Will reduce dependence on Maggi by half in 4-5 yrs: Nestle

After a five month ban, Maggi is all set to make a comeback. The instant noodles will be available around the country starting today. CNBC-TV18 caught up with Nestle India's Managing Director Suresh Narayanan.

Below is the verbatim transcript of Suresh Narayanan’s interview with Ronojoy Banerjee on CNBC-TV18.Q: It has been perhaps the most turbulent and the most tempestuous phase for Nestle in over 100 years in India. Would you now say that things are finally settling down?A: It has been a challenging time for not only me but also for over 7,000 employees of Nestle and also hundreds and thousands of other partners whom we have got in the business. However, I am delighted to say that the situation now is much better than what it was and with great delight I will be having the privilege on behalf of the Nestle organisation to give back to the consumer what belongs to them, brand Maggi.Q: Currently about three government laboratories have cleared it in places like Goa, Karnataka, Punjab and I also remember that you asking for approvals from the governments of Uttarakhand and Himachal Pradesh for producing Maggi. Can you gives us an update now to begin with how many states will be producing it and have you got those approvals from Uttarakhand and Himachal Pradesh?A: In terms of the final testing, as had been mandated by the honorable High Court, there was a two stage testing process that was undertaken. One was that right after the verdict, there was a testing process where samples were drawn and sent to three accredited laboratories for testing of lead. They came 100 percent clean and then we were allowed to start manufacturing trials. So, we did the manufacturing trials and the manufacturing trial samples were also sent to the laboratories in Mohali, Jaipur and in Hyderabad. A couple of days back, those analysis also have shown that we are 100 percent clean.Q: How many laboratories now have found that?A: These are three accredited laboratories and this is what was mandated by the Bombay High Court as far as the initial testing was concerned and also on the manufacturing trial testing was concerned. So, it is basically across three accredited laboratories and this really also cements over 3,500 tests that the company itself has done across our own Nestle quality assurance laboratories and external laboratories to vindicate the stand that Nestle has always had that we have been safe, we are safe and we will continue to be safe. Q: In terms of getting approvals from the governments of Himachal and Uttarakhand?A: At the moment out of the 5 locations for manufacture we have started manufacturing in Moga in Punjab, in  Bicholim  in Goa and also in Nanjangud in Karnataka. As I speak to you we are in dialogue with the governments of Himachal and Uttarakhand in order to allow us to commence manufacturing at our plants in Taliwal and in Pantnagar.Q: Give us a date on when do we see the Maggi coming back on to the shelves?A:  I can be fairly specific to you, November 9, we will be introducing Maggi back again in the hands of the consumer. It will be a selective rollout. We are not in a position  now to extend it to all parts of the country. This has been a long journey and it will really be a culmination of this journey to give the brand to the millions of consumers who have stood by us in all the times of trials and tribulations that we have been through as a company. Q: Three manufacturing plants, which are the pockets that we are expecting then, Maggi to be first available apart from these states?A: At the moment there are about 8 states where the ban has not yet been lifted which are states like Punjab, Orissa, Bihar, Meghalaya, here we are in active dialogue with the authorities in order to lift the bans, but excluding that in the rest of the country we would be in selected outlets and in selected towns and start the Maggi journey back again into the hearts of the consumers as of November 9.Q: What happens with this development, what happens to the Rs 640 crore case that the government had filed in the National Consumer Redressal Commission, you will have to fight that case still nonetheless despite this development?A: It has been most unfortunate that this case has been preferred on Nestle. Quality equals trust for us, it always has been and will be. This is something that we will defend to the best of our abilities. Certainly moving forward we will be having our own defences on this particular case that is in front of us going forward in the coming days.Q: You have no choice but to fight the government on this particular issue?A: I don't wish to comment too much on this because the matter is still sub judice. The basic issue for us and what is in the public domain is the fact that many of the matters that are in front of the NCDRC are actually matters that were before the honourable Mumbai High Court which as you know the judgement lifted the ban and also clarified some of the points that was there as part of the contention. So, clearly it is already matter covered by the Mumbai High Court. We have also made representation on jurisdiction of the NCDRC as far as this particular matter is concerned. However having said that we will defend ourselves with all humility, with all transparency, samples have been sent for analysis as you are aware. As far as Nestle organisation is concerned and as far as my own management of this company is concerned we are completely transparent. We have absolutely nothing to hide on our quality standards, on our safety standards , on what we make, how we make it, where we make it. Q: Despite the Bombay High Court verdict there is still a lot of unease with the government. The federal minister has come out and said that that does not affect it, our stand remains. We have got the FSSAI chief who has come out and said that there seems to be a problem. In fact he has even questioned the clearance that the UK FDA had given saying that we have written to the UK FDA to ask what were the batches that they tested and which they say that the lead content was fine. So, clearly in that sense despite your launch the troubles and uncertainty still continue for Nestle?A: Let me clarify a few points. It is important to understand where we are coming from. Number one, Nestle has never ever and will never ever question the primacy of the FSSAI and the other stakeholders in being the purveyors of food quality and safety in this country. We will not question that, we have never question that and we will not question that.Number two, the issue for us was the question of the analysis that was performed in terms of the testing of heavy metals where we said that the issue for us is the laboratories, whether they are accredited and National Accreditation Board For Testing And Calibration Laboratories (NABL) follows some of the most stringent standards for accreditation. So, there is a process available already in the country for very stringent accreditation of laboratories. The protocol that is being followed of testing and also the competence of the people who are doing this analysis. So, as far as we are concerned we have not ever questioned the authorities on either the standards set or the primacy of the authorities in terms of being the standards for food quality and safety in this country.The issue for us really speaking is that over the last months it is fair to say that there has been a lot of understanding of the issue as well in terms of what does it pertain to, of what have been some of the rationale that the company wishes to present and put forward in this entire matter. I must say that the leadership at the FSSAI, from the chairman Mr Ashish Bahuguna has also been stellar. It is sometimes unfair to say that everyone has been against an organisation. The fact of the matter is that there is the process of dialogue, there is a process of listening and as a company we are also getting across to the authorities in terms of what is it that we are requesting as fair play as far as the company is concerned.Q: Nestle of course we saw, even on your website you were trying to sort of regain the trust. You were very transparent in that sense, you explained it to the consumers what is the issue, what is typically the lead content and if I were to take one simple line you said that we already have a process where we regularly monitor all our raw materials for lead including testing by the accredited laboratories. When you have the stringent process the obvious question then why did this issue arise in the first place?A: It is very difficult for me to speculate on what might have been the rationale for having picked this issue in the first place. All I can say is obviously the analysis that had been done had been done at laboratories which were clearly not accredited, where the method of testing, the protocol of testing was not up to the required standards and it threw up results which were very contrary to what the standards of the company has been because for us the only reason why a consumer buys Nestle is because he or she trusts this company with the quality of the product. That is the only reason why a consumer chooses to buy brand Nestle. And that is something which is a strong suit for the company. We have invested 150 years of our existence on this.So, it is fair to say that the reasons why this would have emanated in the first place is beyond the purvey of the company in terms of determining what made this happen but clearly when it happened the clear approach of the company has been and my own personal approach has been is that look as an organisation we have absolutely nothing to hide on quality. We have experience on quality, in all humility we are not the only people but we have the experience on quality and safety across countries for a number of years and we bring to bear all of that in whatever we do, whether it is 100,000 farmers in the supply chain of milk or whether it is 400,000 farmers involved in the supply of wheat, any of our materials and raw materials are subject to stringent standards.Q: Therefore, your internal testing standards, should therefore be more stringent than what the accredited laboratories, standards or yardsticks are?A: Our standards and the results that we have obtained, for example, on lead which has been the matter of contention is well below the standard that has been set. So, therefore for us it has all been about this relationship of trust that we have built and for us the only thing that is really and truly sacred as an organisation is this relationship of trust based on quality. Q: You are saying that it is still unclear to you why this issue arose in the first place but then if you are not clear about it right now then ofcourse there are future risks that what if it happens again. So, have you as a company been able to go to the bottom of it as to what happened, were there indeed some batches where the lead content may have been high because until and unless you go to the root of the problem how do you resolve this thing?A: This is not the first time that we have been testing for lead. We test our products, our raw materials all through the chain, all through the year - 365 days. So, for us when I tell you that quality is trust, when I tell you that my organisation stands for unimpeachable quality, I am saying so with the bearing of the fact that we have over 300 people in this organisation working full time on quality, we have a laboratories that are equipped only on quality and we have got a whole value chain that is based on quality. For me as an organisation I can vouch for it that quality is at the centre of all that we do as a company. Why this would happen in the first place and why did it erupt in the first place was because there was an analysis that came out and that said that it had a standard of lead which was many times the prescribed standards. At that stage what for us was important  was the fact that in our entire analysis, in entire chain of what we have done and this brand Maggi has been around for 32 years. In 32 years we have been selling this brand, there has not been a single incident of any kind of serious damage to either consumers or their health or whatever, it has been only pleasurable moments, generations built-up in the memory of Maggi. So, for me it is an area of strength that I speak of  as an organisation.Q: Viewers would still be asking what processes you are now putting place to ensure that such instance don't happen? Have you taken stock of that?A: What we are doing as a company is that the protocols that we have been following are protocols that are set internationally and that are validated internationally and also locally. Therefore those protocols are being pursued with due diligence as I speak to you. There is no relenting of that at all. It is not that I did a laxity on quality and now I have suddenly become stronger on quality. I have always been strong on quality, I will continue to be strong on quality. I think the degree of sensitisation that has happened within the organisation to the fact that quality is trust and to some of the other specific measures within the organisation to strengthen this as we go forward will be many times more sensitive than what we were. I think that is going to be the important journey for us. The challenge as an organisation for us is going to be to address squarely the issues that the consumer has had the doubt on. We are not walking away from that.  Q: Also what the crisis brought out was Nestlé's perhaps some would say overdependence on Maggi as the growth driver. 26-30 percent of your revenues come from there, is that the key big learning? Because the Maggi impact even had on Nestle group in this region, will that be now your next strategy to solve? Perhaps de-risk your business model and develop other brands and lessen your dependence on Maggi because it is going to take some time before Maggi is again widely available in the country, so what will be the strategy moving forward?A: I firmly believe that Nestle has got a very wide portfolio and it is a portfolio that can be clearly leveraged in the context of a growing market like India. Yes I do take the point that there was a very strong pillar that Maggi represented, that will continue to be of course a driver of growth and acceleration for us in the coming years, but as I had mentioned in my first interview to Shereen when I first came on as the Managing Director of the company, that indeed we would look at the other parts of the portfolio as well, whether it is in milks or in coffee or in chocolates and confectionaries in order to accelerate our growth. So quite clearly you will see from us a renewed energy and vigour on the other parts of the portfolio as well in addition to building back Maggi, consumer by consumer.Q: Maggi has been the preeminent leader in this noodle space - 65-70 percent market share. Have you lost ground? Do you fear having seeded ground now to some of your competitors?A: One factor is clear, when a market leader is off the market for five months, there is clearly collateral damage to the entire category. So it is fair to say that the entire category has taken a beating because of what happened with Maggi but on the other hand, each player and as I always have said that competition always energises, it does not intimidate and to me, if competition really comes in, and if competition is able to offer different value propositions to the consumer, there is no reason why this category can in fact grow and there will be place for each one depending on the strength and valorisation of their own propositions.Q: What will be your approach to sort of advancing and reclaiming the mind space that Maggi created, because of the brand hit that Maggi has got. So what will be the strategy? More advertisement? More marketing initiatives?A: There are three or four key things that we will do. Number one is to squarely address the issues on which the fears have been and our advertising and our communication is going to address the issue on which the fear was; the whole issue lead and what happened to it. So that is going to be very clearly an area and I believe that we have to invest time and effort around that. Then of course there is going to be a lot of engagement on digital, activation, because one of the things that I have been truly humbled by is the millions of people for whom Maggi has been like a friend, it has been a part of their family, it has been part of their lives. I am truly energized by the fact that for people Maggi means so much. Q: Did you at any point in time think of engaging or roping in a brand ambassador for Maggi? Cadbury had done that with Amitabh Bacchan when it was facing issues. Did at any point in time that thought cross your mind, or do we see one in the coming weeks?A: Maggi has meant so much to so many people, in fact the brand has been highly socialized. So to think that one person might represent a whole generation on a brand, is not complete in terms of the entire thought process. So at the moment, the approach that we have taken is, it is people like you and me, much younger people than me certainly, who are talking about the brand and who will continue to talk about the brand and if you have that familial touch to it, there is a lot of traction that a brand can get. So at this stage, we will do with what we have and let us see as you go forward, what the future offers us.