No
Instant Karma Here
First
Mover Maggi still rules the roost, Johnnie-come-lately ITC has gained
significant ground, and HUL and GSK Consumer still have to get their act right
in the fast-growing instant noodles category
Some 26
years after Nestle launched Maggi noodles with its captivating two-minute
proposition, three big consumer products companies, Hindustan Unilever Ltd
(HUL), Glaxo-SmithKline Consumer Healthcare (GSKCH) and ITC, decided to test
the waters.
Almost three years after these three giants got into the fray, Maggi still rules the roost, with more than three-fourths of the 2,500 crore market in the bag, as of September 2012. ITC's Yippee has done well to grab a double-digit share. Top Ramen from Nissin Foods of Japan, which entered the country way back in 1988, has a 4.3% slice of the pie. But the two multinationals, HUL with Knorr and GSK with Foodles, have yet to show any substantial gains.
For a category that is growing at 20% annually, and in a country in which instant foods are beginning to catch on with India's burgeoning middle class, you'd expect plenty of action in noodles. As Devendra Chawla, president, food & FMCG at Future Group, says: "Noodles are no longer considered a processed food; it has become mainstream, a choice rather than a last alternative and has come to be accepted as a part of the regular household menu."
Why then have brands from reputed consumer marketers not been able to make a dent? The biggest shocker is Foodles, which has used the health plank as a differentiator. According to a recent Edelweiss research report, Foodles' contribution has dipped roughly 24% year-on-year and the company has shifted focus to niche multi-grain offering, which earns higher gross margins but does not compete in the mass noodles segment.
HUL, which has extended a soup brand into the category, may be having trouble convincing consumers that Knorr is also a noodles label, say analysts. "The soup imagery of Knorr has made customers think of it as a product that is consumed during winters," says an analyst tracking the foods sector who did not want to be named. An HUL spokesperson declined to comment when contacted, although HUL's annual report for 2011-12 does say: "Knorr soupy noodles managed to double the business during the year as the product has received good response from consumers across all the markets."
ITC, for its part, is pleased as a punch with the share it has garnered so far, and attributes its No 2 position to factors like quality, inter-business synergies and distribution strength. V L Rajesh, executive vice president & head of marketing, foods division, ITC says: "We did few things that are pretty oldfashioned really. Our hotels business has some of the most exceptional chefs in India today, and they have played a huge role in shaping our noodle offering." Rajesh adds that ITC's clout with distributors has also helped it reach consumers. "Distributors trust ITC. They know that if there is a product problem, we will take it back or we will find a solution to the problem."
Maggi, meantime, shows few signs of faltering, launching new variants — one of the newer ones is Maggi Masala Damdaar — and pulling out all stops to cement itself in the consumer mind space. In 2012, for instance, it signed on tinsel town superstar Amitabh Bachchan as brand ambassador. "Maggi is growing consumption by upsizing packs with various combo & multi packs," says Chawla.
If Nestle has to worry, it's less about the multinationals — at least for now — and more about regional players who have carved out handsome shares locally. One such marketer is CG Foods. The maker of the Wai Wai brand of noodles claims it is has been able to beat Maggi in the north east. G P Sah, global business head, CG Foods, claims that Wai Wai has a 65% market share in West Bengal and the north east.
Sah goes on to claim that Wai Wai is also the second largest noodles seller in India with a 16% share (he pegs Maggi's share at 62%). "Wai Wai sells 20 lakh packs of noodles per day. And I challenge any brand that claims to be second to Maggi, if they have the guts to declare their numbers publicly," declares Sah.
Nissin Foods, which has shuttler Saina Nehwal promoting the brand, is attempting to leverage its early mover advantage and its ability to put out variants like 'cup noodles’, 'mug noodles' and a curry variant in the market. "There is a huge opportunity in the Indian market and Top Ramen will develop products aimed at gaining more share. Our closest competition is Maggi, but they have been in the market for a longer time," says a spokesperson for Indo Nissin Foods.
The opportunity is indeed huge, what with instant noodles ceasing to be just a metro phenomenon and become popular in semi-urban and even rural markets. And the likes of ITC, which has made significant inroads into villages, are well placed to gain more ground. "We have the commitment to do what we should to become big in the market," says Rajesh.
Almost three years after these three giants got into the fray, Maggi still rules the roost, with more than three-fourths of the 2,500 crore market in the bag, as of September 2012. ITC's Yippee has done well to grab a double-digit share. Top Ramen from Nissin Foods of Japan, which entered the country way back in 1988, has a 4.3% slice of the pie. But the two multinationals, HUL with Knorr and GSK with Foodles, have yet to show any substantial gains.
For a category that is growing at 20% annually, and in a country in which instant foods are beginning to catch on with India's burgeoning middle class, you'd expect plenty of action in noodles. As Devendra Chawla, president, food & FMCG at Future Group, says: "Noodles are no longer considered a processed food; it has become mainstream, a choice rather than a last alternative and has come to be accepted as a part of the regular household menu."
Why then have brands from reputed consumer marketers not been able to make a dent? The biggest shocker is Foodles, which has used the health plank as a differentiator. According to a recent Edelweiss research report, Foodles' contribution has dipped roughly 24% year-on-year and the company has shifted focus to niche multi-grain offering, which earns higher gross margins but does not compete in the mass noodles segment.
HUL, which has extended a soup brand into the category, may be having trouble convincing consumers that Knorr is also a noodles label, say analysts. "The soup imagery of Knorr has made customers think of it as a product that is consumed during winters," says an analyst tracking the foods sector who did not want to be named. An HUL spokesperson declined to comment when contacted, although HUL's annual report for 2011-12 does say: "Knorr soupy noodles managed to double the business during the year as the product has received good response from consumers across all the markets."
ITC, for its part, is pleased as a punch with the share it has garnered so far, and attributes its No 2 position to factors like quality, inter-business synergies and distribution strength. V L Rajesh, executive vice president & head of marketing, foods division, ITC says: "We did few things that are pretty oldfashioned really. Our hotels business has some of the most exceptional chefs in India today, and they have played a huge role in shaping our noodle offering." Rajesh adds that ITC's clout with distributors has also helped it reach consumers. "Distributors trust ITC. They know that if there is a product problem, we will take it back or we will find a solution to the problem."
Maggi, meantime, shows few signs of faltering, launching new variants — one of the newer ones is Maggi Masala Damdaar — and pulling out all stops to cement itself in the consumer mind space. In 2012, for instance, it signed on tinsel town superstar Amitabh Bachchan as brand ambassador. "Maggi is growing consumption by upsizing packs with various combo & multi packs," says Chawla.
If Nestle has to worry, it's less about the multinationals — at least for now — and more about regional players who have carved out handsome shares locally. One such marketer is CG Foods. The maker of the Wai Wai brand of noodles claims it is has been able to beat Maggi in the north east. G P Sah, global business head, CG Foods, claims that Wai Wai has a 65% market share in West Bengal and the north east.
Sah goes on to claim that Wai Wai is also the second largest noodles seller in India with a 16% share (he pegs Maggi's share at 62%). "Wai Wai sells 20 lakh packs of noodles per day. And I challenge any brand that claims to be second to Maggi, if they have the guts to declare their numbers publicly," declares Sah.
Nissin Foods, which has shuttler Saina Nehwal promoting the brand, is attempting to leverage its early mover advantage and its ability to put out variants like 'cup noodles’, 'mug noodles' and a curry variant in the market. "There is a huge opportunity in the Indian market and Top Ramen will develop products aimed at gaining more share. Our closest competition is Maggi, but they have been in the market for a longer time," says a spokesperson for Indo Nissin Foods.
The opportunity is indeed huge, what with instant noodles ceasing to be just a metro phenomenon and become popular in semi-urban and even rural markets. And the likes of ITC, which has made significant inroads into villages, are well placed to gain more ground. "We have the commitment to do what we should to become big in the market," says Rajesh.
Preethi
Chamikutty ET121128
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