The big comeback of Maggi will be met by Baba Ramdev’s whole-wheat noodles. Will we witness a major shakeout in consumer brands beyond this battle?
Those who love their instant noodles will now enjoy a big fight for their attention. Maggi, India’s favourite, ready-in-two-minutes, snack is set to storm back into kitchen shelves riding on mushy, sentimental advertisements and carefully crafted social media campaigns. Countering it, in an FSSAI-levelled marketplace, will be yoga guru Baba Ramdev’s Patanjali Atta Noodles, that promise a healthier and cheaper alternative.
Will Maggi vs Patanjali be the big brand war of our times, like Surf vs Nirma of the early 1980s, or the more evenly matched cola wars (Coke vs Pepsi)? There are many interesting elements to the instant noodles controversy worth a close examination. Let’s start with the government action against Maggi. Many of us thought that FSSAI (Food Safety and Standards Authority of India) seemed vindictive and bent on destructive action, rather than one based on genuine findings. Since Maggi has cleared most product tests in India and abroad, the Rs320-crore product recall was a criminal waste in a country with our level of poverty. Similar action by FSSAI against a smaller company would have driven it to bankruptcy and caused widespread job losses. This aspect of regulatory action by our regulators has not got the attention it deserves and will be quickly forgotten, if Maggi makes a big comeback, as is indicated by the limited, online sales during Diwali.
That Patanjali Ayurved announced plans to make instant noodles and began to crank up its marketing network immediately after Maggi’s troubles began adds a curious dimension to the whole business. Patanjali Atta Noodles will, reportedly, hit a million stores in December and also set up manufacturing facilities all over India. Let me start with a disclosure. I am a recent convert to Patanjali products such as its toothpaste, soaps, shampoo, honey, ghee, turmeric, oil and even household-cleaning products. And, yet, I am perplexed by Baba Ramdev’s haste to expand in multiple directions (pastas, noodles, malted beverages and childcare and sportswear are among the new plans being announced almost every day) with high-wattage advertising.
Baba Ramdev’s business empire is structured as a not-for-profit entity and the Patanjali brand is unique in its growth to becoming a Rs2000-crore business empire, almost entirely through word-of-mouth and minimal advertising. It is a great management case study. Baba Ramdev’s admirers will tell you that senior executives at India’s biggest multinational companies (MNCs) work at a fraction of their earlier salaries and have helped set up modern manufacturing facilities, packaging and distribution systems at its sprawling manufacturing units at Haridwar and elsewhere. The distribution network comprises tiny, hole-in-the wall non-air-conditioned outlets, with only a large photo of Baba Ramdev, to push sales. The enormous saving on advertising, salaries, overheads and distribution, probably, allowed Patanjali to offer excellent products at incredible prices. This is a peculiarly Indian model that is now being replicated in smaller scale by other wealthy ‘Godmen’.
But things began to change rapidly a few months ago. It started with Patanjali’s prominent advertisements in dailies seeking distributors. Soon afterwards, it launched expensive advertising campaigns with a galaxy of movie and television stars endorsing a range of products including low-value products like turmeric. All of a sudden, you have Patanjali products beaming at you from every television channel, especially in the Hindi belt. Apart from a much-publicised tie-up with the Future group, Patanjali products are now available at most major malls, super-markets and online stores. This level of marketing spend cannot continue without a sharp increase in costs, which will, eventually, translate into higher consumer prices and lower margins, or compromise on quality.
It is also not clear if Patanjali is fully geared to take on the MNCs on their turf in FMCG (fast-moving consumer goods), household cleaning products, malted beverages and snack foods. MNCs are aggressive players who fight hard and dirty for every percentage point of market share, while Patanjali is still learning the rules of the game. Having chosen to advertise its products, it has to be able to justify every claim about market leadership and product efficacy with verifiable statistics and data. In several cases, it has beaten a retreat and withdrawn advertisements, when challenged. Then, there is social media as the latest tool in market warfare.
Take a look at this takeoff on the noodles brand by a controversial comedy group that has gone viral on social media. It spoofed the image of a pack of Patanjali Atta Noodles with a photo of the yoga guru and a tagline saying, “They have proved that you don’t always need a sexy half-naked woman to sell products. Half-naked men are also equally effective.” All in good fun, right? Or is there a sharp strategy working out there? Baba Ramdev’s followers’ loyalty may be legion, but killing the brand’s cool-quotient for younger customers, who are the real target for instant noodles, can be an effective strategy for Maggi, unless Patanjali’s price is extraordinarily compelling.
Patanjali also seems to have landed in a soup over obtaining FSSAI permission for launching its atta noodles. While the company argues that FSSAI’s rules do not require a separate licence for noodles (it has permissions for selling pastas), it is the regulator’s words and interpretation that will count. Since the noodles will hit the market only in December, Patanjali may still have time to obtain regulatory clearances.
All said and done, we are in for interesting times as Maggi and Patanjali roll out their respective noodles brands. But, remember, Baba Ramdev is not into the soup and noodles game. He is aiming far bigger. If Amul, the brand that Dr Verghese Kurien built, is the only home-grown, iconic brand of the past 65 years, then Patanjali Ayurved, which is aiming at Rs5,000 crore in sales in 2015-16, is aiming significantly higher.
A study on ‘meaningful brands’ released in November by Havas Media (a French communications group) shows that Amul is India’s most ‘meaningful’ brand in India, while Nestlé, which makes Maggi noodles, does not even figure in the top 10, although it ranks third on a global list of ‘meaningful brands’ in a study by the same agency. Interestingly, Life Insurance Corporation (LIC) ranks third on the list, with a very unusual finding. According to Havas Media, a massive 86% of Indians would care if LIC disappeared tomorrow; it explains the significance of this incredible finding by contrasting it with the global finding.
Globally, most people do not care if 74% of the brands were to disappear the next day. Oddly enough, although LIC is an insurance behemoth, India is a severely under-insured country and life insurance penetration is at a poor 3.17% (says a 2012 study). Why do we still love and trust LIC so much, if we don’t buy insurance? What does that say about Indian consumers? According to Havas Media, it suggests that ‘trust and attachment’ are big factors for the Indian consumer, because we are more ‘emotional, caring and believing’. Or do we just prefer big public-sector sounding entities, like LIC and Amul, whether or not we use their products?
If sentimental Indians truly prefer home-grown, swadeshi names built on trust, then Patanjali clearly has an edge, not only in the noodles war, but in its quest for market share in every other category as well. Unless Patanjali blows it up big time with some serious mistakes, it has already got the ‘trust and attachment’ factors in place and could go on to rewrite marketing history in India. We may see marketing history being made or unmade.
(Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected])