Nestlé India Limited: Maggi Noodles at War with The Regulators

On May 21, 2015, food inspectors in the North Indian state of Uttar Pradesh tested Maggi instant noodles that had been manufactured by Nestlé India Limited. Their results led them to declare that the samples contained higher-than-permissible levels of monosodium glutamate and lead — substances that could, at those levels, potentially cause harm to consumers. The well-known brand accounted for 26 per cent of Nestlé India Limited’s annual revenue, and the subsequent recall was a source of controversy. The recall was one of the biggest business stories of the year in India and was estimated to have cost Nestlé India Limited US$50 million. The company’s response to the problem ranged from inaction and denial to attempts at rectification and redemption. The overall actions of the company were characterized by confusion regarding product safety and contradictory statements about the accusations that had been made against it. Given the material losses and the damage to both the Maggi and Nestlé India brands, the company wanted to know how the situation could be corrected — and avoided — in the future. Was the Food Safety and Standards Authority of India correct to recall Maggi noodles? Once the crisis was in motion, how could Nestlé India Limited have handled the situation to appease customers, regulators, and stakeholders?

This case is ideal for graduate students in courses that focus on regulatory environments, business environments, and marketing. After completion of the case, students will be able to:<br><ul><br><li>Understand the facts of the situation in light of the regulatory framework in India for ensuring adherence to food quality standards.</li><br><li>Examine the situation with respect to established international norms on food quality assurance.</li><br><li>Discuss the appropriateness of the company’s response to the crisis.</li><br><li>Identify possible means by which the company could have avoided this situation or minimized damage.</li><br></ul>

• crisis management, regulatory framework, brand dilution, sanitary measures