afaqs!

Has Maggi finally got competition?

By Anushree Bhattacharyya , afaqs!, New Delhi | In Marketing | March 07, 2011
2010 saw a sudden spurt in this instant noodles category with two major FMCG players, GSK and ITC venturing in. Besides, existing competitors are also trying for a rebound.

Circa 1982. All it took was two minutes to woo the hungry souls. The country had just been introduced to a revolutionary product, which took over hundreds of households by their hunger pangs, offering them an instant solution. Maggi Instant Noodles had entered the kitchens of India, the first one of its kind to do so. It was not only a new brand, but also a new food product for many Indians. It's been 28 years since then, and Indian consumers have continued to be loyal to the brand.

The reason is because Maggi has not had much competition. Even though it has been nearly three decades, the brand did not face any serious competition. Instead, in all these years, Maggi has grown exponentially to become a generic brand, and has single-handedly taken the instant noodles category from being almost non-existent, to a Rs 1,200 crore one, of which it currently has, as per industry estimates, a 70 per cent share, approximately.

The only competition Maggi had until now was from the Japan-based Nissin Group's Top Ramen, and the Nepal based CG Foods' Wai-Wai Noodles.

Wai-Wai, till recently, was restricted to the eastern market of West Bengal and Sikkim, where it controlled 70 per cent of the market. Its strategy was to first build-up the distribution network, which it successfully did - the brand was available on the shelves of super stores, as much as in the local Kirana stores. It was then that they started building the brand.

Top Ramen, on the other hand, was aggressive in its marketing - it even roped in Shah Rukh Khan as the brand ambassador, but failed to get its distribution network in place. The brand had entered into a distribution tie-up with Marico, the owners of Saffola and Parachute.

However, the year 2010 saw a sudden spurt in this category.

Wai-Wai is now working towards a national presence. The company, which had manufacturing units in Assam and Sikkim, recently set up a new plant in Rudrapur, in Uttaranchal, and is also looking at acquiring a FMCG company in the South/ West.

Top Ramen also has moved to set up its own distribution network, besides hiring a new agency Dentsu, to give it a fresh marketing push. The brand plans to launch itself with a new look and a new taste.

And...

Two major FMCG players, GSK and ITC, decided to venture into the market, almost 20 years after Nissin Group's Top Ramen had decided to try its luck. GSK launched Foodles, while ITC launched Sunfeast Yippee. Unilever, too, tried to create some competition with Knorr Soupy Noodles.

Instant Gains

One reason why we see a spurt in this category is that it is still growing at the rate of 23 per cent. Prashant Pandey, general manager - marketing, GSK, says, "While it is true that consumers, both in the urban and semi-urban markets are aware of instant noodles, the markets in the hinterland and interiors are yet to be tapped. This provides a huge scope for growth. The category is yet to penetrate deeper into the deepest regions of this country," he says.

The other reason that experts attribute to the growth is that the profit margins in the instant noodles category are very high. This was a lucrative proposition for companies such as GSK and ITC, which were looking to diversify into other categories.

It is because of Maggi that instant noodles have become a part of the food habit of Indian homes. Maggi has moved from being a 7 pm-snack, to being a part of breakfast, lunch, and dinner, of the average Indian household. Says Sunil Alagh, chairman, SKA Advisors, "It is all thanks to Nestle, which has done the initial and crucial job of establishing the instant noodles category in the consumer's mindset."

According to Alagh the market is ripe. "It's the perfect time for newer players to enter the category. They just need to launch a good tasty product, and work on its distribution," says Alagh.

Tasting Times

How well will the new brands be received? Brand consultant Ramanujam Sridhar, says, "The new entrants will perform well in areas where the brand equity of the parent company, or the brand itself is very high. For example, the Horlicks brand is very strong in the Tamil Nadu market, and there are chances that Foodles will do well in this market where it was first launched."

Industry observers like independent consultant Cajetan Vaz and Prateek Srivastava, president, South, Ogilvy India (he was in-charge of Sunfeast Yippee campaign), feel that while there will be a place for many players in a growing category, the new entrants will have to find a differentiating factor, and build the concept through advertising and marketing.

However, the new players still have a long way to go, especially when MAGGI continues to innovate itself with new product variations, be it Maggi Vegetable Atta Noodles, Maggi Vegetable Multigrainz Noodles, or several other variants.

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