As the saying goes, "Thirty years east of the river, thirty years west." Now, instant noodles have made a comeback. Last month, Master Kong, the leading instant noodle company, released its 2018 financial report, showing a 5.73% year-on-year increase in its instant noodle segment. At the same time, Master Kong stood out among instant noodle companies, with total revenue reaching 60.686 billion yuan.

Frankly speaking, the instant noodle industry has experienced ups and downs. Starting in the 1990s, it saw 18 consecutive years of growth, peaking in 2013. Due to the wave of consumption upgrades and the rise of the food delivery market, the industry began to decline. However, in recent years, instant noodles have started to recover. According to data from the Chinese Institute of Food Science and Technology, in the first half of 2018, instant noodle sales volume grew by 4.5% and sales value by 8.6%, with both volume and price rising, indicating accelerated growth.

There are two reasons behind this:

First, the food delivery industry has been criticized for various food safety issues. Consumers have gradually realized that some delivery food has far more serious hygiene problems than instant noodles. Various small delivery workshops have emerged, whereas instant noodles, as pre-packaged food, have long passed strict inspections by the national food regulatory authorities.

Second, instant noodle companies have gradually caught up with the consumption upgrade trend, continuously innovating and launching high-quality, high-nutrition products. They have shed the "unhealthy" label and, through various forms and activities, have helped consumers rediscover instant noodles.

Among these companies, Master Kong, as a leader in the instant noodle field, has performed particularly well recently.

Space Science Popularization

Recently, after the space science popularization tour swept through Xi'an, Yulin, Datong, Ankang, Taiyuan, and Chengdu, Master Kong kicked off its space science event in Jinan, Shandong. According to industry insiders, the space exhibition in Jinan alone attracted tens of thousands of consumers, who experienced firsthand how Master Kong applies aerospace standards and technology to its own production and manufacturing.

On April 27, the space science exhibition welcomed a special group: the channel distributors who have been fighting alongside Master Kong. Regarding Master Kong's partnership with the space industry, they may be the most qualified "outsiders" to speak. A distributor surnamed Zhang from Tengzhou, Shandong, told reporters, "I had heard that Master Kong was cooperating with the national space program, but this time I came to participate and experience it myself, and I was deeply impressed. In the past, the instant noodle industry experienced several incidents, such as rumors about junk food and unhealthiness. Master Kong, from sponsoring marathon events in the past to now cooperating with the space program, has effectively countered these rumors and established a high-quality image for its instant noodles."

But it wasn't enough to just feel it himself. Zhang continued, "After this visit, when I return to the company, I will convey this space science exhibition to our salespeople at the morning meeting, train them, and have them share this topic with small shop owners during their visits. This is a good topic for us to promote and can effectively counter competitors."

Industry experts have pointed out that companies today must follow this principle: one hand holding a sword (bending down to seize the market), the other holding a scripture (brand philosophy and brand building). Master Kong's prominent actions in the past two years undoubtedly confirm this. Adapting to environmental changes and adjusting strategies in a timely manner may be the core reason Master Kong continues to hold the top position in instant noodles.

One Hand Holding a Sword

In the FMCG sector, Master Kong is a typical representative of truly bending down to do market work, extending its reach to millions of small stores, and it was one of the earliest practitioners of the channel refinement strategy. In the early stages of industry development, Master Kong reached the forefront of the market thanks to its successful channel refinement strategy.

Of course, with changing times and environments, Master Kong has not rested on its past success. In November 2018, Master Kong Holdings reached a strategic cooperation with Alibaba's Retail Link. In January 2019, Master Kong Holdings reached a strategic cooperation with JD's New Channel, leveraging the quality of Retail Link and New Channel to effectively improve brand penetration efficiency and further expand market coverage density for traditional retail small stores.

But that's not enough. According to industry insiders, starting from December 2018, Master Kong adjusted its channel profit policy, increasing distributor channel gross profit by 2 yuan per box, and also made appropriate policy adjustments for retail small stores. Zhang said, "Previously, Master Kong didn't have much advantage in channels compared to competitors. Now this adjustment has dealt a heavy blow to competitors, especially in retail small stores."

Such a large rebate has greatly encouraged Master Kong's entire distribution system and corrected channel interest relationships. In addition to releasing profits, Master Kong is also paying attention to the development of distributors while considering their business. According to insiders, in the past, channel refinement was more enterprise-led, extending management to terminal stores, making distributors more like logistics providers. But now, Master Kong is actively promoting the transformation and upgrading of distributors. Besides helping them access digital platforms like Retail Link and New Channel, it also supports distributors to lead market development through the division of different business circles.

If distributors only provide warehousing, distribution, and capital advance functions for brand owners, their value will severely diminish in the upcoming digital channel era. Master Kong knows that in the future, truly valuable distributors will be marketing promoters: forming strategic alliances with brand owners, helping them implement communication with consumers and promotion in retail stores across regions. The head of the Shandong market told this author that Master Kong has established a complete system, shifting from emphasizing management in the past to emphasizing service now. In the past, distributors only did logistics; now we help distributors improve their commercial flow capabilities and encourage them to refine their channels further. We hope for win-win cooperation, not one-sided wins, and certainly not leaving distributors aside.

One Hand Holding a Scripture

Channel adjustments have given distributors confidence. But if we want to help distributors complete their transformation and upgrading, having only a "sword" without brand building, without consumer trust and support, is like drawing water with a bamboo basket.

In the past, when there was a market dividend, whoever covered the market first and delivered products to consumers took the initiative. This was the so-called channel is king, terminal is king. At that time, it was channel-driven. But when the market enters a stage of full competition, the dividend period disappears, and supply exceeds demand, it enters the era of brand-driven. For the instant noodle industry, the era of blindly competing on price is over. Low-price competition is fatal for both companies and the industry. The bottoming out in 2013 precisely illustrates this point.

From October 2018 to now, Master Kong's space science exhibitions, including previous sponsorships of sports events, are intended to continuously strengthen Master Kong's brand building. Not only to let consumers know that Master Kong is a "big company," but also to make them believe that Master Kong is a company with quality assurance and trustworthiness. The goal is to establish a space-quality positioning in consumers' minds and foster trust in space quality.

A distributor surnamed Song from Jinan told us, "We specialize in serving special channels for the campus market. Master Kong's investment in the campus market is not only about sales volume but also about cultivating consumers. Because if consumers have an early awareness of Master Kong's space quality, when they leave campus, they will still have a deep understanding of Master Kong, and through word-of-mouth, they will influence more people around them. In the past, when we did market work, Master Kong was always the target of attacks due to its large sales volume, whenever there were counterfeit or quality issues. Previously, we could only simply explain that Master Kong is a big brand, but now we can stand tall and respond to these doubts with the space cooperation event. We market people now have a nuclear weapon."

Frankly speaking, in the past, Master Kong, in terms of the "sword," continuously reinforced its moat in response to changing times, maintaining its leading edge with a sharp sword. Now, by cooperating with the space industry and establishing a high-quality image, it has made up for a lesson. For an industry like FMCG, which is homogeneous and low-involvement, only by holding both a sword and a scripture can a company truly win the market and win people's hearts in the long run.

Zhu Danpeng, a researcher and analyst at the China Food Industry Research Institute, believes that with the consumption upgrade across the industry, consumers' awareness of food safety is incomparable to before. This cooperation between Master Kong and the space industry can provide higher, stronger, and better endorsement for Master Kong's brand height, reputation, and food safety assurance. With such top-level design and authoritative space endorsement, the entire internal channel system of Master Kong will receive more positive recognition. From another perspective, Master Kong's growth in the past two years, besides product innovation and meeting the core demands of the new generation of consumers, is also because Master Kong is the first company in the instant noodle field to incorporate food safety issues into its business strategy, which will also play a very positive role for the entire industry.

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