Leadership

Nestle Maggi Controversy

Group 02 Course
Nikam Prashant Lotan 2022PGP258
Sarthak Sahu 2022PGP341
Crisis Management
Ria Rajesh Lodha 2022PGP498
Dhanishta Sharma 2022PGP564
But before we deep dive.....
 Anatomy of a Crisis
In the Chinese language, the pictogram used to express crisis contains two words : danger & opportunity. The same can be
used to describe the essential elements in any crisis.
The situation can be a danger for:
• The brand
• A particular product, production line or factory
• An individual
• People such as consumers
• The company or organization concerned, as well as its investors, shareholders & insurers, OR
• The entire industry

On the other hand if a crisis is handled well , or if the problem affects a rival concern, the situation can be an opportunity.
A crisis can even be created or exploited for the benefit of a product or used by a body such as a pressure group, to
publicize itself or promote a campaign.
Protecting the brand & reputation
There are many ways in which a company can demonstrate to its employees, suppliers, customers consumers & the
world at large that its prime concern is to produce safe, wholesome foods.
• Adoption of systems to identify & control possible hazards & risks at all stages of the chain
• Rigorous food control procedures including quality, hygiene and process controls
• Display of a sense of social responsibility in marketing strategies, purchasing policies, relations with employees as
well as in dealings with local communities and the public in general
• Encourage goodwill in the communities in which the company has operations by providing local managers with
budgets for donations to local charities & other worthwhile causes
Threats in the Food & Beverage industry
Every company should conduct its own risk assessment- a brainstorming session involving a multidisciplinary
group of senior executives and categorize potential problems and threats such as
• Product contamination, either accidental or deliberate
• Problems facing the industry
• Extortion- a demand for money or the threat of particular action being taken, usually of a political or religious
nature
• Pressure from a consumer or environmental group
• Incidents at a manufacturing plant, such as fire, explosion or accident involving injury or loss of life.
Typical Product Recall Procedure
• Assemble Crisis Team
• Advise Enforcement Authority
• Alert Insurers & Lawyers and any other outside services
• Identify product to be recalled
• Withdraw & Isolate all suspect product
• Prepare Press statement
• Draw up distribution list
• Advise trade customers (prepare and distribute recall notice)
• Advise trade customers who have not received suspect stock
• Advise media and distribute press release
• Consider another use for suspect product (within legal & ethical allowances)
• Investigate cause of problem & rectify
Now back to Nestle.....
 About
Nestlé S.A. is a Swiss multinational food and drink processing conglomerate
corporation headquartered in Vevey, Vaud, Switzerland. Nestlé's products
include baby food, medical food, bottled water, breakfast cereals, coffee and tea,
confectionery, dairy products, ice cream, frozen food, pet foods, and snacks.
Nestlé has 447 factories, operates in 189 countries, and employs around 339,000
people
Purpose: To unlock the power of food to enhance quality of life for everyone,
today and for generations to come.
Nestle India is the Indian subsidiary Value: Driven by this purpose, it focus energy and resources where unlocking the
of Nestlé S.A. Its key products power of food can make the greatest difference to the lives of people and pets,
include Maggi, Nescafé, Milkmaid, Cerelac, protect and enhance the environment, and generate significant value for its
KitKat, Néstea & Polo. shareholders and other stakeholders alike.

Products Market Share (India)

Nestle Cerelac 97%
Instant Pasta 76%
Instant Noodles 60%
Condensed Milk 70%
Ketchup 20%
Instant Coffee 51%
Government Regulations / Company Protocols:
Food Safety Regulations in India: Food Safety By Nestle:
• Historically 13 different laws pertaining to sanitation, • Materials: Rigorous procurement and auditing processes to
licensing, food safety and labelling governed the processed- ensure selection of safe, high quality raw materials.
food industry. • Preparation: Preventing foreign bodies from entering products,
• In 2006, the government consolidated these laws under the enabling the management of allergens, and controlling pests.
Food Safety and Standards Act (FSSA). • Processing: Processing food at optimum temperatures to retain
• FSSAI worked on new regulations for quality standards of its nutritious value, while removing dangerous microorganisms
instant noodles to better regulate the quality of taste- and preventing the formation of harmful levels of chemical
makers and other ingredients. contaminants.
• In section 92 of the FSSA 2006, authority inserted clause • Testing: Before a batch of product leaves factory, it must pass
related to "Macaroni products". a 'positive release' test to confirm it is safe to consume.

S.No. Parameter Fried noodles Non- fried noodles Test Parameter UOM Requirements Results
Arsenic(As) mg/kg Max. -1.1 <0.05
(a) Moisture (percent by mass), Max. 10 13.0
Cadmium(Cd) mg/kg Max. -1.5 <0.05
Acid insoluble ash (on dry matter
(b) 0.3 0.3 Tin(Sn) mg/kg Max. - 250 3.47
basis), Max %
Lead(Pb) mg/kg Max. -2.5 <0.05
(c) Acid Value, Max. 2 ---
Mercury(Hg) mg/kg Max. - 1.0 <0.025
Maggi Noodles In India
Maggi was an over 100-year old Nestle Brand consisting of instant soups, stocks, bouillons, ketchups, sauces, seasonings
and noodles. Nestle developed the Maggi product line to cater to changing consumer lifestyles and provide convenience to
the modern-day consumer on the go.
The company launched its Maggi instant noodle product line in India in the early 1980s, at a time when "buy & instantly
made" food category was at a nascent stage in the country. Indian consumer had conservative food habits, preferring to
eat traditional Indian dishes rather than canned or packaged food.
Initially, Nestle had to fight hard to gain acceptance for Maggi. But after numerous unsuccessful promotional attempts it
understood that it should position Maggi as a quick & healthy snack for children- convenient for mothers to prepare and
fun for kids to eat. It was promoted as an after school snack demanded by children with taglines like Mummy, bhook lagi.
This approach paid off.
Since then Nestle continued to make product and brand improvements to Maggi to ensure its continued relevance. It
adopted personal & evocative slogans like, "main aur meri Maggi" and "2 minute mein khushiyaan".
Maggi Noodles Safety Crisis : Timeline
March 2014 April 2015
A food-safety officer in the northern state of Uttar Pradesh(UP), On April 30, the UP authorities asked Nestle to recall its
collected samples of Maggi Noodles as a part of routine quality- February 2014 batch of Maggi Noodles, which consisted of
testing exercise, where they tested positive for the presence of 200,000 packages.
MSG, an ingredient that Nestle said it did not add to its product.
The state regulators issued a notice to the company setting out May 2015
its findings. The company responded to the recall stating, " Nestle India's
current practice is to collect stock that is near the 'Best Before'
July 2014 date from distributors/retailers, so we are confident that these
The regulator sent the samples for retesting to a federal packs are no longer in the market." The company also
laboratory in Kolkata. committed to undertaking a fresh set of tests conducted by
independent laboratories to verify results.
April 2015
The Kolkata Laboratory test results were released. They not only June 2015
confirm the presence of MSG, but also indicated a high lead The company announced results from testing conducted on
presence, at 17.2 parts per million(ppm). Government samples drawn from 125 million packages of Maggi Noodles
regulations prescribed lead limits ranging from 0.2ppm (for stating the noodles are safe to eat.
instant food) to 10ppm (for foods like baking powder, tea, dried
herbs, and spices.
June 2015
The FSSAI was unconvinced. It asked each of India's 29
states to test free Maggi samples. So, on June 5, Maggi
Noodles were banned nationwide by FSSAI. The National
Consumer Dispute Redressal Commission (NCDRC) filed a
law suit against Nestle India on behalf of Indian consumers.

Media Coverage
News articles were published with headlines like, "Maggi,
under regulatory scanner for lead, MSG beyond permissible
limit", "Maggi betrayal has broken our good Indian hearts",
Maggi controversy shows Indian consumers are taken for
granted" etc. Maggi faced a bitter trial by media and received
hate comments on social media platforms as well.
Stakeholders Affected:
• Consumers: Everywhere in the world, the Nestle name represents a promise to the consumer that product is safe and of
high standard. Due to crisis, it lost trust of the consumers and their right to informed choice and healthier diet was
compromised.
• Suppliers: Nestle contributes to improvements in agricultural production, the social and economic status of farmers, rural
communities. It expects them to demonstrate honesty, integrity and fairness and adhere to non-negotiable standards. As their
market share plummeted, several key suppliers, agents, subcontractors were impacted.
• Employees: Success of organization depends on its employees. Treating each other with respect and dignity and expect
everyone to promote a sense of personal responsibility are key values of Nestle. After crisis there was conflict between
employees' personal values, ethics and organization's values and ethics.
• Regulatory Authorities: Nestlé’s official reference method (ISO 17025), is used for the quantitative determination of ten
trace elements. After instant noodles crisis, FSSAI worked on new regulations for quality standards of instant noodles to
better regulate the quality of taste-makers and other ingredients.
• Shareholders: Share price fell from RS 7,039 on 8 May to Rs 6036 on 5 June, wiping out nearly Rs 10,000 crore from
Nestle's market cap. It took 18 months for Nestle to bounce back from the "near death" experience and to improve
shareholder's trust.
Actions Taken:
• Initially, the business denied the allegation, claiming on their website and social media pages that no product recall orders had
been issued.
• As the safety investigation in India progressed, Nestle continued to update its customers. On the Maggi Noodle's website,
Twitter, and Facebook page, Nestle declared that extensive testing had found no excess lead in Maggi Noodles.
• Customers who had questions about the amounts of lead and MSG in Nestle's noodles were reassured via the company's
social media accounts. The business persisted in assuring customers that the noodles are secure.
• Nestle launched a FAQ section on its main website.
• Maggi noodles were recalled by Nestle. The company reversed course and decided to remove Maggi noodles from the
shelves after reassuring customers that its noodles are safe. "We are working with authorities to clarify the situation, and in
the interim Nestle will remove Maggi noodles from shelves," CEO Paul Bulcke stated.
• After being deemed unsafe by authorities, Nestle made the decision to destroy Maggi Noodles worth more than $50 million
in India. Six weeks were given to Maggi to demonstrate its safety standards. It eventually passed the test and returned to the
shelves, but the road to regaining the consumer base was difficult.
• Nestle started over after the ban was lifted. Since then, it has introduced over a dozen products under the brand, aiding it in
regaining a significant amount of lost ground.
Result:
• According to Suresh Narayanan, chairman and managing director of Nestle's India, Nestle likely needed a shock like the ban
to shake it out of its complacency.
• In addition to letting go of its tendency to be a "closed company" when it comes to disclosing its business activities outside
of regulatory filings, Nestle India has also quickly adapted to the shifting conditions of the local market.
• Its employees now have a growth-oriented attitude and mindset, which is reflected in the fact that new product launches
(over 45) now account for more than a fifth of its growth.
• Their new motto is "Growth through Innovation and Renovation".
• To increase focus on the market, it has decentralised the decision-making process by creating 15 verticals that now target
specific geographies with their respective hyper-local strategies.
• At its height, the Maggi crisis had brought the number of retail stores carrying Nestle products down from 5 million to 3.2
million. The total has grown to 4.3 million over the last two years. Additionally, distribution cost rationalization has increased
margins.
Result:
• To connect the masses, they made the best use possible of social media. The websites that were initially used
to promote the product are now being used to uphold its reputation.
• Their communication, however, was sharp and formal during the crisis, lacking the human touch and the humility to
accept missteps.
• Maggi turned to the new era of information consumption, "Social Media," to actively engage with people once
it realized their misplaced ways.
• Nestle increased its advertising and promotional spending and diversified its digital media mix to launch the "We
Miss You Too" campaign, which put the focus on a group of Maggi followers who shared stories about their love for the
noodle in a Maggi-less world.
• Additionally, Maggi worked with renowned e-commerce site "Snapdeal.com" to create welcome kits, which included
a box with 12 packets of Maggi, some free gifts, and a letter of welcome back.
• Following a resoundingly positive response to the flash sale, Maggi held a number of online contests
where participants could share their thoughts and feelings about Maggi's comeback. Customers took part with a strong
sense of enthusiasm. Fans expressed their faith in Maggi on the brand's Twitter, Facebook, and YouTube pages.
References
• The Maggi Noodle Safety Crisis in India: Case Study by Harvard
• Crisis Management in the Food & Drinks Industry: A Practical Approach by Colin Doeg
• Maggie test results
• Nestle Quality and Safety
• News Article

• View attached appendices here- Appendices