Nestle India is now upping its innovation game to gain leadership

Nestle India’s Maggi has now reported to regain close to 60 per cent market share. The food giant is now eyeing food technology to appeal to tech-savvy consumers, courtesy its partnership with Indian startups. Will 2017-18 be its year?

Nestle India is now upping its innovation game to gain leadership

Nestle India is slowly getting its act together to ensure that 2017 is their year. For starters, its instant noodles brand Maggi, whose sales were severely hit by the Food Safety and Standards Authority of India (FSSAI) ban in 2015, has now reported to regain close to 60 per cent market share. Before the five month-ban was imposed, it commanded close to 75 per cent of the market share in 2015 and was the single largest revenue earner for Nestle India.

According to a report in PTI, Nestle India Chairman and Managing Director Suresh Narayanan had mentioned that Maggi is now leading its category. Nestle India also diversified its portfolio in the last six months by launching 35 products across categories.

2017-18, a Year for Nestle India?

Jagdeep Kapoor, brand guru and Chairman and Managing Director of Samsika Marketing Consultants, credits the recovery to the company’s new head, Suresh Narayanan. “There’s a greater transparency, more openness to dialogue which was earlier missing from previous heads. One product and category had gone through challenging times but it’s now on the recovery path. So the lesson over here is to be open, responsive and make sure everything comes out clearly without leaving any doubt in the mind of consumer or stakeholder. They have done that. The whole game is between balancing thrust and trust. The former has returned in terms of aggression and growth by the new head. He is working on getting its recovery. Also what has worked is the latent goodwill. I am sure that the company will win back market share and regain confidence.”

He expects the brand to grow much stronger and is confident that ‘the bounce back is going to be huge in the next financial year (April ‘17- March ’18)’. “Nestle will continue growing market share and share market. It will regain the trust of the consumer as long as they do it the right way,” says Kapoor.

However, N Chandramouli, CEO, TRA, still feels Nestle India has a long way to go, considering the ban on Maggi has given room to competition brands such as Top Ramen and Wai Wai to grow their market share.  “It has given space in the minds of the consumers to be able to accept new brands, which itself is a huge loss for Maggi. If you look back at their action during the crisis, it was never about regaining trust. So the ongoing struggle for Maggi is about regaining that brand trust and not sales. It’s about how to (again) enter the mindspace of the consumer. It’s a long journey and is  not going to happen soon,” he says.

So Chandramouli’s skepticism on Nestle India’s performance in the upcoming financial year is evident. He adds, “They may perform slightly better over last year. However, it is important to note that sales is not a direct reflection of the loss of mindshare and trust. If market share is being acquired by expanding the market to tier 2 and 3 cities, which I assume is the case with Maggi, their flagship product, it perhaps reflects badly on performance. Sales figures can be quite deceptive about their market perception and may even create paradigm blindness about the issues that are really relevant.”

Innovation in the Forefront

As per media reports, the 150-year-old food giant is eyeing food technology to appeal to tech-savvy consumers, courtesy its partnership with Indian startups. This initiative will assist the company to create new products by roping in innovators and staying relevant in the digital age, similar to its open innovation platform Henri@Nestle in the US. Nestle will fund the projects. Currently in one of the briefs, the company has reportedly asked startups to come out with solutions that will encourage consumers to cook at home.

According to Chandramouli, it’s part of Nestle India’s game plan to stay relevant with food technology. He explains, “Earlier the challenge for Maggi was to come into the kitchen as a food item. Now they have made growth over there. But now they are seeing kitchen itself is not growing with Swiggy and Scootsy easing the whole food ordering process. The challenge is opposite now. Grocery buying is going down and there’s a growing awareness towards health. They are also part of the same problem of being ousted from the kitchen. They have to find ways to become relevant again. For instance, they are asking people to finding alternatives to PET bottles and looking for innovations to make cooking more interesting. But it will all be product driven.”

Henri@Nestle’s ongoing projects in the US include making alternatives to PET bottles for packaged drinking water and creating packaging innovations to reduce obesity in kids by stopping them from reaching out for more than recommended portion sizes for a Nestle biscuit brand. Each brief has an assigned funding of $50,000.

Kapoor feels this initiative is all part of the brand building and recovering market share as he says, “They have to give signals to the market that they are alive and kicking. They will try out new things and consolidate the old to make sure they recover the lost market share. Also they are connecting back to the consumer not only through their brand and their initiatives but also through their CSR activities (its video series under the #EducateTheGirlChild by Blush Nanhi Kali and tie-up with the Department of Medical and Health, Government of Rajasthan to offer access to clean drinking water). They want to be part of the lives of ordinary Indians.”

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