Will Maggi Bounce Back?

While brand experts are optimistic, they implore Team Maggi to proceed with caution.

Poster boy of recent day controversy Nestlé's instant noodles brand Maggi, has begun appearing on shelves, after months of back and forth with the authorities, testing and discussion. While there's plenty of anecdotal evidence that people are excited about Maggi's return, several questions continue to loom. We tried to zero in on the top three:

• Will Maggi sales fall short of pre-ban levels - or exceed them? Is the brand past its peak on the sales front?

• The intangibles are not to be taken lightly - to what extent has 'brand Maggi' been affected? What will happen to the brand value of Maggi, going forward?

• What is there to learn from this episode? What's the biggest takeaway/lesson here?

By and large, branding and communication experts are optimistic about Maggi's ability to regain consumer trust. After all, several big companies have recovered their volumes after disastrous product failures. Examples that come to mind readily include Coca-Cola's 'pesticide scandal' and Cadbury's 'worm controversy'.

A spine-chilling global example is the Tylenol scandal that Johnson & Johnson faced in the 1980s; many of the pain relief tablets were found laced with poison, leading to several deaths in the USA. It remains to be seen how Volkswagen will regain consumer trust post the recent 'pollution scandal'.

We had a few industry experts indulge in some intellectual soothsaying. A look at what they said about Maggi's prospects.

Will Maggi Bounce Back? #Tellafaqs!

— afaqs! (@afaqs) November 29, 2015

Edited Excerpts.

Maggi single-handedly created the instant noodles category in India, and was a precursor to the nation's appetite for packaged foods. Its promise of easy preparation became the basis for many food formats.

And then the trust was shattered. Indians are the most trusting of brands and believe brands should play a role in improving their quality of life and well-being, according to Havas Media's Meaningful Brands India Study 2015. MSG and lead-related accusations hit at the very core. The swift action of the government and consequent total withdrawal of the product caused extreme reactions both for and against Maggi.

The study reveals 'food' as one of the most 'meaningful' sectors; it is linked with strong attachment and trust. The insights revealed by the study, coupled with the 'brand love' enjoyed by Maggi (as evidenced by the fast sales after re-instating it), gives Maggi another chance in India.

Maggi will endure because of the people who made it what it was - the Indian customer. It will be akin to the renegade child forgiven by loving parents. Will it thrive? Sure, it has huge potential. And time makes all things possible.

But Nestlé and Maggi cannot afford to take another misstep. Maggi has everything and more going for it, but how things pan out will depend on what Maggi does next.

While Maggi has suffered a significant loss of business, and its reputation with its consumers has been severely dented (even though many remained incredulous that the product could be unsafe), it is likely to end up becoming an even stronger brand in 2016. Nestlé is likely to fully recuperate the losses it incurred during the controversy.

Several factors could lead to this: Perhaps the most important one could be a positive backlash from consumers who feel Maggi has been unnecessarily victimised; they may wish to show their support to the brand by consuming more of it. Nestlé itself is likely to increase its advertising and promotion spend to reconnect with its consumers and further delight them with more variants.

Nestlé's innovative use of the burgeoning e-retail channel (like partnering with Snapdeal), will further enhance the reach of the product; this will give a further fillip to its sale. And, finally, with its current (Wai Wai, Sunfeast, etc.) and new competitors (Patanjali) also stepping up their marketing effort, the entire packaged noodles category is likely to see sharp growth. Maggi is likely to benefit from this.

Even if you are the best sprinter, it is difficult, if not impossible, to make up for lost time and lost opportunities. Nestlé is already running a race with a handicap of Rs 300 crore due to the recent fiasco. But, big international cola and chocolate brands have bounced back from similar, if not more difficult, situations.

The cola segment's pesticide controversy was worsened by discussions around other social issues like depletion of the water table and the existing negativity in consumers' minds about the damaging effect of carbonated drinks in general.

Cadbury's problem of 'insects in chocolate' was a visible, tangible one; one could not deny the evidence. Nestlé's problem, on the other hand, emanated from some sarkari report of some small town UP Government department. We all know how much trust we have in these departments. According to the reports, some substances were present beyond the permissible limit.

Consequent media bashing and lack of a strong rejoinder from the brand management stoked the fire.The brand stoically bore the loss, destroyed its huge stock, waited for international lab reports and court orders, and then came back to the consumer. Today's consumers are intelligent, discerning and smart. If the super-fast online sell of Maggi packets is any indication, it is only a matter of time before the brand gets its former glory back.

The lesson for the brand is: If you are dealing with food, keep your firefighting machinery ready; conduct mock drills. This is neither the first, nor the last, time we're seeing such an episode.

The new online commercials for the resurrected Maggi seem to resonate with the mindset of the consumers.

In the short term, yes, the brand suffers, because of all the negative news around it. However, if there's proper closure, then it's a matter of time before they get back. In this case, I think there is proper closure, because of what the High Court has said.

If you see most of these cases, where there has been proper closure - whether it was Tylenol in the 1980s, or even Cadbury and Coke for that matter - volumes have recovered. Yes, the lead time varies, depending on the intensity of the competition and the stature of the brand. In this case, Maggi is an iconic brand. I expect it to come back to normal pretty soon.

But there's a subtext to what I am saying: This is a good time for Maggi to actually bring back a fully loaded product and enhance the product significantly. The strategic intent is not about cost; it is about gaining back consumer confidence. So, it becomes a kind of revamp. Whether they will regain confidence to the extent it was before this problem occurred depends on the series of actions they take. There should not be any misstep. The communication has to be calibrated very finely. They have to walk a fine line between chest thumping and overly emotional and soppy communication.

But, there is a certain level of murkiness about the issue. The entire controversy sounds pretty hollow; it's more of scare-mongering. It sounds like a manufactured, rather than a real, controversy.

The biggest take-away from the Maggi episode is that one should never ignore the smallest whimper of either consumer activism or regulator activism. It is extremely important to pay attention to the smallest issue raised by a regulator, in the remotest corner of the country. It is extremely important to cater to any kind of activism that is going on against your brand, anywhere.

About the way Maggi handled the situation - while initially, they bumbled, later, they got savvy. And when they got savvy, they got very savvy.

We've seen such episodes before. Globally, there have been famous disasters; Johnson & Johnson seems to have been through around three of them, many pharma companies have faced them. Brands have tended to bounce back, apparently without any problems. Well, either they die or bounce back.

Maggi is going to come out of this looking better than ever. It's already beginning to sound like the government/authorities over-reacted. And public memory is notoriously short. Overall, I don't think the brand value of Maggi should be affected. There won't be any long lasting damage.

Recently, someone asked me what I think Maggi should do next. I said, 'Maybe they should launch a chocolate variant. They should completely change the conversation.' You don't want to be talking about whether or not you have lead in your product. Enough has been said about that. Move on! They need to get some new news about the brand out. People will get excited about that and hopefully forget about all this.

They'll reach their pre-ban sales levels; they may do even better. It's been a good wake up call for them. Post crisis, even Cadbury improved its packaging and supply chain. That little shock actually made the company and brand stronger. I think Maggi will do similar stuff. It'll look into its formulation, its ingredients, where/how it is produced... they've been resting on past laurels and haven't worried about this too much. But now, they'll come out with better products and improved packaging.

Maggi is no stranger to crisis. The brand has had its fair share of troubles - in the late 1990s, the then newly launched air-dried noodles had to be withdrawn, as consumers did not like the taste. The company quickly picked up on the consumer sentiment and launched the original noodles back. Although this looked like a disaster at the time, the brand went from strength to strength every year following that crisis and has emerged as one of the strongest FMCG brands in India.

The current situation is similar. Yes, trust has been dented for the moment but the brand will emerge stronger than before. Consumers welcomed the initial product placement before Diwali and the Snapdeal package was snapped up within minutes of its announcement. Despite the confusion around the safety of the product, trust in the brand is very high and consumers are willing to buy it again.

On digital media and in the press, the brand engaged in appropriate conversations, as opposed to knee-jerk reactions. The result of this prudence is an overwhelming positive sentiment. Consumers endorse brands if they are able to reassure them quickly. For instance, despite New Coke being overwhelmingly rejected by consumers, when Coke Classic was brought back, consumers showed their loyalty by buying it even more than before.

I have no doubt that Maggi will emerge from this crisis with vitality and vigour, and will regain its top spot shortly.

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