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The ban on Maggi noodles has turned out to be a boon to main competitor Yippee noodles, as its maker ITC is witnessing a rapid growth in its share in the country’s fast foods market.
ITC has reportedly asked its contract manufacturer for Yippee noodles–Keventer Foods–to double its production at its Barasat factory in West Bengal.
“Yes, production has almost doubled in the past four weeks,” a Keventer Foods executive told Livemint on the condition of anonymity.
Things have turned in favour of Yippee noodles following the ban on Maggi, which happened to be the country’s most popular instant noodles, by the national food regulator in June 2015. The regulator imposed the ban saying the on noodles were unsafe for consumption after tests showed that it contained unsafe levels of lead.
However, the manufacturer of Maggi noodles, Nestle India, challenged the ban in the Bombay High Court, which subsequently overruled the Food Safety and Standards Authority of India (FSSAI) order. However, the court ruled that Nestle India can resume the sale of Maggi noodles only after the samples are tested safe for consumption by the government-approved laboratories.
The FSSAI ban had a significant impact on the instant noodles market in the country, with sales plunging by 80% in June, said a senior executive at a food company that also sells noodles.
“Sales picked up during the past four to five weeks. But it is still about 30-35% below the level of what it was in April-May,” the executive told Livemint.
On the other hand, Yippee noodles gained some popularity and saw an improvement in its sales.
“There has been an encouraging growth in market share,” Livemint quoted foods division head at ITC, VL Rajesh, as saying.
Analysts’ estimates show that ITC’s share now accounts for over 50% of instant noodles market in India. Before the ban on Maggi noodles, Yippee noodles occupied just 10-12% of the market share.
“There’s a reason why ITC fared better than other noodles brands. ITC has one of the most extensive distribution and retail network, which helped the company push Yippee wider, compared with other noodles brands,” said Abneesh Roy, associate director (institutional equity research), Edelweiss Securities Ltd.
Maggi had a market share of over 80% in instant noodles in the quarter ending March 2015, according to a Nomura report. Besides, a timely advertising campaign centered on quality and safety helped ITC to boost Yippee sales.
“The campaign has been appreciated by consumers for its transparency and honesty and has generated a lot of positive feedback and queries from consumers,” said Rajesh.