Instant noodles, long criticized for health concerns, finally saw a recovery after years of downturn. Meanwhile, another convenience food perceived as high in oil and salt has become a sensation, prompting the question: are convenience foods experiencing a spring revival?

Industry Recovery

Instant noodles, the leader in convenience foods, seem to have experienced a full recovery in 2017.

Recently, Tingyi (Cayman Islands) Holding Corp. (hereinafter referred to as Tingyi) and Uni-President China Holdings Ltd. (hereinafter referred to as Uni-President) each "submitted" their 2017 report cards.

In terms of instant noodle business alone, both performed well. Last year, Tingyi's instant noodle business generated revenue of 22.62 billion yuan, a year-on-year increase of 4.91%, accounting for more than one-third of the group's revenue. Meanwhile, its old rival Uni-President's instant noodle business saw a year-on-year decline of 0.7% to 8.163 billion yuan, but its profit reached a record high of 412 million yuan, with "Master Kong" (汤达人) achieving double-digit revenue growth.

"Given the dominance of the food delivery market, it is truly remarkable that instant noodles have performed this well," an industry insider told New Financial Observer reporters. Public information shows that to maintain growth, Uni-President adopted a strategy of "survival of the fittest, focusing on promoting upgraded products," while Tingyi also employed many "tactics."

"Specifically, these include product premiumization, continuous new product launches, and sports marketing, all of which effectively drove sales growth," a source familiar with the matter told reporters.

He also revealed that to improve consumer satisfaction, Tingyi promoted organizational flattening and asset rejuvenation, hoping to gain faster insights into changing consumer needs and strengthen the competitiveness of its instant noodle products by saving capital expenditure and improving capacity utilization.

Even Nielsen provided effective "evidence" for the warming of the instant noodle market—according to its research report, the overall instant noodle market showed a recovery trend in 2017, with overall sales volume up 0.3%. "This shows that instant noodles still have opportunities; the key is how you do it," the aforementioned industry insider said.

Product Upgrades

The so-called "how you do it" actually refers to product upgrades.

"It must be said that the now well-known 'Master Kong' (汤达人) was launched as early as 2009. But at that time, this high-priced product was completely ignored," a market observer told reporters.

Master Kong (汤达人) gained widespread attention only in 2015, with some describing it as "suddenly popular." That year, its sales surged. But few know that Uni-President waited six years for this explosive growth. "Of course, during those six years, it was fortunate to have Uni-President's 'Old Tan Pickled Cabbage' (老坛酸菜) as a companion; otherwise, its fate would have been uncertain," the aforementioned observer said.

In fact, this is not an exaggeration. When Master Kong (汤达人) was launched, competitors also launched similar products. But when Master Kong (汤达人) became popular, the competitors did not. It can only be said that Master Kong's rivals failed to persist to the end.

Marketing expert Liu Chunxiong has repeatedly spoken publicly about the "rise" of Master Kong (汤达人). In his view, this was Uni-President's strategy. The so-called strategy is to "deduce" the present based on the future. Many people regard strategy as "planning for the future," but in fact, strategy is precisely about the present.

"Master Kong (汤达人) was an upgraded product prepared in the context of consumption upgrading; before middle-class consumers arrived, it could only wait," the aforementioned observer said. In his eyes, there is another upgraded product worth mentioning: Jinmailang's "One Dish, One Noodle" (一菜一面).

The biggest feature of this product is replacing the seasoning packet with a dish—using FD (freeze-drying) technology to turn freshly cooked dishes into a vegetable cake, replacing the traditional seasoning packet method. Also in 2015, Jinmailang's chairman Fan Xianguo took his "One Dish, One Noodle" (一菜一面) to conquer the world. Whether at industry conferences or within the circle, he always talked about this "sharp weapon."

Some media have also said that Jinmailang would rely on this product to compete with Tingyi and Uni-President. In the view of the aforementioned observer, convenience foods must be upgraded because consumers have upgraded.

Opportunities Remain

In the convenience food sector, a product that became hugely popular last year is actually the self-heating hot pot.

It has a slightly larger package than ordinary instant noodles, divided into upper and lower layers. You only need to add water to the lower layer, wait for the heating pack to expand and steam to rise. After waiting another ten-odd minutes, you can smell the aroma of "hot pot."

Because it is sufficiently "convenient," it is also called convenient hot pot, lazy hot pot, or mini hot pot. Previously, not many people thought self-heating hot pot would make waves, but after last year's Tmall "Double 11," everything changed.

Data shows that during last year's "Double 11," 1.7 million self-heating hot pots were sold in one day. Some industry insiders even estimate that in the future, it could form a market worth hundreds of billions of yuan.

Compared to the recovery of instant noodles, the popularity of self-heating hot pot has left them far behind. Moreover, consumer support has led upstream manufacturers to jump in, even Haidilao has joined. There are also cross-industry entrants, such as snack brands like Three Squirrels, Weilong, and Bestore.

"At the just-concluded Spring Sugar and Wine Fair, nearly 100 self-heating convenience food manufacturers participated, with about 50 from Chengdu alone..." the aforementioned industry insider said.

In his view, the technical content of this product is not high; for companies, it only requires "integration." Combining ham sausages, lotus root slices, meat slices, vegetables, and even heating packs from different manufacturers, arranging and combining them, is all it takes. Interestingly, in recent years, people have attributed the "sluggishness" of the instant noodle industry to "junk food," yet the hugely popular self-heating hot pot seems to overturn this assertion. "After all, for self-heating hot pot, high oil and high salt are inevitable," the aforementioned industry insider said.

Some media have also reported that self-heating hot pot has not yet been included in the food production license classification catalog, nor are there corresponding production license review rules, and there is no precedent for production licenses... "This fully shows that opportunities for convenience foods still exist; it's just a matter of whether your product is right," the aforementioned observer said.

Source: New Financial Observer -END-