By Tharuniyaa Lakhsmi | 11 November 2024

Demand for Nestlé India’s popular noodle brand, MAGGI, weakened over the slow growth of the FMCG sector.

The fast-moving consumer goods (FMCG) market, includes everyday products like food, beverages, and personal care items. The FMCG market has recently experienced a slowdown due to inflationary pressures and changes in consumer behavior.

The flagship brand’s contribution to Nestlé’s total revenue of Rs. 191 billion declined from 18% to 14% in FY 2023. Analysts estimate MAGGI’s contribution to Nestlé’s total revenue to be 11-13% in the current fiscal year.

“Reason behind falling demand for MAGGI is due to the FMCG market facing a slowdown,” said an analyst
from Motilal Oswal Financial Services Limited. Inflation, increased competition and the rise of quick commerce apps are also impacting demand, he said.

The double-digit growth of the food-beverage (F&B) sector has slumped to single-digit growth of 1.5%-2% as compared to the previous quarters, said a spokesperson from Nestlé India. Demand for MAGGI in metro cities has declined but rural demand remains stable, he said.

“MAGGI still occupies major shelf space in most retail stores but faces stiff competition from competing brands such as ITC’s Yippee and Nissin’s Top Ramen,” said a retail expert on the condition of anonymity.

Buyers are moving towards more affordable and local brands as Nestlé hiked MAGGI prices and reduced the quantity of the product to keep pace with inflation, said another analyst, who did not want to be named.

“Competitors are offering heavy discounts and bundle offers, making it tough for MAGGI to stand out,” said the retail expert. “While MAGGI has a loyal following, it is hard to justify the higher price point in such a price-sensitive market,” he said.