2-minute troubles (Company. product and employee names have been modified to maintain confidentiality) Introduction Mr Raul Truckle, the CEO of Pestié was very pensive as he stared out of the window of his India HQ. He had been with the company for the past 15 years in various capacities and never before had he faced a crisis of the magnitude of that which he was now facing. After all, it wasn't everyday that the integrity of a 100+ year oki company was called into question. While in india integrity of the company was called into question due to the presence of harmful chemicals in the product, in New Zealand there was general Public outrage at Pestié for having changed the taste of one of its much beloved products. “The need of the hour is damage control” he mused to himself as he thoughtfully twired a spoon in his coffee. "We must salvage the reputation of the company” he thought. Iconic Pestlé Brands Pestié is a French multinational company started in the year 1905. Originally 2 manufacturer of condensed milk and milk products, over the years and through the two world wars, they had diversified their product offering to chocolates and eventually instant noodles. “Bit-Bat", their brand of chocolate coated wafers were renowned across the world for: their taste and quirky marketing. “Bit-Bat” had a unique blend of smooth cocoa and crispy wafers which made it an ideal mid-day snack. Each finger-sized bite had the rich “chocolaty goodness” (as the marketers claimed) of South American cocoa. The company had augmented its basic product with several variants depending on local consumption pattems and by all accounts, Bit-Bat was doing well globally. Their chocolate mik-powder “Silos” was one of the most popular brands in its segment, with some consumers even claiming to have weaned their children with it, The formula for the same was a closely guarded secret. This product was especially popular in New- Zealand and Australia. “Their instant noodles brand "Benny" was a household name with generations of students swearing by it as the ideal “any-time” snack. This product had dominated Asian and European markets for several decades and was exhibiting all signs of dominating several more. Pestlé India Operations Pestié in India recently celebrated a century of deep engagement in a country which over that period had proven its potential to be one of Asia's economic superpowers. Their first sales agents in India began work in Chennai and Kolkata in 1912.Today, the company directty employs 6,000 people in India and more than half a million indirectly. tts products are sold in more than 3.5 million outlets across the country.OT ly because India The Indian processed food market has ah n pele children suffer faces significant nutritional issues. The majority of Indian worn” "inc. At the from basic micronutrient deficiencies such as vitamin A, iron, 16 non-communicable same time a large proportion of the population also suffers from diseases such as obesity and diabetes. ways been enigmati The challenge therefore was to win over a market with rigid traditional eae be ang yet maintain a delicate nutritional balance, which was achieved through an 29° ort responsive manufacturing network coupled with sustained excellence in pI development and research nto the nuances of the Indian market. Pestlé India has invested USD 500 milion to increase its capacities over the las! {wo years. This includes USD 70 milion in a new manufacturing site in Nanjangud to produce Benny products. The construction of Pestlé's eighth factory in. Tabliwal, Himachal Pradesh, is progressing rapidly. Existing factory sites in Moga, Samalkha, Ponda and Bicholim are also being expanded. Pestlé S.A is investing CHF 50 million in a new research and development centre in Manesar, Haryana, which will become operational towards the end of 2016. Winning Over the Indian Consumer In 1983, India won the Cricket World Cup; then, another seminal event took place. Pestlé debuted its latest creation, Benny 2 Minute Noodles to the country. And the rest, as they say, is History. What the hot dog is to America, Benny is to India; for we belong to the generation of ubiquitous lovers of this 2 minute, wonder. So much so, that India has now emerged as the largest consumer of Benny noodles However, this was not an easy journey, as the brand faced its fair share of hurdles in the beginning. For one, they had a myriad cultural variables working against them. The concept of packaged/instant foods was not popular at the time and there was still no (minutely close even) match to Mom's ‘haath ka khaana’. In essence, Pestlé adopted a two pronged positioning strategy- based on Convenience for mothers and of course fun & good taste for children. This enabled Benny to become instantly relatable and helped it build a name for itself. And voila, the market for instant noodles began to grow! Benny went on to reap their rewards, capturing 65% of the market share in the instant noodles segment, almost double the size of its nearest competitors. Comfort Cooking or Chemical Concoction? ‘The love story between Benny and the Indian market however turned sour one Monday in the month of May, 2015 when routine tests on samples returned with results indicating that it had nearly 3x the permissible quantity of lead and MSG. Following an uncharacteristically poor response from the company management, the issue exploded with state governments across the country taking up the issue. Some state governments even went so far as to ban sales of the product. The product was pulled from shelves across the country as various NGOs joined the clamor of people demanding an explanation from the company. All this happened even as the eonswas vehemently denying the accusations an independent tests hat \ccusations ; ; \d claiming that indeper id More Trouble- The New Zealand Silos Crisis ae the Indian Ocean, unrest was brewing in New-Zealand, where customers were in sBipar over Pestié having changed the flavor and composition of its much beloved ilos". Recently, Pestlé had removed the vanilla essence which was an essential ‘component of its Silos drink and replaced it with more mineral rich ingredients. This was @ Conscious move by the company to move to produce a more healthy drink. They also felt that this product was operationally more sustainable (in terms of materials used and ‘method of production). They had cautioned their customers prior to release that there may be a mild difference in taste. Customers however disagreed. Customers claimed that what was once a chocolaty treat, had now been reduced to a mildly synthetic tasting chemical mess. The problem was further complicated by.2 more factors: Firstly, New- Zealand's neighbours and rivals Australia had no such product change, with Silos stil available there with its classic chocolaty taste. Secondly, Pestlé had declared that it was unwilling to change the taste of its product, despite customer complaints. The Way Ahead ‘There was no question that the issue was escalating with every passing day. Across the world, various countries were watching the proceedings in India and conducting independent tests of their own. The campaign in New Zealand to bring back their old and familiar product was gaining momentum. Amidst the chaos, the CEO now had to take a stand to protect the reputation of their century old company. In India, should he continue to Confront’accusations or issue an unconditional apology? Iso, should the company proceed to pull the product from its shelves? How should he go about repairing the brand name of the company? Should he question the testing procedure used? Were there vested interests which were trying to sabotage the brand? What should his approach be in New Zealand? Should the product be withdrawn and shelved? Should they continue to push the product? How do they address customer complaints? Should the product be rolled out across the world? How to address the damage to the reputation of Pestlé as a whole? How might the brand bounce back? Was there an integrated strategy which they could follow to solve both their problems? Was there a radical and as-yet-unexplored 3° option? ‘As he closed his eyes, Raul recollected the words of his mentor. The professor had quoted Richard Brandon, when he had said "Your name is only as good as your reputation’. Raul decided ‘that he would need to meditate deeply on these words to get out of the Soup he was in right now. He got out of his seat to present the matter to the board over a Video Conference. He would have 2 minutes before the call was set up. What course of action should he recommend? Design an Integrated Ad campaign for Pestié for it to respond to this crisis, with special focus on the nature of communication between Pestlé and the various forms of mass media. Recommend what stance Corporate HQ of Pestlé should take, How can Pestléleverago Tochnology (specifically mobile and app based channels of communication) fo deliver tho intonded message? Appendix A- Understanding MSG Poisoning Mono Sodium Glutamate (MSG) is one of the prevalent food additives on the market and is used in canned soups, crackers, meats, salad dressings, frazen dinners and many more processed foods. Chemically speaking, MSG is approximately 78 percent free glutamic acid, 21 percent sodium, and up to 1 percent contaminants. In 1959, the U.S. Food and Drug Administration labeled MSG as “Generally Recognized as Safe" (GRAS), and it has remained that way ever since. Yet, it was a telling sign when just 10 years later a condition known as “Chinese Restaurant Syndrome” entered the medical literature, describing the numerous side effects, from numbness to heart palpitations that people experienced after eating MSG. Today that syndrome is more appropriately called “MSG Symptom Complex,” which the Food and Drug Administration (FDA) identifies as “short-term reactions" to MSG. One of the best overviews of the very real dangers of MSG comes ftom Dr. Russell Blaylock, a board-certified neurosurgeon and author of “Excitotoxins: The Taste that Kills.” in it he explains that MSG is an excitotoxin, which means it overexcites your cells to the point of damage or death, causing brain damage to varying degrees — and potentially even triggering or worsening learning disabilities, Alzheimer's disease, Parkinson's disease, Lou Gehrig's disease and more. Part of the problem also is that free glutamic acid is the same neurotransmitter that your brain, nervous system, eyes, pancreas and other organs use to initiate certain processes in your body.4 Even the FDA states: “Studies have shown that the body uses glutamate, an amino acid, as a nerve impulse transmitter in the brain and that there are glutamate-responsive tissues in other parts of the body, as well. Abnormal function, of glutamate receptors has been linked with certain neurological diseases, such as Alzheimer’s disease and Huntington's chorea. Injections of glutamate in laboratory animals have resulted in damage to nerve cells in the brain.” Although the FDA continues to claim that consuming MSG in food does not cause these ill effects, many other experts say otherwise. According to Dr. Blaylock, numerous glutamate receptors have been found both within your heart's electrical conduction system and the heart muscle itself. This can be damaging to your heart, and may even explain the sudden deaths sometimes seen among young athletes. "When an excess of food-borne excitotoxins, such as MSG, hydrolyzed protein soy protein isolate and concentrate, natural flavoring, sodium caseinate and aspartate from aspartame, are consumed, these glutamate receptors are over-stimulated, producing cardiac arrhythmias. When magnesium stores are low, as we see in athletes, the glutamate receptors are so sensitive that even low levels of these excilotoxins can result in cardiac arrhythmias and death.”Many other adverse effects have also been linked to regular consumption of MSG, including: + Obesity Eye damage Headaches Fatigue and disorientation " Depression Further, even the FDA admits that “sh Complex can occur in certain groups of people, namely tk doses” of MSG or those who have asthma. jort-term reactions” known as MSG Symptom those who have eaten “large According to the FDA, MSG Symptom Complex can involve symptoms such as: + Numbness. Burning sensation Tingling Facial pressure or tightness Chest pain or dificully breathing Headache Nausea Rapid heartbeat Drowsiness Weakness . . Appendix 2: Pestlé Income’ statement! (All figures in INR Mil.) ‘SrNo Description 2014 2013 1 Revenue from Operations 99,057 90,025 2 COGS 48,231 42,982 3 Depreciation 3375 Sad 4 ‘Employee Benefit expenses 751 6,824 5 Other Expenses 24,011 22,189 6 CSR Ea 7 7 Exceptional Noms 72 138 8 Profit before tax (1-2-3-4-5-6+7) 15,921 14,944 3 Tax expense Saat F505 0 Profit after tax (6-5) 10,480 5545 " Company Financial statements