Nestle India, in a bid to beat the slowdown in the FMCG market, has decided to extend its fastest growing brand, Maggi, to two more product categories. It has also begun to aggressively promote the smaller pack of Maggi noodles at Rs 5.
Market sources have confirmed that Nestle is test-marketing `Maggi 2-step mix,' a ready-to-cook paste in three flavours initially, and has decided to relaunch the Maggi Bouillon Masala flavours as `Maggi Magic Cube' soon.
As of now, Maggi is the brand for 2-minute noodles, Chinese noodles, ketchups and sauces for Nestle. As per the latest available data, sales of Maggi 2-minute noodle in India are highest among all other Nestle products worldwide.
Even as the company extends Maggi into new product categories, it has decided to push the smaller pack of Maggi 2-minute noodles aggressively, albeit four years after the pack was launched in India. It is promoting the smaller pack through a lower-price point strategy in the same way as soft drink companies Coca-Cola and Pepsi. This is being done to drive volumes through affordability. Nestle had earlier used this strategy effectively for Nescafe coffee, by launching Nescafe Redimix in Re 1 and Rs 10 packs.
Analysts say Nestle, which faced one of the most challenging years in the FMCG industry in 2003, has realised that unless it continuously innovates in an endeavour to provide value-for-money to consumers, the company's bottomline may be impacted in the long run.
Over a period of time, Nestle has restructured its brand portfolio to phase out several products with slow offtake, including Maggi pickles and jam, Milkmaid dessert mixes, while completely abandoning its packaged water business.
Another brand, Milo (chocolate energy food drink), is being reviewed to enhance its competitiveness. The company has instead added several new products to its portfolio to keep up with fast-changing market preferences.
While Nestle is not saying what led it to enter the cooking-paste market, where established players such as Dabur Foods find the going tough, sources said Maggi Magic Cubes will hit the market in reformulated versions after its test-launch is completed.
The Rs 20-crore cooking-paste market registers an annual growth rate of just about 18-20 per cent and comprises Dabur Hommade and Kissan in the tomato-puree segment, besides regional players. So far, not many established players other than Dabur Foods have evinced interest in entering this category.
Market sources said the 2-step mixes are being test marketed in the Punjab, Pune and Delhi markets at present in three flavours: Paneer Tikka, Chicken Tikka and Chicken Biriyani. How the market reacts to these flavours will probably determine whether Nestle will go in for any further options in the cooking-paste segment.