Hindustan Unilever is launching Knorr instant noodles, entering a turf dominated by Nestle, which has a near-monopoly in the Rs 2,700-crore market. This comes almost five years after HUL entered a bridge category with its soupy noodles.
HUL’s decision is part of a strategy to expand the Knorr brand, which is so far restricted to soups and a ready-to-cook range in India. Knorr is parent Unilever’s largest food brand and HUL wants to replicate its global success in India.
“For any brand to grow sustainably, it is essential to also have a play in a mature category. Knorr has a rich and deep understanding of global flavours and as an organisation we understand the noodles category. Within noodles, we clearly see a point of difference that Knorr can bring to the table,” said Abhiroop C, general manager packaged foods at HUL.
Nestle’s Maggi currently controls about three-fourths of the market, followed by newer players like ITC’s Yippie and more recently, Capital Foods’ Smith & Jones. However, HUL is trying to differentiate itself both in terms of pricing and product. Knorr instant noodles will bear a price tag of Rs 15 a packet compared to most rivals that sell their brands at Rs 10 and Rs 12 for a similar-sized pack. Also, HUL will initially roll out Chinese variants of instant noodles instead of the masala flavour that constitutes the bulk of the segment.
Nestle has been under strain in the past four years, with the share of Maggi shrinking from over 90% to about 70%, analysts estimate. “With the urban market gradually turning around, this is the right time to launch such products. HUL will be able to get market share if it differentiates its product,” said Abneesh Roy, associate director at Edelweiss Securities.
HUL doesn’t expect Knorr to replace Maggi. “All our noodle offerings are additions to the consumer repertoire as they don’t want to have the same product day in and day out,” said Abhiroop of HUL, adding the company believes there is a sizable market and a separate niche that Knorr can create for itself. “We will offer flavours that meet the evolving needs of consumers in India and through that point of differentiation bring Knorr into the household.”
Over the past few years, HUL has made concerted efforts in packaged foods by launching several variants within soups and meal-making flavours. It also scaled back its presence in segments such as juices.
Source: Economic Time
