Nestlé casts net wider with ₹10 Maggi noodles
3 min read 19 Sep 2023, 12:27 AM ISTThe local unit of the Swiss company, which used to sell Maggi in 100g packs for ₹10, raised the price to ₹12 in December 2014 and further to ₹14 in February last year to account for rising raw material costs.
PremiumNEW DELHI : Nestlé India Ltd’s noodle brand Maggi is making a big comeback at the ₹10 price point, as the packaged consumer goods company aims to stave off competition and claw back market share in smaller towns and villages with an attractive price point.
The local unit of the Swiss company, which used to sell Maggi in 100g packs for ₹10, raised the price to ₹12 in December 2014 and further to ₹14 in February last year to account for rising raw material costs. The new ₹10 pack, introduced in so-called Rurban markets (rural markets and small towns) across 15 states, weighs 40gm. However, ₹10 packs are still available in a few markets of Punjab and Uttarakhand, where mostly it’s served by highway or tourist joints.
Price points such as ₹5 and ₹10 are easier to remember and transact in and are seen as more attractive for low-priced consumer items such as foods and shampoos. Maggi masala noodles are also available at price points of ₹7 (32gm) and ₹14 (70gm).
“There is an increasing preference for spicy products all across India," Nestlé India said in a response to queries. “Maggi has always been in tune with what our consumers desire and has started offering a range of products to consumers that meet this need. We already have Maggi special masala, Maggi spicy garlic and Maggi manchurian noodles in urban markets. For rurban markets, we recently launched “Teekha Masala" and “Chatpata Masala" variants of Maggi noodles for ₹10.
Analysts said Nestle India’s renewed push into the ₹10 stock-keeping units (SKU) is seen positively by channel partners. “Also, there was a need for consumers to up-trade in the category. There is the expectation of discontinuing the ₹7 SKU. As Nestlé exits, competition will follow (for ₹5 SKUs) as margins are low. For the ₹14 SKU, the retail margin is 9%. For new ₹10 SKUs, the retail margin is at 9%. Additionally, to push new SKUs, the company is offering an extra incentive of 2–3%," said Nitin Gupta of Emkay Global.
The expansion of smaller packs to newer markets comes as Nestlé pushes deeper into the country’s interiors. While Kit Kat chocolates and EveryDay milk whitener sachets are sold in these markets, the company is now adding more distribution muscle to scale up the presence of such products. For instance, in 2022, the company accelerated its push into villages and smaller towns, scaling up on-ground activation and deploying more resources. The company added around 55,000 villages and 1,800 distribution touch points in 2022, it said in its annual report.
The latest move will also help the company keep local competition at bay. Small local companies have emerged stronger as the effect of the pandemic wanes and inflation cools. Volume growth of local brands has surpassed that of national brands significantly over the 12-month period ended 30 April, according to researcher Kantar. Local brands are defined as those operating within a single market.
At a media roundtable in July, Nestlé India Ltd chairman and managing director Suresh Narayanan pointed to heightened competition from local brands.
“Every competitor keeps me positively awake. There are some Indian brands that are doing well. The problem happens when brands look at it as an opportunistic play—which is, get in there, give something slightly inferior at a better price, and then walk away. That dents the category badly," he said then.
Maggi noodles are part of the company’s prepared dishes and cooking aids portfolio. In 2022, the portfolio contributed 32.2% to the company’s domestic sales, according to the company’s annual report for the year. Maggi enjoys over 60% market share in the packaged noodles market in the country.
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