Nestle relaunches Maggi, partners with Snapdeal for online sales

The snack that used to be savoured throughout India is back. Nestle's Maggi noodles went back on shop shelves on Monday, five months after being banned over allegations by the food regulator that it contained excessive lead and mislabelling over flavour enhancer monosodium glutamate (MSG).

Maggi's return brought to an end the biggest food recall exercise in India, which cost NestleBSE -2.00 % Rs 450 crore and the destruction of more than 30,000 tonnes of Maggi noodles.

This followed the June 5 order of the Food Safety and Standards Authority of India (FSSAI). "The rollout has begun today. It has been a challenging period for Nestle, and therefore, there is a feeling of satisfaction at bringing back Maggi noodles to the market," Nestle India Chairman Suresh Narayanan said at a briefing in New Delhi on Monday.

After having been caught off guard by the controversy and a consequent delayed response, the company went into damage-control mode, getting veteran Narayanan back to India to head its local unit as it pushed to get one of its biggest brands back into stores.

Nestle India reported a standalone loss of Rs 64 crore in the second quarter ended June, the first time it had done so in the last three decades, on account of the ban on the Rs 2,000-crore plus brand. Net profit fell 60% to Rs 124 crore in the third quarter, while net sales dropped 32%. In addition to stores, the Indian arm of the Swiss foods giant has partnered with online marketplace Snapdeal to sell Maggi noodles, the first time it's taking sales online. Nestle reported that stocks in markets such as Kolkata were sold out within hours of its return.

The product -- unchanged, apart from labeling — has been relaunched in 100 towns through 300 distributors. Maggi noodles aren't available in eight states where bans are still in force but the company is working with the authorities to resume sales.

"We will not introduce Maggi in these states till we have done the due diligence," Narayanan said. The firm said it's in touch with channel partners and distributors to ensure the rollout of Maggi across all distribution points. Narayanan said Nestle will step up spending incrementally to regain consumer confidence.

"There is a consumer challenge and I am quite transparent in admitting it," he said. "But our core foundation has always been quality and safety and we will work very hard to rebuild trust among those consumers. I know that it's not going to be a smooth ride."

Nestle is manufacturing Maggi noodles at three locations -- Nanjangud (Karnataka), Moga (Punjab) and Bicholim (Goa). It said Maggi samples have been cleared by three accredited labs mandated by the Bombay High Court. Nestle had said on October 26 that it had resumed manufacturing the product.

It's awaiting clearances to make Maggi at its Uttarakhand and Himachal Pradesh plants. FSSAI had banned sales of Maggi noodles in June, calling it "unsafe and hazardous," sending shock waves through the processed foods industry. Nestle had announced the voluntary recall of Maggi noodles the same day. The consumer affairs ministry filed a class action suit against Nestle at around the same time, seeking damages of Rs 640 crore for alleged unfair trade practices, false labeling and misleading ads.  This was the first time the ministry had taken a company to the National Consumer Disputes Redressal Commission (NCDRC).

"This case is unfortunate and we will defend ourselves in the best possible way," Narayanan said. Parent firm Nestle SA reported a 2.5% decline in consolidated net profit to 4.51 billion Swiss francs for the first half of 2015, citing the Maggi incident in India. The company said it has conducted 3,500 tests representing over 200 million packs at both national and international accredited laboratories for testing and all reports are clear.

"Various countries including USA, UK, Singapore and Australia have found Maggi Noodles exported from India safe for consumption," it said. On November 4, Nestle had announced that fresh stocks of Maggi noodles were safe for consumption. Maggi used to be Nestle India's biggest brand, accounting for about 30% of sales at the company, which also makes KitKat chocolates and Nescafe coffee. Net sales fell 32% to Rs 1,736 crore in the quarter. The Bombay High Court revoked the ban on Maggi on October 19. Nestle said that all 90 samples, covering six variants tested by laboratories, had lead well below the permissible limits.

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