The luosifen market has exceeded 10 billion yuan. Those who frequently visit Viya and Li Jiaqi's live-streaming rooms know that snacks sell fastest during influencer live-streaming, especially food. Consumption upgrades and the lazy economy have driven innovation in the food industry. People are no longer satisfied with traditional bagged instant noodles; mid-to-high-end convenience foods are becoming increasingly popular, such as Lamian Shuo (Japanese-style ramen), A-Kuan (red oil noodle skin), and luosifen brands like Luobawang, Haohuanluo, and Li Ziqi. Relevant data shows that sales of Liuzhou luosifen increased by over 600% year-on-year in the first half of this year. During the pandemic, production of packaged luosifen was once "in short supply."
-01- Luosifen: Local Ingredients "Breaking Out" As a representative of mid-to-high-end convenience foods, luosifen has gradually spread from Liuzhou to the world, becoming the top choice for young people who are willing to cook but lack culinary skills in the post-pandemic era. How did this sour and spicy local snack become one of the most watched categories in the food industry? Like Guilin rice noodles, Chongqing hot and sour noodles, Taiwan scallion pancakes, Korean cold noodles, and Tianjin buns, Liuzhou luosifen is a local specialty snack, forming a hugely influential business card. However, unlike other noodle snacks, luosifen has a unique pungent smell, similar to durian and stinky tofu. Consumer attitudes are sharply divided—those who love it are "addicted," while those who dislike it avoid it. The technical barrier for luosifen is not high; the difference mainly lies in its soup base. Different manufacturers have different soup base recipes, resulting in varying saltiness, spiciness, and texture. Consumers can tell which brand a product is from by tasting the soup. It is understood that packaged luosifen currently ranks first in the same category on Taobao, far ahead of Korean cold noodles in second place. Yao Bingyang, marketing general manager of Guangxi Luobawang Food Co., Ltd., told Yuanqi Capital: "If you look at the luosifen category alone, the scale is already considerable, the market can basically reach 10 billion yuan. For a single company, achieving 2-3 billion yuan is already considered a good performance." The global popularity of luosifen is inseparable from strong government support. In 2010, the Liuzhou municipal government chose luosifen as a business card, and in the same year, the Liuzhou Luosifen Industry Association opened a physical luosifen store in Beijing. At that time, many luosifen ingredients had to be airlifted from Liuzhou to Beijing. In May 2012, the premiere of "A Bite of China" made luosifen, a regional snack from Liuzhou, widely known across the country. This can be regarded as the first large-scale exposure of luosifen to "traffic." In 2014, the emergence of packaged luosifen changed the situation where luosifen was difficult to spread beyond Liuzhou. In the same year, there were already more than 40 "brands" of packaged luosifen produced by small workshops. Jia Jiangong, deputy director of the Liuzhou Municipal Commerce Bureau, said: "Starting from the end of 2014, if the factory area reached 300 square meters, the Food and Drug Administration would issue a license. The industry quickly prospered, and related enterprises increased to more than 80. In this process, industry standards were continuously formulated, and entry barriers were raised. Small workshops lacking qualifications were naturally eliminated." Since then, the luosifen industry has developed rapidly. During the pandemic, luosifen became popular again. Luosifen factories in Liuzhou worked overtime to increase production, but supply still fell short of demand. Even with a prepayment model, delivery was scheduled a month later. In March, it was so popular that 60 million people on Weibo shouted "luosifen freedom." At its peak, the Li Ziqi brand alone sold 5 million packs of luosifen in three days. "The characteristics of luosifen and its serendipity made it a phenomenal food. During the pandemic, our full production reached 300,000 packs per day. Some of the promotion during the pandemic was brand marketing, but the first two waves were actually spontaneous dissemination in the market," Yao Bingyang said. The stinky smell of pickled bamboo shoots and the special flavor of the snail soup base are novel and memorable, catering to people's curiosity and triggering widespread and lasting discussions. For those who have never tried it, the ubiquitous discussions make them want to try it. After trying it, they find it unique and delicious, and they want to return to social media to express their appreciation for luosifen, showcasing their personality and taste, and making repeat purchases. This creates a cycle where luosifen is no longer just a snack but a symbol for sharing emotions and social resonance. According to data from the Liuzhou Municipal Commerce Bureau, in 2019, the output value of packaged luosifen exceeded 6 billion yuan, and in the first half of 2020, it reached 4.98 billion yuan, with production increasing by 616.9%. It is understood that from January to June 2020, total online sales (e-commerce, WeChat business, and private domain) were around 2 billion yuan, of which the CR3 accounted for about 600 million yuan due to capacity constraints, and the remaining increment went to other small brands. Now, the popularity of small luosifen brands is gradually fading as CR3's capacity recovers. The big brands have stable positions and high consumer recognition. Although online popularity is declining as the pandemic subsides, sales are still much higher than before the pandemic. Capital has always been keen. Companies such as Haidilao, Three Squirrels, and Bestore have added luosifen categories, and leading institutions are also waiting for opportunities to find potential investees. Huang Jinglan, a section member of the Third Supervision Section of Liuzhou Customs, said that in the first half of this year, the export value of Liuzhou luosifen inspected and qualified by Liuzhou Customs was about 7.5 million yuan, eight times the total export value of last year. Yao Bingyang said: "(Luobawang) has a presence in Southeast Asia, Europe, and some European countries. The overseas market is mainly through international student channels; foreigners cannot stand this taste. In the first half of the year, foreign trade was quite good, and the North American market was the largest, with a very high willingness to buy luosifen. But in the second half of the year, international students did not return, and customs clearance is now very slow." Yao Bingyang told Yuanqi Capital that if calculated based on final sales, a conservative estimate is that the output value of Liuzhou luosifen in 2020 will reach 6-7 billion yuan without any problem. Liuzhou plans to build the luosifen industry into a "double 10 billion" level by 2022, achieving 10 billion yuan in sales revenue for packaged luosifen and 10 billion yuan for supporting and derivative industries. The convenience, quality, and individuality of luosifen perfectly match the labels of convenience food consumers such as single nobles, homebodies, and punk health enthusiasts. According to CBNData, this type of product is growing fastest among the post-95 generation. Currently, the most typical customer base for luosifen is consumers in first- and second-tier cities who are willing to try new things and accept novelty. Guangdong and Guangxi are the largest markets. The repurchase rate for the luosifen category is as high as 40%, showing strong user stickiness, and 70% of consumers are female. The luosifen industry is still in the market cultivation period. According to sales, the top three companies in e-commerce rankings are Li Ziqi, Haohuanluo, and Luobawang. It is understood that apart from Luobawang, most companies in the industry do not have marketing teams, and no company has received social capital investment. Next, we will further analyze the luosifen industry from the perspective of the leading company, Luobawang.
-02- Sample Luobawang: Building a Brand from the Supply Chain Like most Liuzhou luosifen brands, Luobawang was established in 2015. From 2016 to 2018, Luobawang mainly sold through online channels. After 2018, it shifted to offline, and in 2019, online and offline sales were equal. This year, offline channel sales have exceeded online, making it the absolute leader in offline luosifen brands. Yao Bingyang said, "Luobawang has entered major domestic supermarkets, and the offline layout is already very complete. This will bring significant growth in the future." In terms of output value, Luobawang has developed rapidly. In 2015, the output value was less than 20 million yuan. In 2019, it grew by less than double compared to 2018. Since this year, the factory output value for to B has reached 500 million yuan, more than double that of 2019. Unlike other companies that only do branding, Luobawang chose an asset-heavy model and produces its own products. Due to the rapid development of the luosifen industry this year, the upstream supply chain is extremely scarce. In the past few years, Luobawang has not done much marketing, but instead chose to invest most of its profits into production equipment. To ensure the safety of raw materials and product quality, Luobawang has established its own production bases for pickled bamboo shoots, pickled green beans, and rice, ensuring quality in raw material selection. In addition, Luobawang has three rice noodle factories, as well as independent yuba and quail egg factories. The entire chain is self-produced without OEM, which guarantees the taste and quality of Luobawang. It is reported that Luobawang's production investment is already in place and funds are sufficient. After building the new factory, there is still capital left for marketing and branding. "The timing is very good now. Capital intervention and financial standardization are very helpful for team improvement. Without external forces, it would be very tiring," Yao Bingyang said. "From a management perspective, we cannot treat luosifen as the next Uni-President or Master Kong. In the short term, we aim to be the best luosifen brand, achieve first place, and reach 2-3 billion yuan." Packaged luosifen can be sold in hypermarkets because it is mostly for family consumption, and consumers need to cook it for about 10 minutes before enjoying it. If it is to be distributed to offline convenience stores, the long-standing pain point of luosifen is that it cannot be "brewed" instantly. To address this, Luobawang has developed a new technology for instant-brewing luosifen, which can be brewed within 5 minutes with minimal impact on the texture of the rice noodles, making it convenient for consumers with tight schedules or no cooking conditions. Yao Bingyang said that Luobawang is confident that the sales ratio of bagged and bucket packaging will be balanced in the future. Luobawang is using a 54-mu plot of land funded by the government to build a new factory, which is currently under interior decoration and will be officially put into use by January next year. It is understood that the new factory can produce 600,000 packs per day, twice the current maximum capacity. In terms of brand marketing, Yao Bingyang said, Luobawang has chosen methods such as Taobao live-streaming with Viya, and the results are good. In the future, it will embrace various marketing methods, including live-streaming, community, and neighborhood, to build an integrated online and offline retail brand. "Luosifen is not just about eating a bowl of noodles. Young people do not like uniformity; richer ways to eat and more flavors are things that need to be studied," Yao Bingyang said.
-03- Lamian Shuo: High-Price Route and Rapid Incubation of New Flavors Lamian Shuo is also a phenomenal hit food, but it differs from luosifen in product logic, brand positioning, and channel sales. Relevant data shows that in 2019, Lamian Shuo's annual sales reached 250 million yuan, selling over 16 million packs in a year. During the 2020 618 shopping festival, Lamian Shuo's sales in the first hour exceeded its total sales for the entire 618 event last year. In Li Jiaqi's live-streaming room, when Lamian Shuo was mentioned, various flavors of ramen were sold out in seconds, generating 2.8 million yuan. On platforms like Xiaohongshu and Bilibili, appetizing images and tasting videos often flood the homepage, "planting grass" for consumers. Some people think Lamian Shuo's popularity is unreasonable. Instant noodles have been around for many years, so why has this high-priced brand been able to stand out in recent years and attract continuous investment from capital? Lamian Shuo financing table (Source: Public information, Yuanqi Capital) Relevant data shows that in 2016, China's instant noodle sales fell by 6.75%, marking the fourth consecutive year of decline. At that time, some media said, "The instant noodle market has reached its peak and even begun to decline." In this harsh winter for the instant noodle industry, Yao Qidi, a post-90s girl from Guizhou, turned her attention to the convenience food sector and founded Lamian Shuo, focusing on ramen. Lamian Shuo's first Weibo post in August 2016 defined itself as "China's first mass-produced one-stop semi-finished fresh-cooked Japanese ramen," emphasizing not only its uniqueness as the first but also highlighting the product's distinctiveness. Although it falls under the category of convenience food, Lamian Shuo insists on a high-price route. Signature products like Japanese Tonkotsu Ramen and Thai Tom Yum Ramen are priced at around 38 yuan, while single-box products are mostly priced at 15.8 yuan, far exceeding the prices of bagged instant noodles from brands like Master Kong. The company never mentions traditional instant noodles in its promotions and has always promised not to use preservatives. Product images do not carry the disclaimer "images are for reference only," but instead emphasize "what you see is what you get," comparing its products only to traditional dine-in noodle shops and takeout noodles. Luckin Coffee uses a similar approach, targeting customers, products, and pricing more like convenience store coffee, but its brand promotion tends to benchmark against mid-to-high-end coffee shops like Starbucks. This brand positioning allows Lamian Shuo to precisely grasp the current trend of low-frying and health, leaving customers with an impression of premium quality, and retaining a customer base that is relatively price-insensitive. Lamian Shuo's ramen is an upgraded version of traditional products. The general trend of consumption upgrades has cooled the mature instant noodle market, and new consumer demands have led to the emergence of new categories. Taking a 38-yuan box of signature Tonkotsu Chashu Ramen as an example, the ingredient pack includes nine small packages: handmade noodles, original Tonkotsu soup base, a large slice of chashu, seasoned bamboo shoots, wood ear mushroom strips, sushi ginger, sesame packets, scallion packets, and nori. It retains the original taste and a large, complete appearance, making the difference from fresh ingredients very small. Lamian Shuo has been continuously extending its product line, from the initial single flavor to the classic six flavors, and now serves as a platform for continuously adding new dishes. Lamian Shuo is not limited by the flavors of traditional domestic instant noodles or local noodles. It boldly assumes the product as a combination of "noodles + dishes," continuously adding new elements to a bowl of noodles, even having as many SKUs as there are dishes. Thai Tom Yum, Pepper Pork Belly Chicken, Leshan Red Oil Skewers, Spicy Sichuan Pepper Chicken, and Taro Chicken are originally local specialty dishes. At Lamian Shuo, they are transformed into new flavored ramen, meeting the needs of people with discerning tastes and refined lifestyles. The 2019 "Online Convenience Food Industry Trend Insight Report" categorizes "brand connoisseur consumers" who love trying new things and "flavor-focused" people who prioritize taste as "taste-driven" consumers. They account for only 24% of the convenience food market but contribute 55% of the consumption amount. They are willing to buy for the pleasure of eating, choose brands based on taste, and love food as well as eating alone. If Lamian Shuo continues to develop new products with the platform-building approach, the company could even help users "bring the restaurant home." History of instant noodle flavors (Source: Public information, Yuanqi Capital) History of Lamian Shuo flavors (Source: Public information, Yuanqi Capital) Moreover, Lamian Shuo uses the logic of internet products to make ramen—understanding consumer tastes better through online channels. Traditional instant noodle new products typically take half a year to a year from idea to launch. Lamian Shuo adopts a small team project-based cooperation model for R&D, with each product's development time not exceeding 60 days. Its second hit product, Sichuan Pepper Noodles, took only 46 days from research, supply chain development, procurement, quality control, design, and final launch. To better understand consumer needs, before product launch, CEO Yao Qidi organized a 2,000-person internal testing team to discuss the taste and packaging design, repeatedly overturning and rebuilding. In packaging design, Lamian Shuo broke away from the traditional five-pack or box packaging of the instant noodle industry, choosing individual boxes. The packaging colors are also carefully designed. Lamian Shuo also vigorously builds brand communities, organizing activities on various social platforms through methods like lucky draws or solicitations, and interacting friendly with KOLs on various platforms, establishing a community system with frequent consumer interaction. Lamian Shuo does not have its own factory. Like Li Ziqi's luosifen, all products are produced by OEM factories, and the company itself is mainly responsible for marketing. As CEO Yao Qidi said, "In 2017, content marketing; in 2018, social e-commerce; in 2019, live-streaming. We hit the mark every step of the way." This year's Dragon Boat Festival, Lamian Shuo teamed up with Wufangzhai to launch the "Zong You Mian Zi" (Noodles with Zongzi) gift box, which is not just a Dragon Boat Festival gift box but also proposes a new concept of "ramen + zongzi = give face," becoming a new social artifact. Recently, it also cooperated with the UK's National Gallery to launch three co-branded gift boxes that can be used in various social scenarios, resonating with consumers in cognition, aesthetics, and values, even becoming a "like magnet" on social media. However, after every hit brand appears, we wonder: how long can it stay popular?
-04- Where Will It Go in the Future? In the post-pandemic era, more people are trying cooking at home. Both Luobawang luosifen, which is still in the market cultivation period, and Lamian Shuo, which has innovated and upgraded from the traditional market, meet the needs of young people with fast-paced lives and limited cooking skills to experience cooking at home, becoming leaders in "light cooking" convenience foods. Both companies invest heavily in marketing and brand building, clearly defining their product characteristics from the brand name, and spreading through online social and shopping platforms, resonating with young groups with certain spending power. In addition, both companies' products focus on new flavors, emphasizing product uniqueness and satisfying people's curiosity. However, it is still difficult to predict where they will go in the future. For most consumers, luosifen is a new food that has suddenly appeared in recent years. To know how far it can ultimately go, the first thing to determine is what proportion of people will absolutely not accept this taste. As for Lamian Shuo, as a "noodle shop mover," it needs to consider how many people who are used to eating out can change their mindset and choose to eat at home. Of course, this is not easy. Due to the limitations of its niche taste, it is difficult to determine how large the luosifen market can ultimately be. After the pandemic, consumer demand for luosifen has gradually declined, and consumers are beginning to return to mainstream brands. There are many luosifen factories in Liuzhou, mostly OEM for brands. The annual output value has exceeded 6 billion yuan, with no obvious technical barriers, only slight taste differences. When the market returns to rationality and the potential scale is determined, it may fall into price wars among brands. If Lamian Shuo wants to innovate product flavors and "bring the noodle shop home" on its own, while ensuring product quality and controlling costs, it is a significant challenge for the company. Unlike standardized products, launching new SKUs means higher requirements for factory flexible production capacity to achieve rapid conversion of multiple products. In addition, the company needs to continuously experiment based on market reactions and eliminate inferior products, which also requires the management team to have strong innovation and decision-making capabilities. But the growth logic and trajectory of Luobawang and Lamian Shuo from category to brand are also worth referencing for the industry and similar companies. How far these companies can ultimately go remains to be seen. Source: Yuanqi Capital (ID: yuanqicapital), Analyst: Rexi