Maggi's Brand Value Set to Fall by $200 Million Following India Ban: Report

Nestle shares fell 2 per cent in early trade on Wednesday after consultancy firm Brand Finance said Maggi will lose over $200 million or nearly Rs 1,300 crore in brand value following the ban of the popular noodles brand in India.

Nestle withdrew all varieties of Maggi noodles on June 5, hours before the Food Safety and Standards Authority of India (FSSAI) banned the snack, ruling it "unsafe and hazardous". The withdrawal came amid country-wide scrutiny on Maggi for high content of monosodium glutamate (a taste enhancer) and lead in some samples.

According to Brand Finance, Maggi's brand was valued at $2.4 billion prior to the ban, which ranked the noodle manufacturer as the 23rd most valuable food brand in the world. However, the $50 million loss of goods combined with a damaged brand will result in a reduced brand value of $2.2 billion, it added.

Nestle on Monday had said that it would take a hit of more than Rs 320 crore ($45 million) from the continuing withdrawal and destruction of its Maggi instant noodles.

Nestle shares, which seemed to have rebounded after witnessing huge selling pressure earlier this month, have been falling for the last three trading sessions. Maggi accounted for over 20 per cent of Nestle India's revenues and nearly 30 per cent of its profits, according to various estimates.

"Nestlé will have to turn around swiftly to ensure that the Maggi brand can retain its dominance in the Indian market. If not, the Nestlé brand itself could be at risk as the Nestlé logo prominently features on the back of Maggi noodles packaging, making it synonymous with the Maggi brand." said Brand Finance CEO David Haigh.

Nestle has maintained the noodles are safe. It has challenged the ban on Maggi in court but has to continue with the withdrawal of Maggi noodles until a verdict is reached.

Nestle has said that it would deal with the associated costs at the time of reporting results. Nestle India reported its March quarter results on May 15.

As of 11.45 a.m., Nestle India shares traded 1 per cent higher at Rs 5,838.60, underperforming the broader FMCG sub-index on the BSE, which was up 1.5 per cent.

(With inputs from Reuters)