IILM UNIVERSITY GREATER

NOIDA

MBA BATCH :- 2024-2026

MICROECONOMICS ASSIGMENT

TOPIC: DEMAND AND SUPPLY ANALYSIS OF

AN FMCG INDUSTRY ( NESTLE )

SUBMITITED BY-

NITISH JOSHI ( 9980)

GARIMA CH0UDHARY ( 9041)

SUBHANKAN SINGH ( 9740)

AYUSH VERMA ( 8800)

The Overview of Supply and Demand:
Economic Analysis of Maggi Noodles in
India

KEY HIGHLIGHTS

· How the sales of Maggie impact Nestle India?

· What strategies they use to regain their value in Indian market?
· Demand and supply analysis
· Current scenario of Nestle in Indian market

ABSTRACT
This study of the Maggie shows how it effects the nestle share in India how
the share of Nestle falls overnight in India after the banned of Maggie in
2014 what market strategies they use to overcome this loss. Maggi had a
90% market share in India's instant noodle market for 25 years. Maggi was a
popular snack for people of all ages and economic backgrounds.

In 2014, tests found that Maggi noodles contained higher levels of lead and
MSG than the permitted limits, which led to a nationwide ban on the product.
The ban caused Maggi's market share to drop from 80% to zero almost
overnight. Nestle lost over $1 billion in sales due to the ban. This banned
effect the nestle in India because most of the sale of nestle in India because
of Maggie and KitKat and one of the products got banned.

Maggie ban impact: Nestle India may take 3 years to recover –

Economics times
This statement from economics times shows how much nestle is dependent
on Maggie in the Indian market.

Penetration, premiumization and innovation, combined with

disciplined resource allocation, have been key in driving business,
making your company one of the fastest growing markets for Nestle
globally," said Nestle India's annual report for 2023-24.

This statement of nestle shows how they are focusing on several strategic
area to drives its growth by increasing market share reaching more
consumers by offering high end product to boost revenue

INTRODUCTIONS
The world economy is increasing day by day, as consumers we play a vital role in
the working of the economy of country. All the marketing of goods start with the
decisions made by us- the consumers. These decisions made by the consumers
concerning our consumption affect the demand and supply of a commodity. MAGGI
- 2 MINUTE NOOODLES’ is a leading brand and also an important part of the
Nestle family. Over the years Maggi has positioned itself as ‘Fast to cook, good to
eat’. Health concern always been the negative factor for the maggi noodle as the
consumer are proactive in nowadays.

The Maggi Noodle brand become most popular brand in India, was banned my
FASSAI and was termed as hazardous food for the consumption and ordered nestle
to shut down the Maggi market . After it was approved and safe to consume , it was
relaunched in the market in 2016 , but demand and supply of Maggi was severly
affect by this ban.
 Nestle: -
Nestlé is an international brand name which operates in the industry of Food and
Beverage as it provides safe and quality nutrition since 1866, when it was founded
by Henri Nestlé [CITATION Nes181 \l 2057],

The Switzerland-based multinational conglomerate Nestlé is a leading name in the

food and beverage sector. Nestlé is a truly global brand with one of the most
diverse product portfolios that includes everything from baby formula to
chocolate, coffee and bottled water. This project explores the demand-supply
forces, and the relevant factors that influence them, to provide a comprehensive
view of the company. Nestle India Limited is an India-based company that is
primarily involved in the food business. The Company manufactures products under
brand names, such as NESCAFE, MAGGI, MILKYBAR, KIT KAT, BAR-ONE,
MILKMAID and NESTEA.

MAGGI NOODLES:
The history of the noodles starts from the industrial revolution in Switzerland due to
which the factory jobs grossly emerged for the women and they were left with no
time. So to overcome this problem,a person Julius Maggi was given a task to create
a food product quick and easy to prepare. "In the year 1863, he came with a
different idea to add taste to meals and after in collaboration with the Swiss welfare
society, in the year 1882-1883 he launched first Maggi brand of instant soups. Later
on many brands were added to the Maggi company. In India, it faced a stiff
competition with biscuits, wafers and homemade snacks. After extensive research
the company targeted the kids as biggest consumers of noodles and various ads
were build up with taglines- Taste bhi health Bhi, Bas 2-minute mien. This
idea served right for the company and Maggi became a brand .

In India, brand Maggi recovered after a five-month ban on its instant noodles over
allegation of containing lead beyond permissible limits.
However, the instant noodles returned to market after a relaunch in November 2015
and later Nestle India extended the brand in the food segment and adjacencies

Source :- Book [Link],

Maggi story in India:-

Maggi instant noodles are having a brand name in India and has almost replaced
the word instant noodles in the global world. It had a market share of 90% of shares
in India until FSSAI imposed wide national ban on it and today contributes 53% of
the market's noodles supply. Maggi has created an impact by targeting the age
groups, household class, working class etc. The brand name of Maggi has catered
the buyers concern about their health issues due to the resence of wheat flour used
in noodles. The brand popularized the image of mother as Maggi mom, working
women that loves and cares for her children as much of traditional mother but they
didn’t have time for making time consuming curries. Kids loves Maggi, moms love
making Maggi. The demand of Maggi before the year 2015 was high and it
contributed to the profit of Nestle company.

The demand and supply chain of Maggi noodles

in India:-

According to the report of the Economic times 2003What Xerox is to photocopier

and Colgate to toothpaste, Maggi is to noodles in India. After the long journey of ups
and downs, Maggi noodles has always acquired a mainstay in the Indian market
across the nestle brands in the world.

The law of demand according to Alfred Marshall says that ‘Others things being
equal, the demand for a commodity varies inversely with its price.’ Maggi noodles is
the most loved meal defined by all age groups and bringing people together with a
healthier taste without compromising on the great taste of love.

The demand of the noodles is always high as it comes with price of Rs.60, 50, 30,
15,10 and also in a mini saver pack of Rs. 5. It can be understood with the help of
figure 1.

fig.1

Determinants of demand of maggi noodles

1. Price of Maggi:

As the price of Maggi decreases, the call for usually will increase (and vice versa),
following the regulation of call for. Maggi's numerous price factors (₹5, ₹10, ₹15,
₹30, ₹50, ₹60) cater to one-of-a-kind patron segments, making it low-cost to a large
target audience, which reinforces demand.

Source:- Book [Link]

2. Consumer Preferences and Taste:

Maggi enjoys a strong position of loyalty in India, and its flavours is a

massive element which make Maggi an elegant noodle than others . Changes
in client choices closer to healthier alternatives or new Flavors can also
affect demand undoubtedly or negatively.

3. Income Levels:

Maggi is an cost effective product , so it caters properly to lower and canter-

profits businesses. As disposable income rises, purchasers may additionally
either buy bigger Maggi or shift to top rate substitutes.

4. Price of Substitutes:

Competing products, inclusive of different immediate noodles (e.g., Yippee

Noodles, Top Ramen), snacks like chips or biscuits, could affect Maggi’s
market shares . If the charge of these substitutes rises, the call for for Maggi
may additionally boom, and vice versa.
 Literature Review : - Factors of Demand
and Supply for Maggie
Company

Introduction

Maggie, a renowned emblem below Nestlé, is understood for its immediately

noodles and different food merchandise. The employer's overall performance
in terms of demand and supply offers precious insights into the dynamics of
the food industry. This assessment synthesizes numerous studies and
reports at the call for and deliver elements associated with Maggie.

Demand Factors

 Consumer Preferences and Trends

Studies suggest that purchaser alternatives play a critical role in shaping the
demand for Maggie merchandise. Research with the aid of Gupta (2020)
highlights that convenience, flavor, and affordability are key elements driving the
call for for immediate noodles, such as Maggie. The rise in busy lifestyles and
growing urbanization has strengthened the call for for short meal solutions.

 Marketing Strategies

Maggie's marketing strategies have drastically inspired demand. Kumar and Singh
(2019) discuss how Maggie's branding, advertising campaigns, and product
improvements have bolstered its market position. The agency's ability to adapt to
regional tastes and alternatives thru localized flavors has additionally been
mentioned as a thing in maintaining high call for.

 Economic Factors

Economic situations, together with income levels and inflation, affect call for for
Maggie products. Research through Sharma and Verma (2021) suggests that in
financial downturns, clients may also shift to more affordable food alternatives, that
could boom demand for finances-friendly products like Maggie noodles.

 Health Consciousness
 Recent studies, including those through Patel et al. (2022), screen a developing
fashion toward health attention amongst purchasers. This trend has led to an
extended demand for more healthy food options, which has brought about Maggie
to innovate and introduce products with decrease sodium and brought nutr

Supply factors
 Manufacturing equipment ( raw material sourcing )

The supply of Maggi products is highly dependent on the availability and price of
raw materials such as wheat flour and spices. The analysis by Mehta and Kapoor
(2023) includes changes in demand prices for these commodities and supply
disruptions due to geopolitics

 Poduction and manufacturing

Manufacturing efficiency is essential to maintain supply levels. A study by Joshi

and Rao (2021) confirms that Maggi’s production facilities are designed to be
flexible and adaptable to meet different requirements. Technological advances in
manufacturing also play a role in improving the supply chain.

 Distribution and logistics

The distribution network of Maggi products is wide, covering urban and rural areas.
The study by Patel and Jain (2022) discusses the challenges faced by logistics
managers in ensuring timely delivery and maintaining supply chain quality. The
integration of technology in logistics and inventory management has been key to
meeting these challenges.

 Regulations and the environment

Supply chain is influenced by legal requirements and environmental considerations.

According to Singh-Kumar (2023), compliance with food safety regulations and
sustainability practices is essential to maintain supply chain integrity and reduce
risk.

RESEARCH METHODOLOGY

1. Define the Research Objective:

Objective: Analyse the demand and supply dynamics of Maggi in a particular market or
region.

Scope: Focus on the factors influencing demand (e.g., consumer preferences, pricing, taste
and wants ) and the efficiency of the supply chain (e.g., distribution channels, stock
availability).

2. Research Design:
Type: The research will use a mixed-methods approach, combining both qualitative
and quantitative data.

 Quantitative Analysis: Focus on numerical data such as sales volumes,

production levels, pricing, and market share.
 Qualitative Analysis: Explore consumer opinions, preferences, and supply chain
challenges through interviews and surveys.

3. Data Collection Methods:

 Primary Data Collection:

1. Surveys & Questionnaires:

Design a questionnaire to gather consumer data (e.g., consumption patterns, preferences,

price sensitivity). Include questions targeting different customer demographics and regions.

Example: How frequently do you purchase Maggi? What influences your purchase decision?

2. Focus Groups:

Organize small focus group discussions with different segments of Maggi consumers
(students, working parents, etc.) to gather in-depth insights on product demand and
preferences.

3. Interviews with Retailers & Distributors:

Conduct interviews with retailers, distributors, and supply chain managers to

understand supply challenges and strategies.
Focus on stock availability, distribution efficiency, and customer
demand.
  Secondary Data Collection:

1. Market Reports & Industry Data:

Analyse existing market reports on instant noodles, FMCG industry trends,
and Nestlé's annual reports for historical data on sales and market share.
Gather data from published sources such as Nielsen or Euromonitor for
industry benchmarks.
2. Company Data:

Obtain sales data, production records, and supply chain performance from Nestlé’s
Maggi division.

3. Online Data:

Collect data from e-commerce websites (e.g., Amazon, Flipkart) on Maggi’s sales
performance.

4. Target Population:

Consumers across different regions, age groups, income levels, and consumer
segments (e.g., urban/rural). Retailers and distributors managing Maggi sales

Current scenario of Nestle in Indian market

According to Business standard Nestle India holds a strong
position in the market with 60% shares in terms of noodle market
despite of so many competitors. Here are few of the articles that
will help us understand the current scenario of nestle in India
India has emerged as the largest market for Nestle's Maggi, with
six billion servings of the popular instant noodles sold in the
financial year 2023-24 (FY24), the Swiss multinational company's
local unit said in an annual report.
Nestle India also declared the country as one of the fastest
growing markets worldwide for the company with a high double
digit growth rate – An article from business standards.
 SOURCE:
[Link]

Nestle have introduced over 140 products in India over the last eight years,
the company plans to invest Rs 7,500 crore between 2020 and 2025 with an
eye to bolster operations.

RESULTS AND FINDINGS:-

Taste is the most important factor considered by the respondents while choosing
instant noodles. Maggi as a good brand recall compared to its customers. Majority
of the respondents did not like the taste of Maggi and the demand of the noodles
went down when it was banned and other continued consuming the noodles. So, the
company should maintain its previous and should follow strict safety measures by
taking consumers health into consideration. After the ban majority of the
respondents do fear about the safety of other branded products available in the
market even though they wish to buy the same.

CONCLUSION: -
The research shows that the consumer's buying behaviour is the biggest factor in
the demand and supply of any product. The brand name of Maggi noodles has
gained a very high position in the market in the last 25 years. Though the
consumers are willing to buy the product which have taste but also includes
ingredients which are good for health of the consumer. The demand of Maggi went
down due to its ban as compared to the market share of last years. Maggi instant
noodles after its roll back in the market are making every effort to win the trust of
the consumers and soon will regain its position with regards to the health of the
consumers.

QUESTIONNAIRE: -
Question 1: - Brand names of instant noodles consumed by the respondents
recently.

Brand names No. of respondents Percentage

Maggi 35 38
Yipee 44 47
SunFest 7 8
Knorr 3 3
Wai wai 2 3
Total 91 100

Question 2:- How often do you consume Maggi?

· Daily
· Weekly
· Monthly
· Never

Question 3: - How do you prefer Maggi to be consume?

· As a snack
· As a meal replacement
· Late-night snack
· Other (please specify)

Question 4 :-- What improvements advice would you like to give for Maggi?

· Better taste
· Healthier ingredients
· More flavour varieties
· Price reduction
· Other (please specify)
Question 5:- Which flavour of Maggi is your favourite among the available
flavour in market of Maggi?

· Masala
· Chicken
· Vegetable Atta Noodles
· Oats Noodles
· Other (please specify)

QUESTION 6 :- What is the medium from where you heard about Maggi?

· TV Ads
· Social Media
· Word of Mouth
· Supermarket/Grocery Store

Question 7:- In a health perspective What changes in nutritional value you

expecting in Maggi for Maggi?

· Reduced salt
· More fibre
· Lower fat
· Other (please specify)

Question 8 :- Among several brand available in market Why do you choose

Maggi as your snacks item ?

· Taste
· Price
· Brand Trust
· Availability
· Other (please specify)
REFERENCE
 [Link]
india-nestle-net-sales/
 Nestle India: net sales 2023 | Statista
 [Link]
 THE BUSINESS TIMES - Get the Latest Business & Financial News
 Recent advances in the use of digital technologies in agri-food
processing: A short review - ScienceDirect