---
title: "Instant Noodle Market Returns to the '40 Billion Club' – Can It Rest Easy?"
description: "Recently, Jinmailang's chairman Fan Xianguo announced that the company will gradually exit the fried instant noodle market within five years. After hitting a peak of 46.22 billion packs in 2013, sales fell to 38.5 billion in 2016, then rebounded to 40 billion in 2018, re-entering the '40 billion club.' This article analyzes the reasons for the decline, the key drivers of recovery, and future innovation opportunities."
author: "晓鱼"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-11-07"
categories: "Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/L1HD-uQ59nKXCFxjo6GdvQ"
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citation: "晓鱼. “Instant Noodle Market Returns to the '40 Billion Club' – Can It Rest Easy?.” New Distribution, 2019-11-07. https://xinjignxiao.com/en/articles/instant-noodle-market-returns-to-the-40-billion-club-can-it-rest-easy-5291f166/"
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---

# Instant Noodle Market Returns to the '40 Billion Club' – Can It Rest Easy?

> Recently, Jinmailang's chairman Fan Xianguo announced that the company will gradually exit the fried instant noodle market within five years. After hitting a peak of 46.22 billion packs in 2013, sales fell to 38.5 billion in 2016, then rebounded to 40 billion in 2018, re-entering the '40 billion club.' This article analyzes the reasons for the decline, the key drivers of recovery, and future innovation opportunities.

Click 'Read Original' or scan the QR code to register. A few days ago, Jinmailang's chairman Fan Xianguo publicly announced: 'Jinmailang will gradually exit the fried instant noodle market within five years!' Amid the topic of market recovery, the instant noodle market is once again stirring.

In 2013, China's instant noodle sales reached a peak of 46.22 billion packs, then declined against the trend, hitting a low of 38.5 billion packs in 2016. Since 2017, sales have gradually risen. In 2018, the combined sales of 22 major domestic instant noodle brands totaled 40 billion packs, returning to the '40 billion club.'

In just a few years, instant noodles, as a national staple, have gone through ups and downs. How did this product, which once accompanied countless outings and late nights, reverse its fortunes? Is this reversal sustainable? Is the market recovery sustainable? Are there still risks and challenges?

> **Core Reading:**
>
> **1. Why did instant noodles decline in previous years?**
>
> **2. What are the key drivers for returning to the market?**
>
> **3. How to find the next innovation opportunity?**

**-01- Why did instant noodles decline in previous years?**

For industry insiders, it's easy to attribute the decline of instant noodles to the external 'barbarians' – food delivery platforms. From 2011 to 2017, China's food delivery market grew from 21.68 billion yuan to 166.24 billion yuan, nearly 8 times in six years. Especially in the early stages of food delivery's rise, with capital backing, platforms heavily subsidized to acquire users, offering free delivery and coupons, attracting consumers in droves.

But were there other factors besides food delivery platforms? If we place instant noodles in a larger consumption cycle, in fact, **the instant noodle category hit a 'boundary wall.'** In short, the category was basically saturated; instant noodles encountered **'market size and technological limitations.'** Remember the 2013-2014 instant noodle war between Kangshifu and Uni-President? In just two years, the two companies consumed 4 billion ham sausages as freebies for consumers buying instant noodles. This was also the main reason for their declining performance in 2014. If there had been room for category growth, they would never have escalated competition to such a degree.

**When hitting the market size ceiling, the most appropriate short-term approach is to launch a 'war' to grab consumer resources.** Additionally, technological limitations refer to the product itself. What's the difference between Kangshifu's and Uni-President's old坛酸菜 beef noodles? Almost none, just the packaging. The 'technological limitations' behind the noodles mean consumers no longer have new expectations for instant noodles. If the product were good enough, consumers would continue to buy, but it's just 'forced' rigid consumption.

'Braised beef noodles' and 'old坛酸菜 noodles' represent the category's synonyms. These household names no longer excite consumers. **Market size and technological limitations have pushed the category to its growth limit.**

Moreover, with rising incomes, the emergence of other novel convenience foods and meal replacements further divided consumers.

**Internal and external troubles combined to affect the instant noodle market; the decline in sales was inevitable. The rise of food delivery platforms masked the real reasons for the decline. Food delivery was just a can of fuel accelerating the category's arrival at the 'boundary wall.'**

**-02- What are the key drivers for returning to the market?**

Returning to the 40 billion club, obviously, still owes a debt to the food delivery market. When platforms shifted from user acquisition back to business fundamentals, and price leverage returned to normal market levels, users began to rebalance and reposition 'instant noodles vs. food delivery.' Food delivery remains a regular meal, while instant noodles are a convenient meal replacement, for immediate consumption, and a first choice when money is tight.

When the alarm of market decline sounded, instant noodle companies like Kangshifu and Uni-President naturally accelerated innovation. According to AC Nielsen data, in the first half of 2019, China's instant noodle market sales increased 7.5% year-on-year, and overall volume grew 1.4%. **High-priced instant noodles drove sales growth. Health and nutrition upgrades are the R&D direction for major brands.**

Recently, the 'Instant Noodle Market Development Report' released by Huoquanquan Microdata Lab showed that in Kangshifu's flagship store, mid-to-high-end products priced at 5-10 yuan accounted for 61.22%, while Uni-President's mid-to-high-end products accounted for 60.98%.

Uni-President positioned instant noodles as 'life noodles,' developing brands like Tang Daren, Duhui Xiaoguan, and Manhan Dacan, externalizing nutrition and health benefits through large chunks of meat and rich broth. Kangshifu adjusted its product structure, developing series like Express Sudamian, Fresh Vegetable Noodles, and Black & White Pepper to meet consumption upgrades.

Beyond ingredient upgrades, both companies also prioritized brand rejuvenation. For example, Kangshifu collaborated with the popular game 'Honor of Kings,' and Uni-President's Tengjiao created the 'Tengjiao Story' series with QR code scanning for 'electric short stories' linking to youth romance scenes. Tang Daren chose Liu Haoran as brand ambassador to make attributes like vitality and focus more convincing.

**Reflection, remediation, plus the slowdown of food delivery, barely pulled the instant noodle market back to the 40 billion scale.**

**-03- How to find the next innovation opportunity?**

Frankly, returning to 40 billion does not mean noodle companies can rest easy. China is a multi-tiered, multi-circle market. Using a unified consumption upgrade to deploy mid-to-high-end products across the board is not advisable.

Mid-to-high-end noodles are not the end; they only meet the nutritional needs of a small segment. What really matters is the consumption needs of multi-tiered, multi-circle markets, regardless of whether they are mid-to-high-end.

**The diversification, niche-ification, and segmentation of consumer demand are certain directions. Following this direction and letting go of the price curse are the only ways to truly seize the next consumption cycle's opportunity.**

**1. Segment populations, customize exclusive noodles**

Define instant noodles as life noodles. The core value of noodles is not convenience but truly meeting life needs. For example, low-calorie noodles for female consumers to reduce calorie intake; high-fiber, whole-grain, easy-to-digest noodles for the elderly. In Japan, there is a udon product developed exclusively for the elderly, with 40% less salt and added gamma-aminobutyric acid, which helps control blood pressure.

**In the past, the core logic of instant noodles was universal taste across the country. The advantage of a big single product is that it can be quickly distributed nationwide with a unified standard strategy and maximum efficiency in production, sales, and communication. Now, the infinite shelf space of online e-commerce provides more possibilities for the rise of 'small single products.'**

**2. Regional characteristics, go national**

China is a culinary powerhouse with thousands of years of history, resulting in distinct regional taste differences. There are countless local specialty noodle dishes. The nationalization of specialty noodles is also a good entry point. In the past, these local noodles were often found in small restaurants, a craft that couldn't be mass-produced industrially to go national, such as Zhenjiang pot-lid noodles and Guangdong bamboo-pole noodles.

For example, specialty snacks represented by Hunan rice noodles, Guangzhou luosifen, and Chongqing hot and sour noodles are gradually going national through online or offline channels, eliminating regional restrictions and authentically showcasing local characteristics.

**3. Avoid staple positioning, focus on snackification**

Internet-famous instant noodles, like fire chicken noodles, win over many users with their spicy, stimulating taste. Catering to consumers' curiosity for stimulation, develop snack-oriented products with 'exaggerated' flavors, similar to spicy strips, rather than current meal replacements, giving users more choices.

**4. Switch tracks, segment consumption scenarios**

The focus of life noodles is life. Noodles in life are not just about health and nutrition; more importantly, they should carry a sense of ritual. In recent years, the emerging innovative consumer brand 'Lamian Shuo' has almost repositioned the value of noodles. The product incorporates DIY elements, adding a 'cooking' step, bringing back the kitchen's warmth.

The new middle class is the main consumer of upgraded noodles. Combining the consumption scenarios of this group, future development could include noodles for fitness, afternoon tea, etc. For example, fitness noodles could focus on low GI and high protein concepts, with ingredients like chicken breast to meet nutritional needs in fitness scenarios.

**5. Upgrade ingredients, align with regular meal nutrition**

**Iterate and optimize, upgrade raw materials.** Still emphasize the 'convenient and fast' benefits of the instant noodle category, but with better taste and healthier options. Examples include Jinmailang's Laofanjia Noodle House and Kangshifu's Express Sudamian. The noodle cake has upgraded from fried to steamed, and may further upgrade to freeze-dried noodles, which are oil-free, closer to freshly cooked, and healthier. Seasoning packets have upgraded from MSG packets to real ingredient packets with large chunks of beef, rich broth, and large vegetables.

Freshness upgrade: fewer additives, fresher taste. Like juice and milk categories, noodles will shift toward fresh, less-additive directions. By reducing preservatives and other additives in noodles and seasoning packets, create fresh instant noodles. For example, Uni-President's Q Xiaoxian noodles contain only six ingredients like flour, no preservatives or additives, with a 45-day shelf life under cold chain.

**Conclusion:**

**Diversified, niche consumer demands do not only refer to the needs of a small group, but also the small needs of the majority.** In the past, we always targeted big needs, pursuing the common denominator of all consumers. In the future, we need to pursue small needs, for specific groups or specific consumption scenarios.

In Jin Cuodao's book 'Explosive Product Strategy,' he analyzed 'extreme cost-performance' as one of Xiaomi's winning formulas. **Providing high-quality products at prices below user expectations, thereby triggering a psychological carnival of users, also applies to traditional FMCG.**

For this new middle class, they no longer blindly worship big brands. They know how to earn and spend money, and seek cost-performance in purchases. Lamian Shuo benchmarks against Japanese ramen. Users' impression of Japanese ramen is rich ingredients and high prices. At Ajisen Ramen, tonkotsu and char siu flavors cost 35-45 yuan per bowl. Lamian Shuo controls prices around 20 yuan, offering products of similar quality and higher cost-performance, better meeting users' functional and psychological needs.

Traditional noodle products benchmark against ordinary domestic noodle shops, where a bowl of beef noodles costs around 20 yuan. In this case, Kangshifu's Sudamian Noodle House doesn't offer as strong cost-performance. Although convenient, its taste and perceived healthiness of ingredients are not as good as ordinary canteens. The price doesn't meet users' psychological expectations, meaning it doesn't achieve extreme cost-performance.

Zihai Guo benchmarks against hot pot restaurants. Consumers perceive hot pot restaurants as costing around 100 yuan per person. Therefore, Zihai Guo's 30-40 yuan price, with its convenience and deliciousness, supports its high price. The Tang Daren series, priced lower than Sudamian but with better quality than ordinary instant noodles, is a good product type in the current noodle upgrade.

**Upgrading is not about raising prices, nor is it solved by a few chunks of beef or a packet of broth. It's more about standing from the user's perspective, finding the balance point between user needs and willingness to pay, to better achieve market expansion!**

Tips that are adopted will be paid 400-2000 yuan.


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## Citation metadata

- Publisher: New Distribution
- Author: 晓鱼
- Published: 2019-11-07
- Canonical: https://xinjignxiao.com/en/articles/instant-noodle-market-returns-to-the-40-billion-club-can-it-rest-easy-5291f166/
- Original source: https://mp.weixin.qq.com/s/L1HD-uQ59nKXCFxjo6GdvQ

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