Chinese Instant Noodles Report: Competition with High-End/Health-Oriented Food Delivery?

The inventor of instant noodles is recognised – even in China – as Momofuki Ando, the founder of Nissin Foods. Since the 1970s, Japan has launched itself into the world market. And in 2016, the total consumption of instant noodles across the world reached 97.5 billion units. Across the world, 270,000 units are consumed per day, and 13.3 units are consumed per person per year. From the cold regions of Japan to various tropical countries, it has become a “global” food that is loved by all regardless of age and gender.

Out of the top 10 in global consumption rankings, 8 are Asian countries. In terms of per capita consumption, Korea has a decisive lead at 76.1 units, but of course, China is on top in terms of total consumption. The economic site “AskCI” reported the details of the “2018 Chinese Instant Noodle Industry Market Outlook Report”(Chinese Institute of Commerce and Industry). Let’s look at the current situation and challenges in the Chinese instant noodle industry.

The market trend is of shrinkage, but the outlook is strong

The Chinese instant noodle market has expanded for 18 consecutive years since the 1990s, reaching 46.22 billion meals in its peak during 2013. It was also estimated that for every second, 1465 packets were opened.

However, it seems to have been shrinking since then. According to the World Instant Noodles Association (headquartered in Osaka)’s data, in the 4 years between 2013 and 2016, the quantity decreased by 8 million units in mainland China and Hong Kong combined. It reduced to 37.56 billion units.

That being said, the report claims that a slow growth is possible till 2021. Growing at a pace of 2.9% every year, the market size is expected to reach 93.7 billion yuan in 2021 – a strong prospect. Why is this so?

In 2016, among all instant noodles types, cup noodles have the highest unit prices accounted for with 47.2% in revenue and 34.4% in sales volume.

Concentrating on the Taiwanese top 2 (Ting Yi, Uni-President)

The market share is concentrated on the major companies. Ting Yi, Uni-President, Hwa-Long, Bai-xiang, San Tai Zi, Jinfeng, etc. are the dominant companies. Among them, the 2 Taiwanese companies Ting Yi and Uni-President together hold 60% of the total market share. Ting Yi also has a high customer brand loyalty and is supported by 76% of the population. If you have been on a business trip to China, you must have noticed it. It is a brand that represents Chinese instant noodles. Its sole competitor is Uni-President. The product line-ups of these 2 companies closely resemble each other.

They continuously announce new products to compete each other. As a result, the share of luxury goods rose. As per the data limited to the third quarter of 2017, the volume increased by 3.3%, while the sales increased by 6.9%. The rise in unit prices is obvious. This is the basis for the strong prospects.

Let’s look at the strategies of the two major companies.

High-end & health-oriented, competing with food delivery

Ting Yi – The plan is to continue on the path of “limited additives, richness, taste, health and nutrition” which it started in 2016. In 2017, sales of the pork bone flavour grew significantly. In addition, they are aiming to increase sales with the newly-released “rattan pepper pork bone” flavour. They increased the choices in natural flavours in their products while also enriching them. They are also sold online as a new standard for packaged noodles.

Uni-President – the high-end brand “Soup Daren” accounts for 77.3% of its sales. In addition to developing new flavors such as Korean spicy beef, they have developed new noodles using state-of-the-art drying technology from fields such as space development and biochemistry. Using ingredients that keep in mind smell and sight instead of just taste, they appeal to the white-collar population.

Both are striving towards a policy of differentiation by setting out on high-end, health-oriented products. Another external environment may also be considered with regard to this. That is the rapid development of food delivery services. The shortage of delivery staff for this Chinese New Year is growing as a concern. It has become possible to eat freshly-cooked dishes made by professionals without leaving home. Differentiation is necessary not only from other companies within the same industry, but also from this new force. Achieving the goal for 2021 cannot be considered an easy task.