Crisis is good time to make changes in company: Nestle India CMD on lessons from Maggi fiasco

New Delhi: Crisis is a very good time to make changes in a company, jettison things that are not adding value and put those that serve the purpose, Nestle India's outgoing Chairman & Managing Director Suresh Narayanan said as he shared the lesson learnt from the Maggi crisis that hit the company a decade ago.

Narayanan, who will retire at the end of this month after leading Nestle India for a decade and turning the company around from an existential crisis to a thriving business, in an interview with PTI said when there is "any movement in the environment, a company should be on top of it in terms of gauging how impactful it is going to be".

The company's popular instant noodles Maggi was banned by the food regulator FSSAI in June 2015 for allegedly containing lead beyond permissible limits, forcing the company to withdraw the product from the market.

Narayanan who was then serving as Chairman and CEO of Nestlé Philippines, was immediately moved to India by the Swiss food multinational to handle the crisis. He joined Nestle India on August 1, 2015, as Managing Director, and Maggi was relaunched in November 2015, five months after the ban was lifted.

When asked about what lessons were learnt from the Maggi crisis, he said, "Crisis is a very good time to make change. You can jettison all the things that are not serving the purpose of adding value to the consumer and put in things that add value to the consumer." Remembering his experience during the Maggi crisis, he said his first 100 days had been one of the greatest challenges of his career.

"I came into Nestle at a very troubled time. It was probably the existential crisis that was happening. It was one of those situations where Maggi was at the centre of all the news in the business world of India," he noted.

Recollecting the experience, Narayanan said, "A crisis of this kind is more than technical facts. It is perspectives and perceptions that matter. Our initial response was more on facts, whereas we underestimated that Maggi as a brand was so much more impactful with the consumers."

Therefore, he said, "When we started the conversation, not only with the environment, but also with the media, we brought to bear the power of the brand and what we stood for as a company that is of the highest food quality and safety."

Second one, Narayanan said, "I think we learned a lesson that any movement in the environment, a company should be on top of it in terms of gauging how impactful it is going to be."

According to him, it was the trust of brand Maggi and the collective strength of its employees, partners, distributors, suppliers and consumers that helped the company bounce back with a renewed vigour.

"We accepted the dictum that failing to succeed will help us to succeed," said Narayanan, often called the "crisis manager" of Nestle who steered Nestle from crises in several other markets such as Egypt and Singapore besides the Maggi incident in India.

After the Maggi crisis, Nestle India quickened the pace of innovations, added Narayanan who is hanging his boots on Thursday after having a 26-year-long stint with the Swiss multinational Nestle.

Elaborating further, he said, "We were an innovative company, but rather slow in innovation. So today we innovated about four times the rate of what we were doing pre-crisis. We have introduced almost 150 to 160 new products.”

Now the Rs 20,000 crore FMCG company is stronger, vibrant and connected, added Narayanan, It again got its pole position in the fast-growing instant noodles segment, where it still dominates with over 60 per cent market share from near extinction.

"It's the only example of a brand that went from market leadership to death and back to leadership in three months time and from then on it has been a journey that has been upwards despite the crisis that we have faced," said he noted.

Nestle India's turnover is now about 2.5 times what it was in 2015 and our profits are about five times what it was in 2015, before the Maggi crisis.

"Our market capitalisation is about 4 times what it was in 2015. Our number of shareholders is about 7 times," he said, adding, "our return of equity, which is a measure of the performance of the company went up from 19 per cent to almost 90 per cent."

Overall, the proportion of new innovations, which was around 1 to 2 per cent of the turnover, went about 7 per cent now.