Product details

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Subject category: Marketing
Authors: Avil Saldanha (St. Joseph's Institute of Management, Bangalore); Rekha Aranha (Christ University)
Originally published in: 2019
Revision date: 19-Feb-2019

Abstract

The Maggi crisis was a result of poor public relations management by Nestle India. Nestle claimed that it was factually right in claiming that it did not add MSG and the detection by Indian Food Regulators was that of Glutamate which naturally occurs in many food products. On the critical issue of higher than permissible lead content in the taste maker accompanying Maggi noodles, Nestle argued that the test should be conducted on prepared noodles and not on the taste maker alone. The Indian Food Regulators disagreed on this aspect and insisted that the test will be conducted separately on the noodles and taste maker. Even though this stand was illogical, Nestle faced the brunt by having to destroy more than 37,000 tons of Maggi noodles which accounted for more than Rs 500 crore (USD77 million) due to the ban. The whole crisis was escalated by media trial, witch hunt by regulatory authorities, panicky central and state governments. Nestles failure was due to mismanagement of consumer perception. Nestle forgot the basic rule of consumer behavior ie 'Consumer Perception is Reality'.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Time period

The events covered by this case took place in 2014-2015.

Geographical setting

Region:
Asia
Country:
India
Locations:
Uttar Pradesh; Kolkata; Gorakpur; Barabanki; Bombay

Featured company

Nestlé
Employees:
10000+
Turnover:
CHF 231 billion
Type:
Public company
Industry:
Food and beverage

About

Abstract

The Maggi crisis was a result of poor public relations management by Nestle India. Nestle claimed that it was factually right in claiming that it did not add MSG and the detection by Indian Food Regulators was that of Glutamate which naturally occurs in many food products. On the critical issue of higher than permissible lead content in the taste maker accompanying Maggi noodles, Nestle argued that the test should be conducted on prepared noodles and not on the taste maker alone. The Indian Food Regulators disagreed on this aspect and insisted that the test will be conducted separately on the noodles and taste maker. Even though this stand was illogical, Nestle faced the brunt by having to destroy more than 37,000 tons of Maggi noodles which accounted for more than Rs 500 crore (USD77 million) due to the ban. The whole crisis was escalated by media trial, witch hunt by regulatory authorities, panicky central and state governments. Nestles failure was due to mismanagement of consumer perception. Nestle forgot the basic rule of consumer behavior ie 'Consumer Perception is Reality'.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Settings

Time period

The events covered by this case took place in 2014-2015.

Geographical setting

Region:
Asia
Country:
India
Locations:
Uttar Pradesh; Kolkata; Gorakpur; Barabanki; Bombay

Featured company

Nestlé
Employees:
10000+
Turnover:
CHF 231 billion
Type:
Public company
Industry:
Food and beverage

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