Nestlé’s Maggi has been synonymous with instant noodles in India for a long time now. So despite the entry of Hindustan Unilever (Knorr Soupy Noodles), IndoNissin (Top Ramen), GlaxoSmithKline (Horlicks Foodles)and ITC (Sunfeast Yippie), the Swiss major has remained the undisputed king with around 80 per cent share in the Rs 2,000 crore branded noodles market that is growing at 25-30 per cent annually.
Analysts say none of the other players are yet a real threat to Maggi, though collectively, they would have chipped away some share from it. That’s reason enough for Nestle executives to be supremely confident. A Nestle India spokesperson says, “exact market shares are irrelevant because Maggi virtually denotes the instant noodles category”.
That might be so till now. But Maggi is all set to face its toughest challenge yet from Sunfeast Yippie, which according to ITC Chairman Y C Deveshwar, has already grabbed around 10 per cent market share in just a few months of its launch. In the process, Yippie has become the second largest player ahead of Top Ramen’s 7 per cent. The others are still scraping the bottom of the barrel.
ITC, which had hoped that its plant in Pune would be enough to cater to the demand for the next 15 months, is already running at full capacity. The company is not only expanding the capacity in this plant but is setting up two new plants in the north and east to meet the demand surge.
But how did ITC manage to do this so fast? Chitranjan Das divisional chief executive, foods division of ITC, says more than half the consumers who tried Yippie have gone in for repeat purchases.
Das says ITC studied the behaviour of consumers of Maggi and other competing products for two to three years just to understand whether there was some disconnect about the products in consumers’ minds. The company found three things: one, some of the noodles in the market become sticky if they are not consumed early. Two, children prefer to slurp noodles while eating and therefore prefer a longer noodle than what was available in the market. And three, many kids add sauce to enhance the taste and look of noodles.
Das says that ITC leveraged its culinary strengths - chefs from the ITC Welcomgroup hotels to get the right mix for the product. So one innovation was to offer round-shaped noodles so that the size could be longer. Secondly. the company decided to have two different flavours within the masala category — Classic Masala and Magic Masala that has a tinge of tomato both in terms of colour and flavour. Kids who added sauce to the noodles earlier are the obvious target group.
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The third innovation was usage of new drying technologies to ensure that the noodles do not go sticky. Research had also showed that many consumers garnish noodles - so ITC decided to add some vegetable garnishing to its noodles.
In keeping with its policy of not splurging on advertising, Yippie depended on word-of-mouth and was sampled by over 2 million consumers across the country before its launch.
To begin with, ITC is concentrating on only those towns that have a population of over 100,000. The next target would be to go to places with a population of 50,000 and above. Analysts say that ITC’s big plus is its distribution. Pinakiranjan Mishra, partner and national leader, retail and consumer product practice, Ernst and Young says, “ITC has a very strong distribution, hence its noodle brand will play on this strength. However what will determine success is essentially the quality and taste of the product”.
ITC’s competitors of course are not sitting quiet. MNVV Prasad, GM Sales & Marketing of Nissin, says, “Nissin distributed its products through HUL and Marico from 1991 to March 2008. From April 2008 onwards we started our own distribution network. Our challenge is distribution of a single product across the nation. But we have made it and are growing our distribution continuously”, Prasad says. The company has roped in badminton star Saina Nehwal to endorse Top Ramen noodles.
Nestle on the other hand is fortifying its new health and nutrition platform associated with noodles under its “Taste Bhi Health Bhi” platform. So it offers noodles enriched with protein and calcium and also in atta.
Health platform is something Yippie has still not tried. That is because ITC does not want to expand the portfolio too much for the time being. Besides, Das says “health-based noodles constitute just 3 per cent of the total market. We will look at it later. We will also look at regional variations in taste.”
This of course would also mean that Yippie has to go just beyond the two pack sizes which are available for Rs 5 and Rs 10. “Our next phase is to go for larger pack size like family packs” says Das.
For over two decades, Nestle has been able to keep all its competitors behind by a long distance in the noodles market. Can ITC narrow the gap?