A year after Maggi storm, Nestle is hitting back with a blizzard of launches in India

Getting back on track.
Getting back on track.
Image: Reuters/Valentin Flauraud
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A year after suffering its worst debacle in India, Nestle is back with the sort of aggression rarely seen at the Swiss multinational’s local subsidiary.

Over the next two monthsNestle will launch between 20 and 25 new products in India’s Rs3.2 lakh crore ($47.4 billion) fast moving consumer goods (FMCG) market, where homegrown players such as Patanjali Ayurveda are on the rise.

“This is probably the single largest window of new product launches in a long time,” Suresh Narayanan, chairman and managing director of Nestle India, told the Press Trust of India.

The Gurgaon-based company, with a turnover Rs8,175 crore in 2015, will launch products across categories such as dairy, confectionery, tea, and coffee. These will be a combination of new products as well as variants of existing brands. It has already introduced seven variants of Maggi noodles, Greek yogurt brand Grekyo, and protein supplement Pro-Gro in the last few months.

Apart from changing consumer habits, players like Patanjali, promoted by yoga guru Ramdev, have forced the conservative Swiss major to cut down on the time taken to launch new products, from at least 12 months to less than six months. ”That is the kind of competition we would positively call disruptive competition. They come and redefine the rules of the game,” said Narayanan, commenting on Patanjali.

Putting Maggi behind

Narayanan, who completes a year as the firm’s India head in August, was brought on board to resolve Nestle’s worst crisis in decades. The row destroyed the market share of India’s most popular noodle, Maggi—one of the company’s biggest brand in the country.

Narayanan then promised to bring back “double-digit” growth to Nestle India through a mix of volume and price increases. Besides resurrecting Maggi’s market share, his task is also to wade through the dull consumer goods market in the country and manage hyper-competition.

Apart from established competition, new entrants like Patanjali have been fearless in attacking Nestle. In November—just months after the Maggi fiasco—Patanjali ambushed Nestle by launching a rival noodle brand. This coincided with Maggi’s re-entry after a five-month absence from the market.

However, after months of aggressive marketing, new launches, and court cases, Nestle has been able to claw back some lost ground. Maggi’s market share now stands at 55.5%. It was 77% at its peak before the crisis.

Nestle isn’t the only company upping the ante against Patanjali.

In the last year, some of the world’s largest FMCG companies that operate in India have launched products to take on Patanjali’s soaring popularity. Ramdev’s firm earned revenue of Rs5,000 crore in fiscal 2015, and hopes to double the turnover by March 2017.

The result: more herbal toothpastes by Colgate-Palmolive, ayurvedic oils from Hindustan Unilever, and herbal shampoos from L’oreal. And now, Nestle India’s newfound aggression.