A recall of Nestlé Maggi noodles in India in 2015 impacted the company for several years, according to an analysis of consumer purchase data.
Scientists examined the immediate and long-term changes in noodle purchases after the nationwide removal of Maggi instant noodles from the Indian market.
“The Maggi noodles scandal is a clear example of how consumers are prepared to make persistent changes in their purchase patterns in response to food safety concerns even if that food product is an integral part of their food culture,” said researchers.
“The long-term loss in purchases, combined with large costs of marketing campaigns to address the reputational concerns, provide strong incentives for food companies to comply with government regulations and ensure the safety of their products.”
The recall had a negative impact on purchases of Maggi noodles among urban households for at least two years. This provides evidence of the huge costs of recalls on producers and it can be used by policymakers to promote food safety, said researchers.
They also found strong evidence for a positive spillover effect to non-Maggi noodles among households with regular purchasing habits of Maggi noodles. This indicates that consumers with more persistent habits of buying a recalled product are less likely to stigmatize similar products under different brands.
Cause of problem
In June 2015, Maggi noodles were recalled and banned temporarily across India due to issues over excessive levels of lead and the presence of monosodium glutamate (MSG). About 400 million packs of Maggi noodles were reportedly destroyed. They were only put back on sale in November 2015 when they passed a new round of laboratory tests. Maggi regained status as the leading noodle brand by April 2016 but at a lower market share, according to a study in the journal Q Open.
The work uses data on packaged noodle purchases in urban India between 2013 and 2017. Researchers compared the changes in purchases by households who bought Maggi noodles regularly prior to the scandal with those who never bought the noodles. They also estimated the effects of the incident on monthly purchases of all packaged and non-Maggi noodles.
Regular customers were households who purchased Maggi noodles once every month in the 24 months prior to the scandal. Households were classed as frequent buyers if they bought the noodles between 13 and 23 months during May 2013 and April 2015 or infrequent buyers if it was one to 12 months.
Results showed a decrease in all noodle purchases of all buyer groups relative to the comparison group during the incident period while non-Maggi noodle purchases by monthly and frequent buyers increased significantly.
Shift to other noodle brands
The decline in all packaged noodle purchases remained statistically significant over the two years after Maggi noodles returned to the market. Combined with the absence of long-term reductions in non-Maggi noodles purchases, this suggests the issue led to a persistent decrease in Maggi noodle purchases among all households who had bought these products previously.
A shift from Maggi noodles to other brands among the monthly buyer demonstrates that producers failing to meet food safety regulations can potentially face substantial sale losses from their regular customers, said researchers.
From May 2013 to April 2015, Maggi noodles represented over 75 percent of packaged noodles bought by urban Indian households, with over 10,000 kilograms purchased every month. In May 2015, the monthly purchases of Maggi noodles decreased by tenfold and remained at a very low level for the next few months.
The non-zero level implies some households still managed to buy Maggi noodles during the scandal period despite the nationwide ban. This could be because some stores might not have taken them off shelves immediately. It also took time to recall and destroy all the products.
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