--- title: "Not Just Master Kong: Beer, Cola Giants Are Disappearing!" description: "The instant noodle industry's decline has entered its fifth year, and it's just a microcosm of the FMCG sector's struggles in China. Multinational giants like P&G, Unilever, and Coca-Cola are all feeling the pinch as consumer spending shifts toward health, travel, and education, forcing brands to pivot to premium products." author: "陈琼" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2016-09-29" categories: "Capital, Earnings & M&A, Consumer & Categories" language: "en" canonical: "https://xinjignxiao.com/en/articles/not-just-master-kong-beer-cola-giants-are-disappearing-8a1904a8/" markdown: "https://xinjignxiao.com/en/articles/not-just-master-kong-beer-cola-giants-are-disappearing-8a1904a8.md" original_source: "https://mp.weixin.qq.com/s/z6Pi6dht6tOhB-ODk9EQ7g" translation: "https://xinjignxiao.com/zh/articles/%E4%B8%8D%E6%AD%A2%E5%BA%B7%E5%B8%88%E5%82%85%E4%B8%80%E4%B8%AA%E4%BA%BA%E5%9C%A8%E4%B8%8B%E6%BB%91-%E5%95%A4%E9%85%92%E5%8F%AF%E4%B9%90%E7%AD%89%E5%B7%A8%E5%A4%B4%E6%AD%A3%E5%9C%A8%E6%B6%88%E5%A4%B1-8a1904a8.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/not-just-master-kong-beer-cola-giants-are-disappearing-8a1904a8/" citation: "陈琼. “Not Just Master Kong: Beer, Cola Giants Are Disappearing!.” New Distribution, 2016-09-29. https://xinjignxiao.com/en/articles/not-just-master-kong-beer-cola-giants-are-disappearing-8a1904a8/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Not Just Master Kong: Beer, Cola Giants Are Disappearing! > The instant noodle industry's decline has entered its fifth year, and it's just a microcosm of the FMCG sector's struggles in China. Multinational giants like P&G, Unilever, and Coca-Cola are all feeling the pinch as consumer spending shifts toward health, travel, and education, forcing brands to pivot to premium products. Long press the QR code or click "**Read Original**" to register. 30+ industry experts, 100+ B2B platform founders, 800+ manufacturer and distributor friends, gathering in Fuzhou to discuss the internet transformation path of the FMCG industry. If it weren't for Master Kong's poor half-year report, people might have overlooked the fact that the instant noodle industry's decline has entered its fifth year. The instant noodle situation is just a microcosm of FMCG; P&G, Unilever, Coca-Cola, and other once-thriving multinational FMCG giants have tasted bitterness in the Chinese market. **During the period of consumption upgrade and industrial transformation, the FMCG market landscape is undergoing drastic changes.** **FMCG giants are all having a tough time** Actually, it's not just Master Kong; since 2015, multinational FMCG companies have been struggling. Coca-Cola's 2016 half-year report shows that in the first half of this year, Coca-Cola's revenue was $21.821 billion, a year-on-year decline of 4.6%. The report indicates that the decline was mainly dragged by the Asia-Pacific region, especially the Chinese market. Coca-Cola COO James Quincey once said that in the second quarter of 2016, Coca-Cola's juice sales in China fell by double digits, and Coca-Cola's sales also declined. Another large enterprise, Wahaha, has seen its performance decline for three consecutive years, especially its star product Nutri-Express, whose sales nearly halved. In the daily chemical sector, P&G and Unilever, which once existed like myths in the Chinese market, are no longer glorious. P&G and Unilever once used "TV ads + supermarket stores" to capture a huge consumer group; now consumers have diversified shopping channels, such as e-commerce, cross-border shopping, and WeChat business. Handmade cold-process soap, silicone-free shampoo, and other products have replaced Safeguard and Head & Shoulders on supermarket shelves. P&G and Unilever, which had nearly 20% sales growth in the Chinese market 10 years ago, are now plagued by declining performance, layoffs, and reduced marketing expenses. **Household spending on FMCG is decreasing** "Our company's sales grew 16% in the first half of this year, with profit growth less than that, attributed to economic slowdown, but against the backdrop of generally slowing FMCG growth, our growth rate is still satisfactory," Xiang Piao Piao Chairman Jiang Jianqi told Beijing Morning Post reporters. In 2015, China's FMCG sales growth further slowed, and for the first time, FMCG sales volume saw negative growth that year. A report by Bain & Company and Kantar Worldpanel, "China Shopper Report," showed that in 2015, China's FMCG market sales growth hit a new low of only 3.5%, the lowest in five years, compared to 5.4% the previous year. Declining sales volume and slowing price growth also led to the first negative growth in FMCG sales volume last year, down 0.9% year-on-year. Kantar Worldpanel China General Manager Yu Jian said that although Chinese consumers' per capita disposable income is increasing, the growth of many FMCG categories stagnated last year, and consumers are gradually spending less on FMCG. An important reason for the slowdown in FMCG growth is that overall household spending on FMCG is decreasing; in 2015, the average household spending growth on FMCG slowed significantly to 0.8%. Yu Jian pointed out that as the domestic consumer market matures, household spending on FMCG will gradually decrease. People are more inclined to spend on tourism, education, and transportation to improve their quality of life. Last year, industries related to health, quality of life, tourism, and entertainment all saw double-digit growth. The report shows that from 2011 to 2015, cinema revenue grew at an average annual rate of 35.4%, outbound travel grew by 28%, and water purifier sales grew by over 50%, in stark contrast to the low growth of FMCG. This indicates that as consumers become more concerned about balance and healthy living, spending on non-FMCG categories is growing rapidly, encroaching on FMCG growth. **The FMCG landscape is about to undergo drastic changes** From the perspective of instant noodle industry practitioners, the widespread spread of many rumors about instant noodles containing large amounts of preservatives, taking 32 hours to digest, and other false claims has caused the Chinese instant noodle market to shrink year by year with poor sales. Associations and companies periodically come forward to defend instant noodles, trying to reverse consumers' prejudice. Meng Suhe, Chairman of the Chinese Institute of Food Science and Technology, said at a recent press conference to debunk rumors about instant food, "Instant noodles are a category in China's food industry with reassuring safety levels; in random inspections from 2015 to the first half of 2016, the pass rate was above 99%." Financial writer Wu Xiaobo pointed out that in the past few years, the biggest impact on the food and beverage industry has not been the internet model, but the iteration of people's health concepts. The rise of the middle-income group and the awakening of public health awareness have made people increasingly concerned about concepts such as additives, GMOs, and all-natural. The FMCG landscape is undergoing drastic changes, and consumption upgrades and the reconstruction of labor advantages will bring new opportunities and challenges to FMCG. In the future, consumer demand will become more niche and personalized. This also means that more and more consumer products that do not fit the new era are gradually fading away, just like those consumer goods full of my childhood memories have gradually disappeared. And new, personalized consumer products will rise. For FMCG companies, to cope with the new consumption situation, personalization and high-end positioning have become the only way. Bruno, Chairman of Bain & Company's Greater China Consumer Products and Retail Practice, pointed out that since it is difficult to drive consumers to increase purchase frequency, and many FMCG categories have low purchase frequency, with penetration stagnating or declining, major brands are responding by launching or investing in premium products. **News Link** **From 1.5 yuan to 29.9 yuan: Can premiumization save the instant noodle industry?** The development history of instant noodles in the Chinese market is also a history of price wars between the two giants, Master Kong and Uni-President. The price war between the two giants lasted for over a decade, and instant noodles maintained the same price for decades; for example, the classic bagged braised beef noodles still cost 1.5 yuan. Over the past 20 years, prices, labor, rent, and raw materials have all skyrocketed, making instant noodles one of the foods with the smallest price increases. However, even so, the crisis in instant noodles shows no signs of easing. Under severe market conditions, instant noodle giants like Master Kong and Uni-President have changed their previous fierce "price war" strategy and have begun innovative models. Uni-President took the lead in high-end innovation. After successively launching 5-yuan instant noodle brands, Uni-President actively laid out the market for medium- and high-priced noodles above 5 yuan this year, launching three new high-priced brands in the first half of the year. Among them, "Man Han Yan" targets the high-end meal replacement market with a price of nearly 30 yuan. Master Kong, on the other hand, stated that since May this year, the company has strategically promoted the classic series to consolidate the 4-yuan price band, and in the price band above 4.5 yuan, it mainly promotes upgraded products such as the slow-cooked broth series. It is clear that Master Kong and Uni-President are pinning their hopes on launching premium products to reverse the decline. At present, the premiumization strategy does seem to be starting to show some results. Uni-President's half-year report shows that its instant noodle business improved in the first half of this year, with revenue of 4 billion yuan, up 9.8% year-on-year. Master Kong also said that June performance has steadily rebounded year-on-year, and the decline in the second quarter has slowed. The change in strategy by instant noodle giants means that the past situation where price wars to seize market share kept the domestic instant noodle market dominated by low-end products is being rewritten. According to analysis by the Chinese Institute of Food Science and Technology, a competitive landscape for high-end noodles has formed, represented by Master Kong, Uni-President, Nissin, and Nongshim. This shifts the original competition model, which used price competition as a means, focused on low-end instant noodles, and squeezed from top to bottom, to one that extends to high-end instant noodles with nutrition and health as the connotation and evenly matched competition. As the instant noodle industry's decline enters its fifth year, high-end instant noodles labeled as rich in flavor, healthy, nutritious, and delicious are increasingly occupying shelves. Whether the strategies of the instant noodle giants will work still needs to be tested by the market. At least against the backdrop of the rise of the middle-income group and consumption upgrades, high-end imported instant noodles from Thailand, Japan, and South Korea remain very popular. New Food Era · New Distribution —— 2016 China "FMCG + Internet" Summit Forum —— **This is a grand event focused on how the FMCG industry's channels will transform under the trend of Internet+ transformation** **Conference Agenda** 08:00-09:00 Registration 09:00-09:05 Host opening 09:05-09:35 2016 China FMCG Industry Trend Analysis Report——Zhao Bo 09:35-10:05 FMCG Enterprise Transformation Strategy and Path——Liu Chunxiong 10:05-10:35 Opportunities and Challenges Brought by FMCG Channel Reform——Field 365 CEO Liu Zhao 10:35-11:05 Alibaba Retail Link All-round Empowerment——Alibaba Retail Link Guo Kunkun 11:05-11:25 Channel Efficiency in the Internet Era——Benlai Holding Vice President Fu Xiaoyun 11:25-12:00 Roundtable Forum——Brand Transformation: Improvement vs. Reconstruction? Guests: Liu Zhao, Liu Chunxiong, Fang Gang, Chen Feng, Shi Zhengchuan, Deng Xia 12:00-13:30 Lunch 13:30-13:50 Distributor Transformation: City Distribution Trend Development——Wei Jie City Distribution CEO Wang Qi 13:50-14:20 Roundtable Forum——Why Distributors Should Do Logistics in Transformation Guests: Zhao Bo, Wang Qi, Liu Zhongmin, Tang Guangliang, Wang Cheng, Sheng Yan 14:20-14:40 How FMCG Enterprises Leverage the Internet to Take Off——Xi Jiu E-commerce Operations Director Wang Hui 14:40-15:00 Detailed Explanation of Zhongshang Huimin's One Machine, Two Wings Strategy——Zhongshang Huimin Vice President Su Xiaoxin 15:00-15:20 Category Value and B2B E-commerce Development Strategy——Yi Jiu Pi CEO Wang Chaocheng 15:20-15:40 Supply Chain Finance as a Lubricant for B2B to Drive Traditional Business——51 Order CEO Chen Xian 15:40-16:00 Zhanghe Cloud Factory Helps Upgrade FMCG Supply Chain——Zhanghe Tianxia CEO Yang Lixiang 16:00-16:30 Integrating Micro Retail, Reconstructing Business Ecosystem——Quanshi Vice President Miao Dong 16:30-16:50 In the Next Decade, B2B is the Main Investment Battlefield——Well-known Investor (TBD) 17:00-17:30 Roundtable Forum——Who is the King in FMCG B2B Models? Guests: Fu Xiaoyun, Zhuang Jianzhong, Jiang Tao, Zeng Weiqin 17:30-19:30 Dinner For manufacturers and distributors friends who want to transform, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register. **Registration Method: Long press the QR code below or click "Read Original"** ↓↓↓ Click "Read Original" [Register] ↓↓↓ --- ## Citation metadata - Publisher: New Distribution - Author: 陈琼 - Published: 2016-09-29 - Canonical: https://xinjignxiao.com/en/articles/not-just-master-kong-beer-cola-giants-are-disappearing-8a1904a8/ - Original source: https://mp.weixin.qq.com/s/z6Pi6dht6tOhB-ODk9EQ7g ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671