A day after Nestle withdrew Maggi noodles from sale in India due to “an environment of confusion for consumers”, following a food scare sparked by reports of excess lead in some packets of the popular instant snack, the FMGC major has rushed into a series of knee jerk responses that hardly amount to damage control.
The company has reportedly asked its company officials to engage directly with stakeholders, dealers and tradeholders, but not to talk publicly about developments A report in the Economic Times says “Any engagement needs to be approved and vetted by the company’s legal team only.” There is also a new section on its website—Maggi Noodles in India—with a detailed FAQ to deal with the concerns of consumers and other stakeholders.
Even today’s statement withdrawing the product hit an arrogant note, seemingly blaming the “confused” customer for the decision rather than concerns about food safety.
“The trust of our consumers and the safety of our products is our first priority.Unfortunately, recent developments and unfounded concerns about the product have led to an environment of confusion for the consumer, to such an extent that we have decided to withdraw the product off the shelves, despite the product being safe.”
Now comes news that Nestle India will be holding a press conference to address the issue — a move that seems overdue given that its chairman Etienne Benet has not issued any personal statement of support for his own product.
The press conference, to be held this afternoon, will have to undo the damage wreaked by not just the food safety scare but also Nestle’s own response so far.
On the question of how the test results could have shown MSG when the Maggi label states that there is “no added MSG’” Nestle India responds: “We do not add the flavour enhancer MSG (E621) to Maggi noodles in India. However, the product contains glutamate from hydrolyzed groundnut protein, onion powder and wheat flour. Glutamate produces a positive result in a test for MSG.”
This is hardly convincing or reassuring for a layperson.
Even Nestle’s social media damage control attempt has fallen flat on its face as its automated Twitter response and sharing of heavy text files in no way established an emotional connect with its target audience.
“I think they’re being advised badly. When someone interacts with a brand online, they expect a human response rather than a robotic one. This is typical of FMCG (fast-moving consumer goods) brands. They seem to have lost the plot by posting PDF files on twitter. Most Twitter users access it through the phone. Who is going to see a PDF file on their phones?” Mahesh Murthy, founder of Pinstorm, a digital brand management firm, is quoted as saying by Mint.
“”India is an emotional country… the reaction to this issue can’t be clinical or detached, which is how it is coming across so far,” a CEO of a top multinational consumer goods firm, was quoted as saying by ET.
Even brokerages have turned bearish on the stock.
“We believe the recent events have dented the brand image of Maggi while the company has to step up its advertising and promotional spend significantly to neutralise the impact of this controversy. We have a cautious view on the stock as we expect volume growth to remain under pressure,” ICICI Direct said in a report.
Kotak Institution agrees that the current controversy will result in a medium-term consumer confidence crisis.
“The event has certainly dented the iconic brand’s public perception/trust… and should make investors question the ‘quality premium’ attached to the company. A misplaced India strategy in recent years and sub-par EPS growth delivery have failed to impact this premium,”noted Kotak.
Phillip Capital downgraded Nestle to “sell. “If the allegations prove to be true, Nestle will face a hefty penalty, complete erosion of brand value, and considerable loss of market share in instant noodles,” it said.
In fact, this is not the first time Nestle has been involved in controversy. Over the years, one of the world’s biggest FMGC brands has often been termed as ‘arrogant’ for its corporate social responsibility actions. Back in 2010 Nestle was mired in a PR nightmare when environmental group Greepeace held that the company’s KitKat chocolate brand contained palm oil, whose production was leading to destruction of rainforests in Indonesia. Greenpeace put pressure on Nestle to discontinue buying palm oil from its supplier Sinar Mas, which was alleged to have involved in illegal rainforest clearance in Indonesia by a massive social media protest campaign.
Greenpeace put out a video parodying the Have a Break, Have a Kit Kat slogan, where a bored office worker bites off a finger of Kit Kat that turns out to be the bloody digit of an orang-utan, one of many species threatened by unsustainable forest clearing for palm oil. Rather than settint its policy straight on palm out, Nestle first tried to force YouTube to pull down the video, which led to further social media backlash.
The tag line of the video was Kit Kat Killer.
Nestle’s Facebook page was overrun with people begging Nestle to stop using palm oil and killing the orangutans. Rather than acknowledging the comments Nestle deleted many of them and posted the following message.
“To repeat: we welcome your comments, but don’t post using an altered version of any of our logos as your profile pic—they will be deleted,”
This caused Greenpeace to then post the video on Vimeo, another social media website.
What Nestle needed to do was limit the immediate damage by engaging with its critics and addressing some of their concerns rather than trying to shut them down. Finally the company did commit to stop using products that come from rainforest destruction, appointed an independent NGO to verify the credentials of all of its raw material suppliers and set up a digital acceleration team to monitor social media sentiment 24 hours a day. Perhaps, its Indian arm could have learned a lesson or two from this experience for its current campaign clearly lacks a smart crisis management strategy.
As Firstpost noted earlier, the closest comparisons to the Maggi controversy are perhaps the PR debacles that hit Cadbury and Pepsi and Coca Cola.
“In Cadbury’s case, when worms were found in its flagship brand Dairy Milk chocolates in 2003, its sales reportedly dropped a whopping 30 percent at the height of the festival season. But the company hit back months later by investing Rs 15 crore on machinery to revamp its packaging, roped in Amitabh Bachchan to endorse the product and increased their advertising spending by 10 to 15 per cent for a quarter.
When Pepsi and Coca Cola were confronted with allegations that its aerated drinks had injurious levels of pesticide, the beverage giant responded by introducing special seals that assured consumers of the product’s safety. This measure was accompanied by advertisement campaigns with A-list brand ambassadors like Aamir Khan touting its safety.”
So where are the billboards or loud marketing campaigns with a celebrity touting its safety despite the company claiming to have tested 500 samples across batches? Why hasn’t the India chairman released a video of himself eating Maggi noodles, guaranteeing its safety? Despite, Future Group, Walmart and More taking Maggi off their shelves, there were no regular updates and advisories from Nestle for its retailers.
” Nestle needs to be more proactive in its engagement for sure. Social media use was suboptimal. Can still be rectified but the withdrawal of Maggi is a good action. It will assuage ‘sentiment’ on this issue. Expensive action as well. it will possibly cost the company all of Rs 250 crore. But this money is worth it,” brand expert Harish Bijoor told Firstpost.
The Maggi crisis is Nestle’s biggest PR disaster in the age where social media gives its verdict even before the authorities have decided whether a product is safe or not. Nestle could have used its social media team to reach out to the customer to re-brand itself. But yet again what came across was a tone that was arrogant and sarcastic— not what resentful, die-hard Maggi fans want to hear right now.
This article was taken from here.