In June 2015, the Indian subsidiary of Swiss food giant, Nestle, found itself entangled in a crisis that questioned the safety of the product. This was after India’s food regulatory body, Food Safety and Standards Authority of India (FSSAI) ordered a recall of all the nine variants of Nestlé’s Maggi noodles and a halt in all commercial activities relating to the product.
The orders by the regulatory body had been issued after the body claimed to have found traces of lead and monosodium glutamate (MSG) in samples of the noodles, in amounts beyond those permitted by Indian law. The company was ordered to recall hundreds of millions of the noodles from store shelves and to destroy tonnes of the same, a move that cost Nestle losses estimated to be between $40 million and $60 million. Nestle was ordered to desist from any further production, processing, import, distribution and sale of Maggi with immediate effect.
Nestle was also slapped with a $99 million lawsuit for damages provided for by the Indian Consumer Protection Act. The suit cited unfair trade practices, the sale of defective goods and the sale of a product without approval. The company’s quarterly profits dropped 60%, a first in at least 17 years for the food company with the one of the largest revenues in the world.
The company was also grappling with its worst public relations crisis, with analysts reporting a fall in its consumer confidence with brand analysts estimating a fall in the value of the Maggi brand by 30-40%.
However, the company moved to court to have the regulatory orders set aside, a prayer that was granted by the Indian court after sample tests showed the products to be safe for human consumption.
Measures were taken by Nestle in an effort to mitigate the damage caused by the crisis and to reclaim consumer confidence and market share. According to a Euro monitor report, Maggi noodles had accounted for 60% of India’s noodle sales in 2014. The percentage had since fallen after the crisis, with competitor rivals taking advantage of the crisis to make more sales.
What strategy is Nestle applying to save its reputation?
1.Appointing a Public Relations Firm
American public relations firm and lobbying giant, APCO Worldwide, was appointed by Nestle to help overcome the widespread backlash against its flagship Maggi brand. The firm was also mandated with the task of creating a positive opinion among different stakeholders.
2.Change in Leadership
The Swiss food and beverage giant also replaced the head of its Indian operations. This appointment came against the backdrop of increased criticisms for its slow response to consumer worries over safety. The company had been upbraided for not doing enough to defend the product when questions were being asked.
3.Address by the company’s chief
The Company also flew down its global chief executive, Paul Bulke, to India to address the media and allay fears about the safety of its products. Nestlé’s India stock regained slightly after the chief executive’s statement, the share having dropped four days in a row.
Nestle also embarked on a series of online advertisements, particularly on YouTube. This was a good move especially in this digital era where consumers can easily access the Internet. The company’s managing director was explicit in stating that it will be using consumer engagement and digital marketing platforms to re-establish consumer trust in the product before bringing the popular instant noodles back to the table by the end of the year.
Talking about the measures to be taken by the Swiss food major, he said, “The entire consumer engagement landscape is changing. Going forward, we are setting up robust and far-reaching consumer engagement platforms and compelling digital marketing platforms. It’s a question of re-establishing the primacy of trust in the brand.”
It was clear that the company prioritized on consumer trust.
Social media advertisements was another move by the company. It ran advertisements on social media, with the hash tag #WeMissYouToo, engaging the consumers emotionally from a nostalgic perspective and leveraging the benefits that come with social media platforms.
The Swiss food giant also placed advertisements on widely circulated newspapers. The advertisements emphasized on consumer trust, asking those who wished to return Maggi packets and be reimbursed the value of the collected packets to do so.
The Company’s website was also updated to contain answers to the frequently asked questions on the events around Maggi noodles and the crisis. The website contained resources of information that provide more details on specific topics, such as, the testing methodology used by Nestle and contact details for consumers who may have any questions regarding Nestlé’s products was provided.
Another topic provided for, was the overview of the full sequence of events, from the moment the concerns about Nestlé’s products in India were first raised, to the moment all the three NABL (National Accreditation Board for Testing and Calibration Laboratories) found the Maggi noodles safe for consumption.
This move to update the company’s website was particularly good especially at a time when consumers rely on information posted online to make decisions. It also serves well at a time when many companies are choosing interactive media to communicate with and retain their consumers.
The managing director had indicated plans for the company to set up 24×7 toll-free consumer services in order to “get the connect with the consumer.”
Regaining customer confidence is not easy once the consumers have a negative perception of a brand. It will be interesting to see if Nestle manages to make a comeback and reclaiming its market share.