Feb 17, 2017 12:28 PM IST | Source: Moneycontrol.com

How Nestle made a comeback from being 'clinically dead'

Nestle India, arm of the Swiss transnational food and drink company Nestle, has launched/relaunched nearly 30 products over the past six months. This is no small feat for a company which had, just over a year ago, gone through the darkest phase in its existence of over a century in the country.

How Nestle made a comeback from being 'clinically dead'

Shweta Mungre
Moneycontrol

Nestle India, arm of the Swiss trans-national food and drink company Nestle, has launched or relaunched nearly 30 products over the past six months.

This is no small feat for a company which was, just over a year ago, going through the darkest phase in its existence of over a century in the country.

In June 2015, Nestle India’s most sought after instant noodles brand, Maggi, faced a six-month ban after a sample tested positive for monosodium glutamate and lead in excess of prescribed limits. This forced the company to recall nearly 38,000 tonne of the product.

Considering Maggi made up for nearly 30 percent of its total India sales, this was a huge blow. From having a reported 75-80 percent market share in the noodles segment, the company went to being "clinically dead" - a term used by the company’s Managing Director Suresh Narayanan to describe the wipe-out.

The crackdown had even led to questions on the management’s vision towards the country. After all, India made up for less than 2 percent of its 2015 global revenue of 88.7 billion Swiss franc.

Maggi has since regained a large chunk of its lost market share, now said to be over 60 percent. But the company has also spruced up efforts to build up the brand through a spate of new launches, innovation in existing products, and introduction of premium products.

Over the last couple of quarters, innovative products like Greek yoghurt, kids breakfast cereal Nestle Ceregrow, health food drink Nestle A+ Pro-Grow, Nescafe RTD chilled Latte, everyday masala, Maggi Hot Heads, and variants of Maggi noodles have been launched.

The upcoming quarters will see the launch of Nespresso (a coffee machine), Dolce Gusto (a coffee capsule system), besides products in pet care, healthcare and skincare.  

As Narayanan has been stating on multiple occasions, a herculean job has been done in terms of managing distribution partners, suppliers, and extended supply chain of the company.

The key challenge for the company has been not what to launch, but when to launch. With the Maggi fiasco rendering a blow to the brand, timing the new launches needed much more efficacious and sustainable strategies and timing, which the company seems to have got right.

The other prowess that the Maggi crisis brought to the fore for Nestle was building up its digital capabilities. "Digital earlier used to be a kind of a tick in the box as far as the marketers’ playbook was concerned.

Today, it is the beginning of the exercise and all other elements will fit into whether they make sense for a longer-term sustainable digital strategy or not," Narayanan had said in an interview in November. The company has now started actively using the digital platform for new launches even before going to trade to improve engagement levels.

"The Nestle we are building is for another 100 years," Narayanan – the one referred by analysts as the ‘turnaround’ MD told the Mint today. "The actions for the next four years would certainly set the tone for the next few decades," he concludes.

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