Road Ahead For Nestle With Maggi Poised to Make a Comeback
Regaining lost sales will be the first objective for Nestle, followed by the relaunch of Maggi instant noodles.
Maggi looks set to finally make a comeback as the 2-minute noodles cleared three lab tests mandated by the Bombay High Court, Nestle said on Friday.
Following the announcement, Nestle India shares jumped 6.1 per cent. The stock has already gained significant ground from the fall since end-May when the controversy erupted, and is now just 7 per cent short of its May 28 price.
With Nestle poised to walk away from the government’s ongoing class action lawsuit, The Mint outlines the road ahead for the company.
Regaining lost sales will be the first objective for Nestle, according to the report, followed by the relaunch itself.
Initially, there will be a surge in sales as the company refills shelves. But repeat consumption is what matters, and noodles don’t just sit on the shelves. Sales need to go back to earlier levels, even after the promotions end.
And, then, there is the financial impact. Noodles contributed to about one-fifth of Nestle’s sales, but are zero at present. Initially, the re-launch will see a significant initial jump in sales growth. There will be a sharp jump in costs as well as the company is likely to spend much more on advertising and promotions, than earlier.
Read the full piece here.
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