New products, higher ad spend on Nestle's revival agenda

Last Updated 02 August 2015, 08:32 IST

Nestle India will consider introducing new products, including under the Maggi brand, while looking to drive growth of other categories with increased advertising spending, as it looks to overcome the setback from the ban on its flagship instant noodles.

The company's newly appointed Managing Director, Suresh Narayanan, who officially took over the role on Saturday, said at a media briefing that bringing Maggi back to the market was at the top on his five-point agenda.

When asked if the company will consider introducing an alternative snacks category under Maggi brand, he said: "If it all makes sense, why not?"

He, however, added it would depend on whether those products are commercially viable.
"In Maggi itself there are couple of ideas on which we are working. In other products categories there are couple of ideas that we have got," he said without sharing details.

Reiterating that Nestle "spends maximum amount on R&D" worldwide, he said there are a number of projects currently underway.

The Maggi ban has affected sales of other categories too and the company was looking to drive growth of those categories, he said.

"For me what is going to be the key focus is on growing some of other categories as well. We have got presence in dairy, presence in coffee and beverages and we have got presence in chocolate and confectioneries as well. There are opportunities there," Narayanan said.

He, however, said the company was not diluting the importance of Maggi as it is "is a big part of our movement".

On the impact on other categories, he said: "There has been impact on the rest of the portfolio because it is also sold in similar outlets and in similar geographies. I can say that it has been reasonably uniform across all the categories. Uniformally it has affected."

As part of his five point agenda, Narayanan said Nestle India would also focus on enhanced engagement with stakeholders and authorities and communities.

When asked if the company is increasing marketing spend to counter impact of Maggi ban on on other brands, he said: "That's part of the thinking really to shore up what really we can do on some of the other parts of the portfolio... One part of the portfolio is affected but we will be looking as to how we can shore up advertising and support activities on the other brands".

Ruling out withdrawing the Maggi brand from market, Narayanan said: "The journey on Maggi would continue but the journey on other categories would also will be significantly emphasised over the period of time."

On whether the company would continue to spend on promotions of existing products in the market under the Maggi brand, he said: "Today the question for the organisation is where would we get the cost benefits of doing activities to generate more growth and I believe that in other categories there are opportunities."

When asked about lessons learned from the Maggi fiasco, he said: "As a consequence of what has happened we will be having a process of introspection as an organisation, in terms of learning what was the thing happened, what was the thing that was right, what was the thing which we have done was not right because this is going to be constituting the part of the learning of the organisation.

"All this is internalised and taken for the future in terms of assuring that we do not come by (such) unfortunate incident again."

Narayanan also reached out to authorities striking a conciliatory note.
"It is my endeavour and those of my colleagues that we come to with respect, with cooperation, with support from the authorities, I am not in a confrontational frame.

"... Nestle is a part of this country. We will be a part of this country as we have been for the last 100 years respecting the laws of the land and also respecting all the authorities. It is my hope that we are able to find a solution and we are able to move forward."

He, however, declined to 'hazard a guess' on how soon Maggi will be back on shelves saying the matter is sub-judice as Nestle India has challenged the ban on Maggi by central food safety regulator FSSAI in the Bombay High Court.

When asked if the company would take legal recourse against FSSAI to claim damages if the verdict comes in Nestle's favour, he said: "We have come here to do business. Let us stick to the 'Karobaar' (business). I am a qualified sales and marketing professional, let me do the job that I know best which is to serve the consumer best. What are you speculating on, the issue has not come to the table."

Narayanan said due to the ban, "a whole business segment has been dismantled" and "the whole system (of supply chain, manufacturing and distribution) is on freeze".

Hit by ban on its Maggi instant noodles, Nestle India reported a standalone loss of Rs 64.40 crore for the quarter ended on June 30, 2015, its first quarterly loss in over three decades. It had posted a net profit of Rs 287.86 crore during the April-June quarter of financial year 2014-15.

(Published 02 August 2015, 08:32 IST)

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