Home / Companies / Nestlé sells 45 mn Maggi packs within two weeks of relaunch

New Delhi: Nestlé India on Monday said it has started production of Maggi noodles at its Pantnagar, Uttarakhand factory, the fourth of the five plants where it produces the noodles brand in India. The local arm of the Swiss packaged foods company said it has sold 45 million packs of the popular snack within two weeks of its relaunch.

Nestlé India relaunched Maggi on 9 November—after a gap of more than six months.

On 5 June, India’s food safety regulator Food Safety and Standards Authority of India (FSSAI) ordered the company to withdraw all nine variants of the instant noodle brand, calling them unsafe and hazardous for human consumption. It cited the excess lead content and traces of monosodium glutamate (MSG), a flavour enhancer, as reasons.

On 13 August, the Bombay high court set aside the ban, contingent to fresh tests and also said sales could proceed only after the output of the factories was tested.

On 5 November, Nestlé India said its Maggi noodles received clearance from three laboratories certified by the National Accreditation Board for Test and Calibration Laboratories (NABL).

Before the relaunch, Nestlé India resumed production of Maggi noodles at three factories—Nanjangud (Karnataka), Moga (Punjab) and Bicholim (Goa), earlier this month. The company is yet to get regulatory clearance to resume production of noodles at Tahliwal (Himachal Pradesh).

“We are yet to start production in Tahliwal (Himachal Pradesh) and are engaging with the authorities and other stakeholders for necessary clearance. While sales are allowed in most states, in some, where we still require necessary clearance, we are engaging with the authorities," the company said in a statement. Nestlé India is yet to receive clearance from a few states.

The firm is selling the noodles only in 200,000 retail outlets across 600 cities and towns. It has a reach of 3.9 million retail outlets.

“The re-launch has had a refreshing effect upon employees and across the supply chain as thousands of farmers, distributors, suppliers and retailers are happy to be part of this. Today, the entire ecosystem including our employees and stakeholders are extremely happy and humbled to have been able to return to the consumers their favourite MAGGI Noodles Masala. We are hopeful that this journey will help us re-calibrate, re-charge and re-focus on the brand," Nestlé India managing director Suresh Narayanan said in the statement.

In the quarter ended 30 September, Nestlé India’s profit fell 60% from the year-ago period to 124.2 crore on account of lower sales.

The net profit came on the back of a 64.4 crore loss, the first in 15 years, in the three months ended June. That loss was caused by a one-time charge of 451.6 crore related to the recall of Maggi noodles from the Indian market.

Equity analysts remained cautious even after the relaunch of Maggi noodles that accounted for about 30% of the company’s revenue in the year ended December 2014.

In a report, equity brokerage firm CLSA retained a sell rating on Nestlé India as the recovery in business is expected to be gradual and revenue will remain around 20% below consensus between 2015 and 2017 (calendar years).

In an investor presentation on 20 November, Nestlé India said its strategy would entail fixing issues with current brands, renovating and extending existing brands into adjacent categories and exploring newer categories depending on the opportunity, margin, differentiation.

“Volume growth is an important priority for management now," it added.

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