When it comes to instant noodles, there’s no beating the Chinese. China slurped down 50.1 billion of the 97.9 billion servings of instant noodles sold globally in 2007, according to the World Instant Noodle Association. Euromonitor valued China sales at Rmb 59 billion (US$8.6 billion) last year, up 8.6 per cent from Rmb 54.3 billion in 2007.
Overseas brands dominate the sector. Faced with flat or declining sales at home, Japanese and Taiwanese instant noodle makers have been turning their attention to China for some time.
Tingyi’s Master Kong brand and Uni-President’s President and Hao Jin Dao brands — both companies originating from Taiwan — do battle with Japan’s Nissin Foods, along with equity partner Hebei Hua Long Foods and its Hualong and Jinmailang brands. Together these brands raked in sales of Rmb 27.5 billion in 2007, roughly half of the market’s value that year. These brands are not afraid to spend on advertising either. According to Nielsen, Master Kong spent Rmb 866 million last year in China, followed by Hualong/ Nissin on Rmb 505 million. Uni-President, meanwhile, invested in Olympic sponsorship in 2008.
Two decades ago, instant noodles were exotic. “When I was in primary school, we thought of instant noodles as something from abroad,” recalls Alexisa Gu, associate director of Synovate China. “They seemed trendy.” Now they are everyday fare.
Localisation has been the key to success for the foreign brands, says Gu, and in this Master Kong excels. “Master Kong launches different flavours for each region.” Master Kong, launched in 1992
in China, built its brand by fostering a consistent pan-China image under the slogan ‘Just this taste!’. In modern retail outlets, Master Kong has a 49.9 per cent share, according to ACNielsen figures quoted in the noodle maker’s shareholder reports.
But Master Kong’s share is much lower when China’s small cities and villages are included. Euromonitor estimated Master Kong’s share at 27 per cent nationwide in 2007, with Nissin and Hualong brands taking 16.5 per cent and those of Uni-President taking seven per cent.
Expanding beyond the upper-tier cities is tough. To do so, Tingyi formed a joint venture with Hebei Zhongwang Food Group in 2003. Likewise, in 2004, Nissin bought shares in Hebei Hualong, again in an attempt to penetrate the countryside.Rural China has plenty of noodle makers. Euromonitor data shows a stunning long tail, with local instant noodle makers with market shares less than 0.1 per cent together comprising 24.2 per cent of China’s total sales.
“These small companies won’t disappear,” says Joy Huang, research analyst at Euromonitor Shanghai. “Noodle-making is a traditional industry, especially in northern China.”
At the low end, Rmb 1 packet noodles rule, and prices top out at Rmb 2.5. Heavy users are males, teens, students and single young professionals, says Synovate’s Gu. “Penetration and frequency of use is higher in the lowest-tier cities, probably due to lack of choice for meals and snacks.”
But in the cities, Tingyi, Nissin and Uni-President are pushing barrel packs, sold in their own bowls, that start around Rmb 3.5 and run beyond Rmb 5. Last year, according to Nielsen data, barrel-packed instant noodles had a 22.5 per cent share, compared to 63.7 per cent share for the packet type. Significantly, the barrel type had double the growth, 32.5 per cent over 2007, compared to 18 per cent growth for packet instant noodles. “Convenience is driving growth at the high end,” says Kiki Fan, associate director of Nielsen China. “People hate having to wash their bowls afterwards.”
Healthy variants are the latest industry fad, and ‘low-fat’ is an oft-used phrase in advertising. One notable launch was Baixiang’s Da Gu Mian, with a collagen-based broth formula. “It claims to have a heavy broth made with pork bones,” says Euromonitor’s Huang. “Manufacturers are pushing food values. Nutrition is always a concern of Chinese people.”
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