Instant noodle companies have launched three viral products in a row, and Uni-President has introduced the 5-yuan 'Tomato King'... Does the collective launch of new products by companies mean the instant noodle market is warming up? Latest data shows that after three years of decline, China's instant noodle market sales began to rebound significantly in 2018, and it is expected that in 2019, China's instant noodle sales will return to the previous peak level. Industry insiders believe that led by new and high-end products, China's instant noodle market is warming up. However, most industry insiders say that the recovery is only temporary, as instant noodles have not solved the health concerns of consumers, and consumption scenarios are decreasing. In the future, consumers will increasingly choose healthy and convenient products. Restorative Growth Recently, Beijing Business Today reporters found through statistics that in the past two years, many companies have launched multiple instant noodle products. From 2018 to 2019, Master Kong successively launched sibling flavors, regional flavors, large-size products, double-share buckets, high-end products represented by Fresh Vegetable Noodles, and ultra-high-end products represented by Suda Noodle House. At the same time, to strengthen its influence in regional markets, Master Kong launched series such as Xunwei Jiangnan, Damo Shengyan, Laochencu, and Shanhai Hui. Double-share buckets meet the cost-effective consumption needs of third- and fourth-tier cities, embracing the lower-tier market. Suda Noodle House is positioned as high-end, seizing the middle-class market. Jinmailang started from health and cost-effectiveness, launching the Laofanjia Instant Noodle House series, which uses non-fried steaming technology to replicate the taste of freshly made noodles, and the high-cost-performance Egg Bucket products. Laofanjia Instant Noodle House is positioned in the mid-to-high-end market, focusing on nutrition and health. Baixiang is also not to be outdone. In 2019, it launched three viral products in a row, including Liao Mian, Pan Mian, and Rock Gorilla Hot and Sour Rice Noodles. In addition, Baixiang cooperated with Zhejiang Gongshang University to deeply research bone soup series products. Based on the bone soup positioning, it targeted high-end simple meals and launched Bone Soup Boiled Noodles. Wugu Daochang, which focuses on non-fried instant noodles, launched three Spicy Crayfish Mixed Noodle products. Regarding the frequent launch of new products, different companies gave similar reasons. A Uni-President spokesperson exclusively told Beijing Business Today that the launch of new products is mainly to meet the constantly changing consumption needs of consumers, especially as consumption levels continue to segment, products need to be continuously iterated and innovated to respond to market demand. A Master Kong spokesperson said that the continuous iteration and update of products is mainly to consider whether they can meet the needs of personalized market segments, the upgrading needs of the middle class, and the needs of the lower-tier market. The 'market demand' and 'consumer demand' mentioned by the above companies were also corroborated during Beijing Business Today's investigation. Many post-90s consumers told reporters that they usually stock up on instant noodles and use them to satisfy hunger at night. Affected by factors such as consumer demand, the performance of instant noodle companies has also begun to show restorative growth. In the first half of 2019, Master Kong's instant noodle business revenue reached 11.544 billion yuan, a year-on-year increase of 3.68%, and net profit increased by 31.24% year-on-year to 875 million yuan. Uni-President's instant noodle business revenue was 4.268 billion yuan, an increase of 2.8% over the same period last year. In addition, other major instant noodle manufacturers such as Jinmailang and Nissin also showed strong market growth. In the first half of 2019, Jinmailang's noodle business and Nissin Food's performance grew by 20% and 41.1%, respectively. It can be seen that the instant noodle industry is showing signs of recovery, which is in stark contrast to the Chinese instant noodle market three years ago. In 2013, instant noodles gradually 'fell out of favor,' and sales continued to decline for several years. In 2016, instant noodle sales fell from 46.22 billion packs in 2013 to 38.52 billion packs. For companies, in 2016, Master Kong's instant noodle business revenue was about 22.13 billion yuan, a year-on-year decrease of 10.34%. In 2017, Uni-President's instant noodle business revenue fell by 0.7% year-on-year to 8.163 billion yuan. In 2018, China's instant noodle industry began to recover. China's 22 major instant noodle companies sold 40.25 billion servings, with sales of 51.5 billion yuan, a year-on-year increase of 3.3%, with both revenue and profit improving. In 2018, China's instant noodle sales accounted for nearly 40% of the global total. Based on the above data, on average, each Chinese person eats more than 30 packs of instant noodles per year. Zhu Danpeng, an analyst in China's food industry, said that food safety issues in food delivery are also becoming prominent, and coupled with the impact of rising raw material prices, price advantages have been weakened. Under these factors, it is inevitable that the instant noodle market will perform well. Consumption Drives Innovation Regarding the restorative growth of the instant noodle industry, companies attribute it to product innovation. A Master Kong spokesperson believes that the transformation to high-end products in the past two years has effectively driven market growth. It can be said that the recovery of the instant noodle market is the result of the consumption side continuously forcing the industry to innovate and upgrade. A Uni-President spokesperson, in an exclusive interview with Beijing Business Today, said that the entire industry has begun a transformation aimed at health and value, with active innovation and a gradually clear pattern of differentiated competition. This has outlined the phased achievements and a certain degree of industry consensus on the path of transformation and value enhancement for instant food. 'The recovery of the instant noodle market is inseparable from the gradual matching of the core needs of the consumer side by the industry side. Especially since 2016, companies such as Master Kong and Uni-President have accelerated product innovation, upgrading, and iteration, launching many high-end products.' Zhu Danpeng said. In fact, the innovative instant noodle products have also made consumers willing to buy them. Beijing Business Today's investigation found that in the past two years, many companies have launched multiple instant noodle products. Some have successfully advanced to high-end products, some have become viral products favored by young consumer groups, and some have become large single products with sales of billions of yuan. Among them, the two instant noodle giants, Master Kong and Uni-President, are the most representative. In the first half of 2019, Nielsen data showed that Master Kong has established a firm foothold in the ultra-high-end noodle market above 10 yuan, with a market share approaching 70%. As of September 21, according to Tmall Supermarket data, Master Kong's best-selling instant noodle was Master Kong Dashidai Braised Beef Noodles, with monthly sales of 90,000 orders. The second was Master Kong Shrimp and Fish Board Bag, with monthly sales of 21,000 orders. Obviously, the most popular product in Master Kong's lineup is still the more traditional Braised Beef Noodles. Uni-President's 'Tengjiao' series products have become viral products favored by post-90s and post-00s consumers due to their unique numbing flavor. The 5-yuan 'Tomato King' series products continue to expand into segmented fields. As of September 21, Tmall Supermarket sales data showed that Tang Daren still tops Uni-President's instant noodle products. Among them, Tang Daren Pork Bone Noodles ranked first in sales, with monthly sales of 70,000 orders; Tang Daren Hot and Sour Noodles ranked third, with monthly sales of 34,000 orders. In addition, Uni-President stated in its 2018 financial report that Tang Daren instant noodles achieved double-digit growth in 2018, and it is expected to exceed 4 billion yuan in sales in 2019. A person in charge of the instant noodle shelf at a Walmart store told Beijing Business Today that Master Kong and Uni-President instant noodles are still the best-selling products. However, brands such as Jinmailang and Baixiang have also launched many new products, putting pressure on Master Kong and Uni-President. A Jinmailang spokesperson told Beijing Business Today that Laofanjia Instant Noodle House is currently in short supply, selling to 13,000 GS25 convenience stores in South Korea, with daily sales of nearly 4,800 buckets. The monthly sales of this product in Jinmailang's flagship store exceeded 6,500 buckets. As of September 21, Tmall Supermarket data showed that its most popular product was the bowl-packaged Jinmailang Sweet and Sour Pork Ribs Fried Noodles, with monthly sales of 21,000 orders. The second best-selling was also the bowl-packaged Alang Fried Noodles Sweet and Sour Pork Ribs Noodles, with the same monthly sales of 21,000 orders. In addition, Baixiang cooperated with Zhejiang Gongshang University to deeply research bone soup series products. Based on the bone soup positioning, it targeted high-end simple meals and launched Bone Soup Boiled Noodles. As of September 21, Tmall Supermarket data showed that among Baixiang instant noodles, the best-selling was Old Hen Soup Noodles, with monthly sales of 16,000 orders, and Original Pork Bone Noodles had monthly sales of 4,290 orders. Most Wugu Daochang products are positioned in the mid-to-high-end market, with considerable e-commerce sales data. As of September 21, the monthly sales of Wugu Daochang's newly launched Spicy Crayfish Mixed Noodles in its flagship store were 2,443 orders. On Tmall Supermarket, Wugu Daochang's Sour Bamboo Shoots and Beef Noodles had monthly sales of 5,179 orders, ranking first in this category. Consumers also have deep feelings about innovation. According to Beijing Business Today's survey data on instant noodle consumers, compared with three years ago, instant noodles have made significant progress in taste, packaging, and high-end positioning. Among them, more than 40% of consumers believe that there are more flavors than before, nearly 30% believe that products are more high-end, and nearly 20% believe that packaging is better. Along with the growth in sales, China's instant noodle production and sales are also increasing. Nielsen data shows that in the first half of 2019, while China's instant noodle market sales increased by 7.5% year-on-year, overall sales volume also increased by 1.4% year-on-year. In Zhu Danpeng's view, the current Chinese instant noodle market has achieved a situation of 'both volume and price rising.' With the rise of many middle-class consumers, occupying the middle-class market has become the goal of major giants. Whether they can carve up this market and launch products suitable for this market is crucial. Some institutions predict that in 2019, China's instant noodle sales are expected to remain above 40 billion servings, returning to the previous peak level. A Jinmailang spokesperson said that in the past 61 years, instant noodle sales peaked at 50 billion servings, and there is still room for growth to 50 billion servings in the future. Health Needs to Be Strengthened Regarding whether the instant noodle market is recovering, Xu Xiongjun, a strategic positioning expert and founder of Jiude Positioning Consulting, believes that the current recovery is only temporary and difficult to sustain. It is worth noting that Beijing Business Today's survey data on instant noodle consumers shows that 58% of consumers believe that the instant noodle industry has not recovered and will continue to be sluggish, which is consistent with experts' views. From a macro perspective, instant noodles have been labeled as 'unhealthy food,' leading to consecutive declines in performance. In addition, affected by e-commerce and food delivery, market share has been eroded. In terms of transportation, traditional trains have been replaced by high-speed rail and airplanes, and the consumption scenarios for instant noodles are gradually being replaced. Beijing Business Today's survey data on instant noodle consumers shows that 67% of people said they basically do not eat instant noodles, 55% only eat them when they 'just want to eat,' and only 16% use instant noodles as a substitute for regular meals when they 'miss meal times.' Shen Meng, director of Chanson Capital, holds a similar view. He believes that at present, the product structure of instant noodles has not changed significantly, and the recovery of the instant noodle market is mainly due to increased consumer demand for relatively cheap instant noodles. From the analysis of Beijing Business Today's questionnaire, regarding instant noodle products, 42% of consumers believe they are 'nutritionally insufficient,' 27% believe that 'traditional noodles are fried, unhealthy,' and 18% believe they have 'single taste.' At the same time, 46% of consumers hope that instant noodles will be adjusted in terms of health, 24% hope for adjustments in taste, and 11% and 8% hope for adjustments in noodles and variety, respectively. It can be seen that how to improve nutritional value and strengthen health is an urgent task for the instant noodle industry. As is well known, fried noodles are the main reason consumers consider instant noodles unhealthy. It is understood that fried instant noodles are products made using a frying process. Since Momofuku Ando, a Japanese of Taiwanese descent, invented instant noodles and founded Nissin Food Products, the vast majority of instant noodles on the global market have been fried. To this day, after more than 60 years, fried instant noodles are still the absolute mainstream in the market, occupying most of the market share. In this regard, companies are constantly trying to break the original perception in terms of nutrition labels. For example, Master Kong cooperates with China's aerospace industry, benchmarking aerospace standards and quality to improve food safety system control, conveying the safe and healthy image of instant noodles. In addition, Master Kong was selected as one of the second batch of National Food Nutrition Education Demonstration Bases, focusing on developing the food nutrition and health industry and carrying out food nutrition education demonstrations. Jinmailang Chairman Fan Xianguo also recently publicly stated, 'Jinmailang will gradually withdraw from the fried instant noodle market within five years. Excessively adding auxiliary ingredients to fried noodles does not equal true innovation. High-end noodles are non-fried steamed noodles, and non-fried steaming technology is the true foundation of high-end noodles.' In order to enjoy delicious taste while obtaining more nutrition, consumers are also 'testing' creative ways to eat instant noodles. Beijing Business Today reporters interviewed several consumers and learned that in recent years, many new viral ways of eating instant noodles have been sought after by young consumer groups. One post-90s consumer surnamed Li told reporters that they would try many new ways of eating instant noodles recommended by Douyin influencers, and even develop their own special ways and share them on social platforms. They are not simply eating instant noodles; to some extent, they are expressing their personality and life attitude through eating instant noodles. 'Consumers are eating instant noodles in creative ways. Brand companies should cater to consumer needs from product, taste, and scenario aspects, forming a positive interaction, and should not only focus on short-term fluctuations,' Yao Liming, director of the China Commercial Economic Research Center, believes that whether the instant noodle industry is recovering cannot be proven by short-term market sales alone. Instant noodles are a basic consumer product, and it is normal for sales to fluctuate. We cannot rely solely on data from a few major brands to assert that the industry is sluggish or recovering. Source: Beijing Business Today (BBT_JLHD) Tips will be paid 400-2000 yuan once adopted. China FMCG + Internet Professional New Media Committed to FMCG manufacturer and distributor transformation and channel digital solutions