Nestle expects launch of new variants, apart from increasing reach and production, will boost market share
Countering claims that rivals are gaining ground in the instant noodles segment, Nestlé India, maker of Maggi noodles, has said it is working on widening the gap with rivals.
Market research agency Nielsen's data for January 2016 put Maggi's market share at 42 per cent, 35 percentage points lower than the share of the brand a year ago.
The company, however, has gained significant market share since its relaunch on November 9, to beat ITC’s Yippee noodles within two months to regain the top slot in January.
Implying there remains significant potential for the brand to regain its lost ground.
Yippee had 33 per cent market share for the month under review.
At its peak, Maggi’s market share was 77-80 per cent.
A year ago, Yippee had 14 per cent, according to industry estimates.
The jump in a year, therefore, works out to 19 percentage points for Yippee noodles, industry sources said.
Nestlé India executives say the gap with its closest rival will widen after the launch of new variants in the coming months.
“The response to the masala variant was relaunched in November has been good.
"We followed this with the popular chicken variant that was unveiled online recently and is now being placed in stores,” said a company executive.
Nestlé has successfully increased the reach of Maggi noodles since last November, when it was totally absent from retail shelves.
By the end of November, Maggi could be reached to some half a million outlets, by January, its reach touched 1.4 million retail shops across 27 states and seven Union Territories. Prior to the ban, Maggi noodles used to be supplied to some 3.8 million outlets.
The north, for the record, remains the strongest market for Maggi noodles, followed by the east and west.
The southern region is the weakest due to differences in eating habits, company executives added.
The firm is expected to work on strengthening its presence in different markets as it looks to improve sales.
In a recent interaction, Suresh Narayanan, chairman and managing director of Nestle India, said the company was working on introducing earlier variants as well as new variants of Maggi over the next few months.
“We are taking a call on whether all nine variants should be out or whether a few of them should be re-introduced and whether new variants should be rolled out. Our plan is to get the full Maggi portfolio out as quickly as possible. You will see this unfold in the coming months.”
While Nestle has been cutting its losses sequentially -- for the three months ended December 2015, the Indian subsidiary reported a 44 per cent decline in net profit versus a 60 per cent decline in bottom line in the September 2015 quarter -- sales growth has been sluggish.
For the December 2015 quarter, Nestle India's net revenue stood at Rs 1,946 crore (Rs 19.46 billion), higher than what it was in the three months ended September 2015, when net revenue was Rs 1,736 crore (Rs 17.36 billion), but in line with June quarter revenues of Rs 1,934 crore (Rs 19.34 billion).
The plan, according to Narayanan, was to quickly restore Maggi sales to pre-ban levels, before moving to other categories.
“I will be spending 2016 on expanding the portfolio of the existing categories.
"Some of the categories that have not delivered as strongly in the past such as chocolates, confectionery and beverages, I will look at new propositions in those segments.”
