Marico takes on Nestle with Saffola ‘instant noodles’ to rival the iconic Maggi brand in India
Maricois set to take on Nestle’s iconic Magginoodles with its own brand of instant noodlescalled ‘ Saffola Oodles’.
- Marico may be hoping that its brand Saffola has a better recall value with the image of being a healthier alternative.
- Whether or not Marico will be successful, only time will tell, but many bigwig brands like ITC and Hindustan Unilever have tried and failed in the past.
The billion dollar question is whether or not Maggi should be worried about a new competitor entering the market. In the past, Maggi has survived challenges much greater than a new brand trying to take away its market share.
The overall demand of the instant noodles saw an uptake during COVID-19 as people sat at home looking for easy to consume food options. Maggi sales shot up by 25%. By 2035, the market is likely to grow by more than 4 times its current size, according to Sharekhan.
Marico’s pitch with Saffola Oodles is that they can provide a healthier version of instant noodles. However, Maggi is already ahead of the curve with variants like Maggi Atta and Maggi Oatmeal.
If there is a surge in demand, Marico has the infrastructure to back it up. It has invested more into distribution — particularly direct distribution in rural areas — during the months of September to December as per IIFL securities.
Other brands have come with the same confidence. And, while they were marginally successful, Maggi still dominates the Indian market.
Maggi has overcome bigger challenges in the past
When Maggi first stepped foot in India in 1983, it had the magnamious task of bringing a population that only eats wheat and rice onto its side with noodles. And, for the first ten years, Maggi didn’t make Nestle any profits. Food habits take time to change, and Maggi knew that.
By 2009, Maggi — more or less — had a monopoly over the instant noodles segment. Right now, India is the fourth largest consumer of instant noodles in the world, according to the World Instant Noodles Association.
As the market was growing, other players took notice. Major fast moving consumer goods (FMCG) companies like Hindustan Unilever, ITC and GlaxoSmithKline stepped into the instant noodles market in a big way. But they were barely able to make a dent in Maggi’s domination.
However, ‘the crisis’ of 2015 had a bigger impact. At the time, Maggi commanded over the instant noodles with 80% of the market share in India.
But, the Food Safety and Standards Authority of India (FSSAI) found monosodium glutamate — what most people refer to as MSG — in Maggi samples. It issued a recall and banned Maggi nationwide. Nestle lost more than ₹500 crore ($7 million) due to the ban and was forced to destroy more than 37,000 tonnes of Maggi noodles.
Even then, Maggi fought its way back. Six years down the line, Maggi may not have the monopoly of yesteryears but it still commands over nearly 60% of the instant noodle market share in India.
Whether or not Marico’s Saffola brand will finally take away Maggi’s majority is something only time will tell.
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