Nestle’s executives in India are probably undergoing the most stressful phase in their work life. With crisis building up, they have been victim of no leave and unsocial family life off late, all thanks to its above standard content of lead.
“I haven’t slept for more than two hours in the past fortnight,” rued a midlevel executive. “It’s been all about nonstop work, plant visits, meetings, tests, future strategies, decisions. Worse, we don’t know what will happen tomorrow,” he told The Economic Times, speaking on the condition of anonymity.
As per a news report in the ET, 7,000 employees, including those working at its five noodles plants in Moga, Pantnagar, Nanjangud, Bicholin and Tahliwal had the nightmare on April 30. That was when a 1998-batch food inspector by the name of Sanjay Singh in Uttar Pradesh’s Barabanki town turned the food giant’s world upside down. As things moved from bad to worse and Nestle’s nightmare snowballed into one of the biggest controversies of the year, Nestle had to press in its entire team into firefighting.
It has flown in global chief executive Paul Bulcke and executives from across the world, including longest-serving brand head Shivani Hegde from Sri Lanka, to manage the crisis. In India, it cancelled leaves of all employees and they have been putting in almost 20-hour work days.
Few of the facts are in public domain. Nestle, known for being one of the most media-shy companies in the consumer-goods space, sent out text invites for its only media briefing since the mega controversy broke out, post-midnight Thursday, according to the ET. The conference was at 12 noon on Friday, and there wasn’t even enough time to send out email invites. Public relations agency Text 100 was given the mandate to organize the conference. The statement announcing the voluntary recall of Maggi noodles was also mailed by Nestle’s communications team at the unearthly 12.54am, to be exact.
Enough proof that Nestle India, maker of the once popular Maggi noodles, is working 24X7.
The firefighting had begun on all fronts, but a little late. “The company’s reticence in the face of the mounting controversy is surprising. Its press conference came 16 days after the news broke on UP FDA’s findings. 16 days is an eternity in an age of social media,” financial services firm Kotak Institutional Equities wrote in a consumer note dated June 5. The issue “appears to have surpassed all recent food-safety controversies involving well-known brands (worms in Cadbury Dairy Milk, pesticides in Coke/Pepsi). The company’s automated twitter responses have done little to assuage consumer fears.
Consumer confidence is seriously dented and the company’s strategy of calling its consumers ‘confused’ (and basing its voluntary recall of the product on this ‘confusion’) does further damage,” the report said.
“Nestle underestimated the impact of the controversy in the initial days. They were, in a sense, caught completely off-guard. By the time they decided to act, the fire had spread wild,” a top communications expert told the financial daily.
At the press briefing which Bulcke, India chairman Etienne Benet and Hegde hosted, the mood went from defensive to almost defiant. “We were waiting for internal investigation results,” Bulcke said, when he was asked about the long delay in acknowledging and addressing the issue.
Nestle is also not commenting on lobbying firm Apco being given the mandate to douse the Maggi fire. Apco, which managed PR for Vibrant Gujarat, too, isn’t talking. But executives in the know said the first priority is getting the government on their side, which it believes will lead to restoring consumer confidence.
Nestle employees have been told not to talk to anyone – not even to trade partners – unless approved by the legal team. Those working in plants have been told not to go on leave as every product is being tested and re-tested several times, people involved with the company said.
The company, whose market cap has lost 15 percent (Rs.10,300 crore), over the past one week, will take a hit of about 7 percent in sales because of the Maggi recall.
Maggi is a Rs.2,000-crore brand, the biggest in the company’s portfolio, and Nestle could lose Rs.180 crore in monthly sales until the product is back on shelves, said Abneesh Roy, an analyst and associate director at Edelweiss Securities.
The Maggi fire has burnt rivals too, which are looking at the controversy grudgingly. Sales of the entire noodles category are down by close to 80 percent in the country – the fifth largest instant noodles market in the world. Retailers like Savemax have removed all stocks of other Maggi products like ketchup too, which were giving noodles for free as promotions.
In 2014, the domestic instant noodle market was valued at Rs.3,800 crore, with value growth of 7.4 percent and volume growth of 2.9 percent