Blog: Maggi returns but will growth follow in AOA for Nestle?
Katy Askew | 5 November 2015
Nestle had some reason for cheer this week when it was confirmed that Maggi noodles should be back on Indian shelves this month.
The Maggi recall was a significant contributor to the top line issues that have dogged the Swiss food group. When Nestle revealed its results for the first nine months of the year in October, the Swiss company said the ban has weighed about 30 basis points on group organic growth in the year to date. On Nestle's Asia, Oceania and Africa (AOA) division, the negative impact was about 170 bps.
But does Maggi's comeback herald an up-tick in fortunes for Nestle's AOA performance? Certainly, across social media Indian consumers have largely welcomed the return of the popular snack. But bringing the brand back to its former strength will likely require investment – both in terms of time and cash.
Bringing growth back to AOA is key for Nestle. The zone has typically been a key contributor to group growth and the region's significant slowdown since 2012 has been a cardinal factor in the firm's failure to hit the 'Nestle model' which calls for 5% organic growth.
The boost from the resumption of Maggi sales in India will certainly be welcome. Analysts at Morgan Stanley note: “In India, a noodles rebound creates upside. We estimate every 500bps increase in Zone AOA LFL boosts group LFL by 90bps.”
However, Nestle's problems in the region are about much more than the Maggi recall. China is by far Nestle's largest market in AOA, accounting for around 32% of sales. And while the noodles boost will play out as a positive for the region, to get AOA back on track Nestle really needs to improve its performance in China.
The UK's competition regulator has given the all-clear to Hain Celestial's bid to buy UK food and beverage group Orchard House Foods, nine months after the US group announced the deal....
Hershey made an unusual announcement today (20 September), sharing its own sales data for the last four weeks to assuage any possible investor concern over figures released by Nielsen....
As the UK starts to ponder what kind of a relationship it wants with the European Union post-Brexit, EU leaders have been lining up to warn that Britain will not be allowed to "cherry pick" deals and ...
Low food prices continue to hold back inflation rates in the UK as the supermarket price war continues in the face of rising import costs. ...
- Interview: Mondelez eyes sweet success in China
- The benefits of engaging staff in sustainability
- How food companies involve staff in sustainability
- Why Danone is withdrawing Dumex from Vietnam
- Why May's Brexit comments give reason for optimism
- 2 Sisters chief Boparan buys Bernard Matthews
- Fonterra says value-added strategy paying off
- B&G Foods acquires ABF's US spice business
- General Mills profit falls as sales disappoint
- Bernard Matthews pensions scheme under review
- Global Chocolate Confectionery Overview: Challenges, Opportunities and Risks
- The Big 15: Strategies and Priorities of Top Packaged Food Players in Comparison
- Global Foodservice Market 2016-2020
- Global Food and Drinks Closures: Performance and Opportunities
- Fast Food Restaurants in the US - Industry Market Research Report