Post-ban, Maggi noodles still No.1 despite ceding large market share

ITC's Yippee made the most of Maggi's absence, increasing market share to 33%

Weeks after Maggi noodles returned to store shelves and kitchen cabinets, the flagship instant noodle from food major Nestlè regained the number one spot in the instant noodle category in India.

The ban period, however, has clearly taken its toll on the erstwhile category leader-by-a-mile; January, 2016 data from Nielsen shows its share of the Rs 2,000 crore instant noodles market dropped to 42%, down from a commanding 77% in January 2015. Meanwhile, ITC’s Yippee! capitalised on Maggi’s absence to catapult to a 33% share.

Nestlè India officials, however, adopted a positive position, saying that despite the absence of its eight variants and lower than optimum production levels, the numbers prove Maggi’s universal acceptance among Indian consumers.

“The latest data clearly shows that we are still number one”, a company executive said, on condition of anonymity.

However, the countrywide ban on Nestle’s instant noodle on June 5 last year has not only dented the company’s profitability and sales, but has also hampered the category as a whole. The instant noodles market was estimated, pre-ban, at Rs 3,800 crore; it has now shrunk by 47%, largely due to the absence of Maggi.

After clearing two sets of laboratory tests and getting a green signal from the Bombay High court, Nestlè India relaunched Maggi Masala noodles in November 2015. During the initial phase of rollout, though, the company faced legal obstacles due to continuing bans at local levels.

“The production at five of our plants also took time to reach optimum level as production was completely stopped during five months since June”, a company official said. “It is only in December end when we could resume normal supply to all the markets except a few north eastern states including Tripura and Nagaland”.

North India is still the strongest market for Maggi noodles, followed by Eastern region, while southern India is the weakest, largely due to a difference in dietary habits. After clearing the final safety tests on October 16, Nestle started production in five of its plants situated at Nanjangud (Karnataka), Bicholim (Goa), Moga (Punjab), Pantnagar (Uttarakhand) and Tahliwal (Himachal Pradesh) in a phased manner.

The company re-launched a second variant – chicken-flavoured instant noodles – in February. It is currently working on relaunches of some of its seven other variants in the coming weeks.

While it will take a few months to reach supply at pre-ban levels, including all variants, the latest market share data is an indication of the high recall level that the brand has among consumers, experts say.