Expert Take: Pranesh Misra, CMD, Brandscapes Worldwide

The more the merrier

Monopoly is not always good. Competition is essential for stimulating growth. Without competition market development is a lonely and tortuous task.

Maggi was launched in instant noodle category way back in early 1980s. Today it dominates the category with around 85 per cent share, but the category has grown to a mere Rs 1,300 crore in 30 years. Not a huge category for a country with over a billion mouths to feed! Compare this with the market sizes and growth of high competition categories like consumer and household durables, automobiles, two wheelers, insurance, mobile telephony and online matrimonial and travel, to name a few.

That the instant noodles category is growing at 15 per cent currently is thanks to arrival of serious competition from organised players. Competition has led to a spurt in advertising claims and counter claims. As Maggi literally owns the category, competitors have positioned themselves against Maggi. This has not been easy, as Maggi has established its equity with both kids and mums with its “taste bhi health bhi” positioning and has built a formidable portfolio of products. Maggi has preempted most possible innovations within the category in terms of packaging (small unit packs), health (atta noodles, soupy noodles), convenience (2-minutes and Cuppa Mania) and pricing (low unit price packs).

Forced to find a differentiated proposition, competition is grasping at straws. Some have attacked on taste by implying that Maggi is sticky and dries up quickly. Others have made non-serious benefits like shape of the noodle their unique advantage. None of these are convincing enough to encourage switch. There will be trial, but this is largely due to familiarity of the mother brands. Horlicks, Knorr and Sunfeast are strong food master-brands. A noodle from these brands will definitely generate enough curiosity to encourage trial. Doubtful if it will ensure brand switch.

Competition may win some ground through distribution and market activation. ITC and HUL are pioneers with huge distribution reach — and would leverage this advantage. Most organised competitors have strong market activation muscle, which will translate to lot more energy being spent at the point of sale. All this will lead to rapid category growth. Although Maggi’s share might drop, it could experience higher growth as a result of this competitive activity.

Competitors should start looking for ‘blue ocean’ strategies, rather than focusing on Maggi. They would benefit more in the long run, if they explore new ways to expand the category.