In the last few months, the challenge to Nestle’s Maggi has come from various quarters. The fiercest however has come from two key rivals — Hindustan Unilever (HUL) and GlaxoSmithKline (GSK) Consumer. Their brands: Knorr and Foodles, respectively.
True, Maggi is still sitting pretty in the Rs 1,300 crore instant noodle category with over 85 per cent market share where GSK with Foodles and HUL with Soupy Noodles have got 5 per cent and 2 per cent share, respectively. For Soupy Noodles, the share pertains to the south only, where it was first launched in March this year, while GSK’s pertains to the south and east — again markets where the company launched Foodles in December last year.
But Maggi is feeling the real heat in new categories, mainly from Knorr — a brand it has been fighting with in quite a few segments in recent years. The signs are clearly visible.
Take soups, for instance. Maggi’s Achilles heel has been Knorr, which has a 60 per cent share of the market, according to an HUL spokesperson. Though Nestle India’s General Manager, Foods, Shivani Hegde declines to give market share figures of Maggi soups, analysts say it is half of Knorr’s, at about 30 per cent.
Then there are cooking aids. HUL’s vice-president & head, processed foods, Sidharth Singh, and Nestle’s Hegde decline to give market share figures of their respective products in this category as well, but analysts peg the overall segment at Rs 50 crore, with both rivals doing their bit to get visibility here. HUL’s Singh says, “We have identified 14 family favourites, basically meals that a family would love to have together, packaged the ingredients and condiments that go into making the dish, thereby helping the lady of the house prepare it. This is in stark contrast to the masalas that are available in the marketplace. Let me tell you that we are speaking of ready-to-cook products, not masalas alone.”
Nestle’s Hegde, meanwhile, responds, “Maggi has the strongest and widest portfolio of products. In cooking aids, we have Maggi Bhuna Masala and Masala-ae — Magic. This not only helps make everyday meals tastier, but also provides the micronutrients that are essential for good health.”
But the face-off doesn't end there. The two giants are likely to compete in a new category — pasta. According to industry sources, HUL is contemplating an entry into the Rs 100-crore pasta market in the future — a segment Maggi forayed into end last year. HUL’s Singh says this is purely in the realm of speculation at the moment. “I cannot comment on the segments we are getting into in the future. Right now our focus is on the existing categories we are in.”
Even then it would be interesing to see how the two giants compete with each other in new categories. Hegde says, “We are accelerating the market to build a bigger cake. It is fine if others try and add to this activity.”
Singh, on the other hand, says that Knorr is a key pillar to its overall foods business. “There are three pillars to the business - Knorr, which plays in the savoury space, Kissan, in spreads and dressings, and Annapurna, in staples. “Our attempt is to build all of them. But yes, we have covered a fair bit of ground with Knorr in the last few years moving from soups to meal makers, and now soupy noodles. The work will continue,” he says.
Analysts couldn’t agree more. “The over 20 per cent growth that HUL is seeing in foods over the last two quarters has been driven largely by Knorr and Kissan,” says Anand Shah, senior FMCG analyst, Angel Securities.
Foods, for the record, contributed just 4 per cent to HUL’s FY10 turnover, which was close to Rs 18,000 crore, according to its annual report. Of this, estimate analysts, Knorr contributed about 1.2 per cent, which is roughly Rs 200 crore.
Maggi, in contrast, is a bigger brand, say analysts, having contributed 25 per cent to Nestle’s Rs 5,149 crore turnover in CY09. “So the gap between Knorr and Maggi is still huge,” says Shah of Angel Securities. “Maggi has been around for over 25 years. It has built the category of noodles and has then proceeded to extend into newer segments. Knorr, on the other hand, has been a more recent entrant in the food space. Above all, the association of Knorr with soups is very strong in India. That explains why it is the market leader in soups.”
Singh admits to Knorr’s soupy heritage. “We don’t deny that,” he says. “But we do want to make the brand big in India,” he adds.
