Thursday, February 4, 2010




Maggi, the dominant leader in the instant foods market for over 25 years now, is not taking any chances. That explains why Nestle, the company that owns the brand, is constantly adding a new buzz around it – both in the urban as well as rural markets.

Last month, Nestle launched Maggi Nutri-licious Pazzta in two flavours, `Masala Penne' and 'Cheese Macaroni' for Rs 12 and 15 respectively. A couple of weeks later, it came out with two new products, this time for the rural and semi-urban markets at lower price points of Rs 2 and Rs 4 (Maggi Masala-ae-Magic and Maggi Rasile Chow).

The Swiss major obviously wants to have its footprint in both India as well as Bharat – the common theme being a `Taste bhi, health bhi' product, a positioning Maggi started with the launch of an atta (flour) variant.

While Masala-ae-Magic is a fortified taste enhancer with Iron, Iodine and Vitamin A, Rasile Chow is alow-cost, tasty light meal that is fortified with Iron.

Nestle India Chairman & Managing Director Antonio Helio Waszyk says the company has leveraged its nutritional expertise to innovate and develop relevant products at the appropriate time with, for example, increased natural fiber, or reinforcing them with nutrients such as calcium and proteins to better manage health and wellness.

Products for the rural market will also help the company maintain a balance. In the last two years, when the urban markets cooled down, the rural markets continued to remain buoyant. High support prices for all large crops, the National Rural Employment Guarantee programme, and the farm loan waiver have ensured that there is good purchasing power in the rural markets. This has begun to drive FMCG companies to villages and small towns. Nestle is no exception.

There are other reasons too. Anand Ramanathan, sector analyst from KPMG, says launches at low price points in rural India and introduction of new products like Pazzta in the urban markets are designed to help Maggi to increase its relevance in the increasingly competitive market and retain its category leadership.

The Indian pasta market is at a nascent stage in India, but is seeing ahuge growth. ITC was quick to exploit the gap in the instant pasta category and came up with Sunfeast Pasta Treat and backed it up with heavy advertising with Shahrukh Khan as brand ambassodor. "Maggi was quick enough to realise that it had to offer a pasta variant if it had to stop customers from moving to a competing brand," Ramanathan says.

Others feel Maggi's new focus on the urban market and introduction of products specifically for rural India stems from the stiff competition from private labels. Naimish Dave, Director, OC&C Strategy Consultants, says, "Maggi is losing share to private labels and other low priced products. There is a section of consumers who would not be willing to pay a premium for a brand. Hence, alow-price strategy is advisable to retain the price conscious segment within the brand franchise." Maggi has around 70 per cent market share, down from around 80 per cent a year ago. But private brands like Future Group's Tasty Treat and Aditya Birla Retails' Feasters are making their presence felt.

Devendra Chawla, Head, Private Labels, Food and FMCG, Pantaloon Retail, says, "We have seen an excellent growth for our private brand". In Future Group stores, Maggi's is the No 1 sold brand while Tasty Treat is in the second slot.

Thomas Varghese, CEO, Aditya Birla Retail, says the repeat buying for private brands is as good as Maggi in the company's retail stores. "Some of Maggi's launches – for example, rice noodles – picked up initially but later started losing share in our retail stores." Varghese says.

Nestle, however, says innovation has always been a part of its culture and the new launches have nothing to do specifically with what competition is doing. Shivani Hegde, general manager, food, Nestle India, says over the years, Maggi has focused on understanding the consumers' changing lifestyles and innovated and renovated to create delight in everyday meals and bring happiness to everyday family moments. This is Maggi's DNA." The new launches will only grow the market further," she says.

Nestle is keeping the buzz alive in both urban as well as rural markets through frequent launches of new flavours at lower price points

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