Nestle India's resurrection from Maggi debacle is virtually unparalleled

During the year, Nestle India strengthened its distribution base, sales capabilities and execution skills to secure the leadership position in most categories

If the Greeks have to recreate their mythology today, the choice for a parallel character in the world of business to that of the phoenix would probably be obvious. Nestlé India’s steep fall inside a pit of fire and its majestic rise since is nothing short of a resurrection story — like a phoenix reborn, rising from the ashes. 

From a company with steadily falling volumes that touched a nadir in 2015, and rumours of it being forced to shutter down, the food and beverages major emerged as one of the most aggressive entities in the fast moving consumer goods sector in 2018 (January-December). During the year, it not only grew its bottom line by 39 per cent, but also improved the operating profit margin by 400 basis points. 

Traditionally considered a slow mover when it comes to stepping into new territories and venturing into new categories, Nestlé India launched over a dozen products during the year and entered new categories such as breakfast cereals, consumer appliances and pet food. The renewed vigour is reflected in the fact that new products (over 50 launches between 2016 and 2018) now contribute over a fifth of its growth. 

According to Edelweiss’ analysis, speed, efficiency and best-in-class roll-out of new products placed on shop shelves and online platforms displayed by Nestlé India in 2018 was unmatched. Further, requisite consumer sampling and engagement activities ensured availability, visibility and accessibility of its brands and products. The firm tapped fast-growing shopper and consumer opportunities on the e-commerce channel. 

During the year, Nestlé India strengthened its distribution base, sales capabilities and execution skills to secure the leadership position in most categories. 

However, what will remain one of the key highlights for the firm is that it took any possible controversy related to its prized possession, Maggi noodles, head on. The firm, rattled by rumours of the presence of harmful elements in its top-selling noodles in 2015, in fact opened the doors of its manufacturing units to consumers — for the first time since its introduction in the market 35 years ago. In a series of videos, it showcased the entire Maggi noodles manufacturing process — from farm to fork. 

“The Nestlé India we would like people to know is for the purpose we stand for, which basically is to enable healthy and productive lives for our consumers,” said Suresh Narayanan, chairman and managing director of the company. 

The transformation in its attitude is striking. At the height of the Maggi crisis the firm kept up a radio silence, while its communication managers were reticent. Lack of clarity among the media fraternity, and consequently its consumers, further fuelled the spread of rumours like wildfire. The country-wide ban on Maggi noodles only aggravated the business environment for the firm and decimated hopes of a revival. 

The new leadership that its Swiss parent finally brought in a couple of months later gave it a lifeline. Suresh Narayanan, a Nestlé veteran, was flown in from the Philippines to take charge of the sinking ship. His record as crisis manager in turmoil-hit Egypt a few years ago had probably given his CV the desired gravitas. Since Narayanan’s entry into the local market, the change in the firm’s attitude in dealing with the crisis — and even the harsh business environment in general — has been visible. 

In Narayanan’s own words, it was crucial to gather courage at the time, as the crisis was taking a tremendous toll on the confidence of the company’s 7,000-odd employees. 

“Every crisis is an opportunity for a company to recommit itself to its values and its purpose. For us respect, dignity, transparency and trust are extremely important. We are a company that never takes our achievements for granted, and strives to do better,” he said. 

Narayanan, however, shies away from accepting any credit. According to him, it is the work of Nestlé India’s team, the power of the Maggi brand and consumers’ love for it that brought it back to leadership position once again by 2017. 

The hard work did pay off. By 2018, the India unit of the world’s largest FMCG company by revenue became the fastest-growing business unit. Today, Nestlé India features among the top 15 subsidiaries of Nestlé SA. 

“The Nestlé India we are building is for the next 100 years. The actions of the last few years have certainly set the tone for the next few decades,” said Narayanan.