Nestlé starts selling Maggi noodles in India again2 min read . Updated: 10 Nov 2015, 12:10 AM IST
Maggi sales resume across India, barring eight states; Nestl ties up with Snapdeal for online selling
Swiss packaged food maker Nestlé SA’s Indian unit, Nestlé India Ltd, on Monday said it has started rolling out Maggi noodles at retail outlets across the country, barring eight states where it is still banned. The company said that it is engaging with these eight states for specific directions.
These states include Punjab, Himachal Pradesh, Uttarakhand, Odisha, Tripura and Manipur where the ban was enforced.
The company also partnered with Snapdeal to roll out online offers to mark the relaunch. The noodles, however, got sold out on the website by 1pm.
At present, Maggi noodles are being manufactured at three out of five locations. While manufacturing has begun in Nanjangud (Karnataka), Moga (Punjab) and Bicholim (Goa), Nestle India is still awaiting directions to start manufacturing in Uttarakhand and Himachal Pradesh.
“This is a phased launch with 300 stockists in 100 towns that covers 30-40% of the entire sales spectrum," said Suresh Narayanan, managing director, Nestlé India, in a telephonic interview.
Nestlé India has got Maggi back on shelves within a week of getting the clearances for the newly manufactured Maggi by the National Accreditation Board for Test and Calibration Laboratories (NABL) on 4 November.
“What takes 6-8 weeks was done in 8-10 days," said Narayanan, who is now hoping to soon get the requisite clearances to start manufacturing from the two other factories to be able to make Maggi available more widely and ensure steady supplies.
The popular instant noodles, which accounted for about 30% of Nestlé India’s revenue in 2014, were pulled from the market, starting 5 June, after the country’s food regulator, Food Safety and Standards Authority of India (FSSAI), ordered the company to withdraw all nine variants of the Maggi, calling them unsafe and hazardous for human consumption. It cited excess lead content and traces of monosodium glutamate (MSG), a flavour enhancer, as reasons.
However, the relaunch of Maggi does not mean that Nestlé India is out of the woods. The ban on Maggi noodles has also hit its other segments, according to its September quarter results. Sales of milk products, infant foods, chocolates and beverages declined approximately 9% year-on-year, Mint reported on 30 October. Most analysts expected sales of these other product categories to grow between 8% and 12% from year-ago levels.
Nestlé India’s profit for the third quarter of the financial year (it follows a January-December accounting period) fell 60% from the year-ago period to ₹ 124.2 crore on account of lower sales. Revenue was 32.1% down at ₹ 1,736.20 crore. Analysts were predicting a 20-22% decline in revenues.
The sharper-than-expected sales decline leads to steep operating profit margin decline as well. “Operating profit margin of 16.9% was well below our expectation of 20.0% and consensus estimate of 19.4% for the quarter," said analysts Krishnan Sambamoorthy and Aditya Joshi of Nirmal Bang’s Institutional Equities Research desk in a report dated 30 October.
To be sure, the margins in the coming quarters are expected to remain depressed as the company will step up on its advertising and promotion spends to bring back the brand. “There will be substantive engagement in terms of multi vector. It’s not only going to be traditional media like press and television but also digital media, lots of activation, sales and events," said Narayanan while explaining that the company will do everything to get the brand back where it belongs.