Follow and star ↑↑ 「New Distribution」 See how many friends are following industry trends with you Today (September 11), the 19th China Convenience Food Conference, hosted by the Chinese Institute of Food Science and Technology, was held in Beijing. At the conference, representatives from leading companies such as Master Kong, Uni-President, Nissin, Jinmailang, Baixiang, Jinguang, Sanquan, Synear, General Mills, Anjoy, CP Group, Haixin, Keming, and Jinshahe attended for exchange and interaction. 2018-2019 China Convenience Food Industry Analysis As of now, there are 4,223 enterprises in China that have obtained production licenses for convenience food, mainly distributed in Shandong, Anhui, Zhejiang, Guangdong, Jiangsu, and other provinces, which account for 40% of the total. Data shows that in 2018, the main business revenue of the convenience food manufacturing industry was 294 billion yuan, an increase of 5.2% year-on-year, which is 2.06 percentage points lower than the 7.26% growth rate of the national food manufacturing industry; the total profit of the convenience food manufacturing industry was 21.4 billion yuan, with a profit growth rate of 14.4%, which is 8.33 percentage points higher than the 6.07% growth rate of the national food manufacturing industry. In the first half of 2019, the profit growth rate of the convenience food manufacturing industry was lower than the output value growth rate, showing a reversal. In this regard, Meng Suhe, Chairman of the Chinese Institute of Food Science and Technology, analyzed that the fluctuations in the output value and profit rate of convenience food are not only due to external reasons but also due to intensified market competition in some industries. Whether companies can focus on making products better and firmly enhance value, 2018-2019 is a period of exploration and "trial and error" for enterprises in their long-term development competition models and development paths. The Main Force in the Convenience Food Industry: The Instant Noodle Industry According to statistics from the Chinese Institute of Food Science and Technology on 22 major instant noodle enterprises, in 2018, instant noodle sales reached 51.5 billion yuan, a year-on-year increase of 3.3%; production volume was 34.44 billion portions, a year-on-year increase of 0.73%. After years of efforts, the safety of China's instant noodle industry chain has reached a high level, with a national sampling pass rate of 99.08% in the first half of 2019. The health transformation of the entire industry has accelerated, and innovation has entered an active period. However, market competition models have shown divergence, and the pace of the industry-wide "value enhancement" that has been promoted for two years has slowed down, with three competition models demonstrating each company's positioning and exploration of future development paths. Professor Meng Suhe pointed out that large enterprises' differentiated product innovation, focusing on health and nutrition from mid-to-high price points, has made high-end noodles colorful due to competition, improved cost performance, and received good market response. Product innovation led by medium-sized enterprises has become more active, with the industrialization of regional traditional flavor products gradually advancing, mainly targeting the mid-end noodle market. She believes that "differentiated competition is a good medicine to reduce vicious competition. Is it to be a 'creator' of product value or a 'porter'? It is worth deep thought in the industry." From the specific market situation, Master Kong's market share still dominates, supporting half of the market on its own. Uni-President follows closely, holding a 20% market share. The star product Tom Yam Noodles has performed particularly well, with sales expected to exceed 4 billion yuan in 2019. Jinmailang, with its precise positioning strategy, has steadily increased its market share, reaching 12% by December 2018, a 50% increase compared to January 2017, and the gap with Uni-President is narrowing. It is worth noting that the "Big Three" together hold more than 80% of the market share, leaving less and less space for other brands. Although Baixiang, Nissin, Nongshim, Gongzai, Huafeng, and Nanjiecun have a certain market foundation, they remain niche. Source: Food Board From sales revenue, Master Kong, Uni-President, Jinmailang, Baixiang, and Shanghai Nissin rank in the top five in order, consistent with market share. Meanwhile, Simate and Nanjiecun outperform Nongshim, Gongzai, and Huafeng in sales, ranking sixth and seventh respectively. In terms of production volume, the top four companies remain stable, but Jiaozuo Yuzhu jumped into the top five, while Shanghai Nissin fell to ninth place, indicating that Shanghai Nissin focuses on premium and high-priced products, without a significant advantage in production volume. Source: Food Board From the sales proportion of bagged noodles and bowl noodles, during the nine years from 2010 to 2018, bagged noodles declined from 71.39% to 55.56%, while bowl noodles increased from 28.61% to 44.44%. The market share of container noodles has been steadily rising, also indicating an increase in noodle product price and value. Source: Food Board Noodle Industry: The Trend of Market Concentration Towards Quality Enterprises is More Pronounced The growth of the noodle industry has been steady and firm in recent years. In 2018, the total output of the noodle industry was approximately 8.12 million tons, an increase of 4% year-on-year. The independent innovation of complete noodle equipment has reached an internationally advanced level. According to statistics from the Chinese Institute of Food Science and Technology, the total output of 24 major enterprises in 2018 was 3.409 million tons, an increase of 12.55% year-on-year; sales revenue was 15.563 billion yuan, an increase of 13.44% year-on-year. The proportion of small and medium-sized enterprises decreased by 4%, and the trend of market concentration towards quality enterprises in the noodle industry is more pronounced. Industry concentration has increased, brand enterprises have accelerated their market share, and competition in the noodle industry is intensifying at the high end. Professor Meng Suhe analyzed that the development of the noodle industry in 2018-2019 shows the following characteristics: First, industrial scale affects product cost. Large enterprises rely on economies of scale to continuously increase their market share, with the top five enterprises' market share increasing by 2% year-on-year. Second, small and medium-sized enterprises survive tenaciously by relying on specialty noodles. In 2018, the new production capacity of small and medium-sized enterprises increased by 60%, and the new production capacity of "baby-type" noodles doubled. Third, the market for dry and wet noodles, and semi-fresh noodles is growing rapidly; "noodles + natural seasonings" is becoming popular, drawing on the experience of instant noodle development, expanding the market through "mixing and matching." Fourth, the health-oriented innovation in the noodle industry has made breakthroughs in multigrain noodle products. It is particularly worth mentioning that noodle equipment has become a classic of "Made in China." The independent research and production of China's noodle equipment has reached an internationally advanced level. It has successfully solved the fully automatic process from wheat warehousing to product delivery, and has continuously achieved breakthroughs in energy conservation, consumption reduction, and intelligence. It is a classic example of enterprise-led independent innovation in the food industry. Frozen Food Industry: Leveraging Trends, Industry Innovation is Activated The frozen food industry has entered a bottleneck period since 2014. Professor Meng Suhe believes there are two main constraints: First, the product structure of frozen rice and flour products is aging. The three old varieties of buns, dumplings, and tangyuan, which account for 75% of sales, have seen continuous profit declines. Second, the development of the business-use market is showing a unilateral breakthrough in hot pot ingredients. Frozen rice and flour products have not formed product innovation with single-product sales exceeding 1 billion yuan for many years, and the industry's development space is increasingly narrow. The aging product structure and weak expansion of the business-use market have become bottlenecks affecting the long-term development of the industry. However, this dilemma saw an important breakthrough in 2018-2019. Professor Meng Suhe pointed out that the frozen food industry, following the trend of "Healthy China," has enhanced value in the precise development of traditional products, found a breakthrough in the business-use market by meeting and adapting to the personalized needs of the catering industry, and achieved important breakthroughs in connecting with the catering industry for enterprises that previously "broke through alone." The entire industry's innovation is focusing on multigrain and rice products. Traditional products rely on innovation to break the downward trend of many years. Frozen food categories such as buns, wontons, zongzi, fried items, and steamed buns, which are most closely integrated with the catering industry, have become the main contributors to frozen food sales growth; and tangyuan has also transformed from a traditional food to an everyday dessert, with sales proportion increasing significantly even during non-festive periods. According to statistics from the Chinese Institute of Food Science and Technology, high-end and convenience are becoming hot spots in the innovation categories of the frozen food industry. By leveraging trends, the overall efficiency and level of the industry have also rapidly improved, making it the fastest-growing segment of convenience food. Savory Flavor and Seasoning Industry: Strengthening Natural Characteristics, Focusing on Scientific Research Accumulation Flavor is the soul of food and one of the essential factors for the innovative development of the convenience food industry. In 2018-2019, the savory flavor and seasoning industry, with active innovation, solid basic research, and a good trend of differentiated competition, has made the professional characteristics of each enterprise more distinct in the overall value enhancement of the industry. In addition, the trend of "natural raw materials" for flavors and fragrances has taken shape, and integration with catering is forming new growth momentum for the industry. At the same time, the industry is making efforts in two directions: "application innovation" and "supporting application innovation with basic research." Application innovation is innovation from the customer's standpoint, and scientific research and development for future markets has also been initiated, focusing on plant-based foods (vegetarian) and artificial meat research. Professor Meng Suhe pointed out that the important future trends in the industry are: first, the naturalization and greening of flavor raw materials; second, the integration of flavor ingredients and soups with chain catering, becoming a new development momentum; third, the rise of vegetarianism, with the research and innovation of artificial meat becoming a new round of competition hotspot; fourth, "equal-height management," acting within one's capabilities, not exceeding one's abilities, not excessively pursuing expansion, but based on resilience and sustainability, focusing on honing core competitiveness. The Future of the Convenience Food Industry: Activating Thinking, Meeting Challenges Professor Meng Suhe believes that "After more than 40 years of development, and after nearly 5 years of deep integration and low-level development, China's convenience food industry has begun a firm transformation aimed at health and value. Building an enterprise with a sense of crisis requires entrepreneurs to truly activate themselves and challenge themselves: to give up familiar advantages and experiences; to learn and cope with new demands, and to find new growth space." At the leadership forum during the conference, Yasutaka Ando, Executive Director, Chairman and CEO of Nissin Foods Co., Ltd.; Fan Xianguo, Chairman of Jinmailang Noodle Co., Ltd.; Chen Xi, President of Sanquan Food Co., Ltd.; Chen Keming, Chairman of Keming Noodle Co., Ltd.; Wei Haijin, Chairman of Hebei Jinshahe Noodle Group Co., Ltd.; Zhou Zhiyi, Head of Sinar Mas Group's Agricultural Resources China Region and President of Food Division; Teng Yongzhuang, Chairman of Haixin Food Co., Ltd.; Yang Shouzheng, Group General Manager of Uni-President Enterprises (China) Investment Co., Ltd.; Shi Juling, Deputy General Manager of Haoxiangni Health Food Co., Ltd.; Ma Yinglong, Senior Vice President of CP Group's China Logistics Division; Luo Zhigang, Deputy General Manager of Master Kong Holdings' Central Research Institute; and Gianfranco, General Manager of Lesaffre Group's Spingler Business Unit Asia-Pacific, shared their thoughts on industry development with conference delegates. Source: China Food Safety News (Reporters: Li Tao, Guo Min), Food Board Once the tip is adopted, a payment of 400-2000 yuan will be made.