Citizens' Issues
Noodle Wars and Other ‘Meaningful’ Issues about Brands Indians Trust
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.
 

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COMMENTS

J Pinto

1 year ago

Babas running mega business, Sadhvis and Yogis permeating the governemnt.

India is showing the world how to stand on its head.

J Pinto

1 year ago

The tie up with FutureGroup bridges the last mile and should allow lower marketing spend.

A few good men hand-picked from the FMCG majors may just help do the trick.

TIHARwale

1 year ago

FMCG don't sit idle when Nirma challenged Surf in no time HUL came out with Wheel. Yes Patanjali honey will give a run to Dabur Honey.

We want to test 31 more Maggi noodle samples: Government
The government on Monday told an apex consumer forum hearing its Rs.640-crore class action suit against Nestle India that it would like to test 31 more samples of Maggi instant noodles, after which the matter was posted for hearing on Tuesday.
 
"We have identified 31 samples from different batches in a Food Safety and Standards Authority of India (FSSAI) godown, which we would like to test and videograph the proceedings," the government counsel told a bench of the National Consumer Disputes Redressal Commission (NCDRC), consisting of Justice V.K. Jain and Justice B.C. Gupta. 
 
The counsel said there was a need to test samples from different batches as noodle samples already drawn had expired while the class-action suit hearings progressed.
 
"This class action suit is not just about the lead and monosodium glutamate contents. It is about the government representing consumers of the country regarding mislabelling, misbranding and other unfair trade practices resorted to by Nestle," the lawyer added.
 
Senior counsel Iqbal Chagla, representing Nestle India, and the government's counsel had heated arguments over more tests proposed by the government, after which the consumer forum posted the matter for Tuesday.
 
"Considering Maggi noodles is back in the market after it has passed necessary tests as mandated by the Bombay High Court, what is the need for fresh tests," Chagla asked.
 
If NCDRC orders another round of tests, it could affect the consumers who are purchasing the product and raise questions, he added.
 
Tests were conducted on October 15 on 13 samples of Maggi noodles from nine batches on a request by the government's counsel.
 
These samples were sent to the Central Food Technological Research Institute in Mysuru, Karnataka, though the test results haven't been presented before the apex consumer court yet.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Nifty, Sensex in no- man’s land – Monday closing report
Nifty is likely to rally if its closes above 7,900
 
We had mentioned in Friday’s closing report that Nifty, Sensex will struggle to head higher and that if Nifty does not breach 7,700, it is likely to head higher. The major indices of the Indian stock markets were range bound through the day and closed with marginal gains/ losses. The trends of the indices through the day’s trading are given in the table below:
 
 
Heightened chances of a US rate hike coupled with the upcoming stormy winter session of parliament and derivatives expiry subdued Indian equity markets on Monday. The US Fed's 'unscheduled' meet is being held to review and determine the advance and discount rates to be charged by the Federal Reserve Banks. The last such unscheduled meeting was held in 2012, wherein swaplines were discussed. The meeting assumes significances as it precedes the Federal Reserve policy meet in December, when a rate hike is expected to be announced.
 
Furthermore, investors were glued to political developments to see whether the government will be able to pass key economic legislation during the winter session that begins on November 26 and will run till December 23.
 
An apex consumer court posted for Tuesday the hearing of the Rs640-crore class action suit filed by the Indian government against Nestle's Indian arm regarding its Maggi instant noodles. A bench of the National Consumer Disputes Redressal Commission of Justice VK Jain and Justice B.C. Gupta on Monday posted the matter for November 24 after the government counsel requested to allow 31 more noodle samples to be tested. After a five-month ban on its marquee product Maggi instant noodles by the national food watchdog Food Safety and Standards Authority of India, Nestle relaunched its product in the market on November 9. The class action suit was filed by the government, accusing the company of unfair trade practices.
 
Prime Minister Narendra Modi on Monday said India has ended regulatory uncertainty to a large extent and is creating a policy driven state. "We have ended regulatory uncertainty to a large extent, creating a policy driven state," Modi said, while meeting the corporate honchos of Malaysia. "I assure you that India wants to progress. You have the experience and expertise. We have the requirement. It is a perfect match," he said. Modi added that India was now the fastest growing economy in the world, and with a stable polity offered ample scope for investment. External affairs ministry spokesperson Vikas Swarup tweeted: "Always time for business! Modi meets leaders of Corporate Malaysia for strengthening commercial ties." Earlier, India and Malaysia signed three agreements on cyber security, cultural exchange and infrastructure development, on the third day of Modi's visit. The Prime Minister's Office said, "Stronger economic ties and more investment are key focus areas."
 
The top gainers and top losers of the indices are given in the table below:
 
 
 
The closing values of major Asian indices are given in the table below:
 

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