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Instant Noodles' 'Triumphant Return' As the world's largest instant noodle market, China's instant noodles have encountered intense competition from food delivery in recent years, with more and more young people choosing to order takeout rather than making instant noodles their first choice. According to statistics from the World Instant Noodles Association, the entire Chinese instant noodle market has been in a state of contraction since 2014, and it was not until 2017 and 2018 that demand for instant noodles began to rebound. The sluggish performance of the overall market has also affected the earnings of instant noodle companies. In order to defeat competitors, a fierce ham sausage war broke out. Master Kong and Uni-President each included a ham sausage with every box of instant noodles. After more than a year of price wars, the two companies used up more than 4 billion ham sausages. From the results, there was no winner in the pure price war. Master Kong's instant noodle business experienced three consecutive years of profit decline from 2014 to 2016, with a profit drop of over 34% in 2016 alone. Uni-President's instant noodle business also saw negative profits in 2014. However, the poor performance of instant noodles did not last long, and the market gradually warmed up after 2016. Both Master Kong and Uni-President's instant noodle businesses achieved double growth in revenue and profit in 2018, successfully staging a 'triumphant return.'
High-End Products to the Rescue Behind the resurgence of instant noodles, high-end products are undoubtedly the biggest contributors. Regarding the classification of high-end products, the industry previously used the 5-yuan line as the basic standard. In recent years, with the general rise in prices, the bar has been raised. Although 5 yuan may no longer be considered high-end, it remains an important marker for dividing the mid-to-high-end market. Through statistics on products from Master Kong and Uni-President in their Tmall flagship stores and calculating unit prices, the Huoquanquan Micro Data Lab found that most of the two companies' instant noodle products are currently priced between 5 and 10 yuan, with 61.22% of products in Master Kong's flagship store and 60.98% of Uni-President's products in this range. Instant noodles, originally seen as a low-end food, have already quietly completed an upgrade and adjustment towards the mid-to-high-end market. In fact, this adjustment began as early as 2014. After the brutal baptism of the price war that year, Uni-President's chairman Lo Chih-hsien announced in September: 'The inflection point for instant noodles has arrived; price competition should shift to value competition,' subsequently pushing 'Tang Daren' to the front lines. Master Kong, even at the cost of profit decline, raised prices and upgraded its instant noodle products. High-end instant noodles focus on nutrition and new flavors, with exquisite packaging, better meeting market demand under the backdrop of consumption upgrading. Taking Master Kong as an example, based on its quarterly performance data from 2016 to 2018, it can be found that sales of high-priced bagged noodles and bowl noodles generally showed an upward trend, while mid-priced bagged noodles and crispy noodles gradually shrank. This is both a market choice and the result of proactive corporate adjustments. Uni-President's high-end layout vanguard 'Tang Daren' has also maintained double-digit growth year after year, being labeled as the 'growth engine for the group's instant noodle business.' Several Tang Daren products have also been accepted by channels, especially emerging B2B e-commerce channels.
The 'Ultra-High-End Instant Noodles' That People Can't Afford Perhaps having tasted the sweetness of product upgrades, the price band above 10 yuan has become a new competitive battlefield. One after another, high-priced instant noodles have appeared on the market. Master Kong has even specifically defined bowl noodles above 10 yuan as 'ultra-high-end' to demonstrate its determination to expand this market. According to this standard, the Huoquanquan Micro Data Lab has compiled the current ultra-high-end instant noodle brands (including series) on the market, as shown in the table below: However, whether ultra-high-end instant noodles have sufficient market space remains a concern for channel distributors. According to the current B2B e-commerce situation monitored by Huoquanquan, the distribution of the above 7 ultra-high-end instant noodle products is not ideal. If instant noodles are to upgrade again on the existing basis, they will face enormous challenges!
Conclusion A few days ago, the Ministry of Commerce released a development report on the snack food industry, which mentioned that FMCG companies are seeking their appropriate position in the gradient of consumption upgrading. This is exactly the case for instant noodles. With the growth of consumption levels, instant noodle companies have gradually raised the main price range of their products to around 5 yuan. However, due to consumers' inherent impression of instant noodles, the transformation towards ultra-high-end instant noodles may be even more difficult. Source: Huoquanquan (ID: hqqapp)