Maggi’s troubles in India may have wiped $200 million off its brand value

Nestle brand itself could be at risk.
Nestle brand itself could be at risk.
Image: Reuters/Adnan Abidi
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It’s been exactly a month since Maggi—Nestle’s popular instant noodle brand—landed in hot water in India after food inspectors in Uttar Pradesh said they found dangerously high levels of lead and monosodium glutamate in the product.

What started as a state-level inspection quickly snowballed into a nationwide health scare, and Nestle had to withdraw the product—one of the largest recalls in the Swiss company’s history—from all over the country. It even flew down its global chief executive, Paul Bulcke, to do the firefighting, but that might have already been too little too late.

In all, the month-long fiasco could result in Maggi losing over $200 million (Rs1,283.6 crore) in brand value, according to Brand Finance, a brand valuation consultancy.

The noodle brand—with a 63% market share in India—was valued at $2.4 billion (Rs15,405.7 crore) before the food safety issue, and ranked 23rd in Brand Finance’s list of most valuable food brands in the world.

Now, the consultancy estimates that the reduced brand value stands at $2.2 billion (Rs14,119 crore).

“Any health concerns raised by a credible source such as the Food Safety and Standards Authority of India (FSSAI) will most certainly damage customer loyalty and consideration of a food brand,” David Haigh, chief executive officer of Brand Finance, said in a release. “Maggi’s parent company, Nestle, will have to turn around swiftly to ensure that the Maggi brand can retain its dominance in the Indian market.”

The prepared dishes and cooking aids category, which includes Maggi, contributes around 30% of Nestle India’s revenue, according to a January 2015 research report by French banking and financial services firm, Societe Generale.

“If not, the Nestle brand itself could be at risk as the Nestle logo prominently features on the back of Maggi noodles packaging, making it synonymous with the Maggi brand,” Haigh added.