Click to read the original article for details On August 23, domestic food and beverage giant Tingyi Holding Corp. released its 2021 interim results. According to the financial report, Tingyi achieved revenue of RMB 35.396 billion in the first half of the year, a year-on-year increase of 7.47% , and net profit of RMB 2.035 billion , a year-on-year decrease of 14.50% . Among them, Tingyi's instant noodle business revenue in the first half of 2021 was RMB 12.722 billion, a year-on-year decline of 14.67%, accounting for 35.94% of Tingyi Group's total revenue. In addition, Tingyi's beverage business revenue in the first half of 2021 was RMB 22.276 billion, a year-on-year increase of 26.45%, accounting for 62.93% of the group's total revenue. Instant Noodles Temporarily Say Goodbye to 'Dividend' Regarding the significant decline in Tingyi's instant noodle business, the financial report explained that in the first half of 2020, the instant noodle business achieved abnormally high growth driven by the 'pandemic'. According to Tingyi's 2020 interim report, the instant noodle business then achieved revenue of RMB 14.91 billion , a year-on-year increase of 29.16% , accounting for 45.27% of the company's total revenue; net profit was RMB 1.694 billion , a year-on-year increase of 93.54% . Among them, high-priced bagged noodles, container noodles, and crispy noodles all achieved double-digit growth, with high-priced bagged noodles sales increasing 47.8% year-on-year. By the first half of 2021, compared with the special period of the pandemic last year, consumer demand gradually returned to normal. On the other hand, the financial report also mentioned that in the first half of this year, 'due to rising raw material prices and mix changes, the gross margin of instant noodles decreased 6.46 percentage points year-on-year to 23.89% '. The prices of core raw materials for instant noodles, including palm oil, cartons, paper buckets, and inner packaging film, all increased by more than 4% , with palm oil prices rising by nearly 60% . And Uni-President China Holdings, which has competed with Tingyi for years, seems to face the same dilemma. According to Uni-President's latest interim report, its instant noodle revenue in the first half of this year was RMB 4.398 billion , a significant decline from RMB 5 billion in the same period last year. According to Nielsen data, in the first half of 2021, the overall instant noodle industry sales volume declined 7.7% year-on-year, and sales value declined 7.3% year-on-year. Industry insiders analyzed that the decline in instant noodle business is not only due to pandemic fluctuations and rising bulk raw material prices mentioned by both Tingyi and Uni-President, but also from the macro environment, the rise of food delivery has brought a huge impact on the entire instant food sector. With the popularity of food delivery apps and services, the overall demand for instant noodles as instant food has grown slowly. Data shows that in 2020, national instant noodle demand was approximately 44.27 billion servings, a figure even lower than the level in 2014. According to Qichacha data, 2011 was the peak of instant food development in the past decade, with related enterprise registrations reaching 12,000. In subsequent years, the number of instant food enterprises continued to decline. Data from the World Instant Noodles Association (WINA) shows that from 2013 to 2019, China's instant noodle demand fell from 46.22 billion servings to 38.96 billion servings, a cumulative decline of about 15.7%. Moreover, consumption upgrading has driven innovation across the food industry. People are no longer satisfied with traditional bagged instant noodles; mid-to-high-end instant food is becoming increasingly popular, and domestic instant food is urgently moving towards refinement, high-end, and youth-oriented trends. Beverage Business Recovers However, thanks to the post-pandemic period, with the gradual recovery of out-of-home consumption and the continuation of new home consumption scenarios during the pandemic, Tingyi's beverage business accelerated its recovery and became the main supporter of performance. According to Nielsen data, in the first half of this year, the overall beverage industry sales volume grew 15.7% year-on-year, and sales value grew 17.6% year-on-year. Tingyi's beverage business segment can be subdivided into seven categories: 'ready-to-drink tea, carbonated beverages, juices, packaged water, coffee beverages, functional beverages, and lactic acid bacteria beverages'. According to Nielsen data, Tingyi's market share in the ready-to-drink tea category is 42.1%, ranking first in the market. According to the report, during the reporting period, Tingyi's ready-to-drink tea (including milk tea) sales share was 42.1% , maintaining its leading position; juice sales share was 17.5% , ranking second in the market; packaged water sales share was 6.2% ; ready-to-drink coffee sales share was 12.1% , ranking second in the market. In addition, since 2011 when Tingyi exchanged 9.5% of its equity for PepsiCo's China business, according to third-party research company monitoring data, Pepsi carbonated beverages overall sales share is 33.2%, ranking second in the market. From product category sales, Pepsi-Cola beverages continue to maintain stable growth, while juices and packaged water saw significant increases, with year-on-year growth of 33.97% and 38.37%, respectively. Industry insiders believe that since Tingyi's 'Boiled Water' was launched last year, it has shown ambitious intentions, with bold brand marketing, especially after officially announcing Cai Xukun as spokesperson in February this year, the brand momentum has been rising. It is understood that Boiled Water is a new cooked water product launched by Tingyi last year to compete with Jinmailang's 'Liangbai Kai'. In addition, 'low sugar' and 'sugar-free', which have become new trends in the beverage industry, have also become the main direction for Tingyi's new product launches. It is reported that since 2020, Tingyi has successively launched three teas主打无糖概念, and currently low-sugar tea beverages account for nearly 30% of Tingyi's tea beverage sales. This year, Tingyi also began to lay out the sugar-free beverage track—Tingyi's sugar-free iced black tea was first launched for pre-sale on Tmall on March 31. Outlook Tingyi pointed out in its interim report that looking ahead to the second half of the year, despite the uncertainty of repeated pandemic outbreaks and the complexity of the macro environment, China's overall economy is still expected to continue its recovery trend. In the post-pandemic era, consumers' health awareness has increased. With the control of the pandemic, out-of-home consumption is gradually reviving, and home consumption habits continue. The diversification of consumption scenarios, the development of O2O models and community models, bring new challenges and opportunities. In the second half of 2021, Tingyi will continue its 'consolidate, innovate, develop' strategy, grasping trends such as consumption stratification, health needs, and channel fragmentation. The instant noodle business will continue to use multiple price bands, multiple specifications, and diversified flavors to meet consumers' different needs. The beverage business will continue to strengthen product structure to promote steady business growth. PS: From September 23 to 25, 2021, the 2021 (4th) China FMCG Conference hosted by 'New Distribution' will be held in Shanghai. Focusing on industry trends + practical cases + growth connection as the core , 3,000 FMCG practitioners will gather for the event. 11 themed forums cover new consumption topics such as 0 Snack Era·Light Wellness, Small Categories·Big Bang, Z Generation·New Tea and Alcohol; new retail topics such as Community E-commerce: Midfield? Endgame? Interpretation, Heavy Investment in Same-City Retail (O2O), Short Video and Livestream Commerce; new marketing topics such as Digitalization, BC Integration, Martech, DTC and Private Traffic, Distribution B2B, and Large Distributors and Digital Distribution , with operators from various segments bringing the latest case studies. Confirmed heavyweight guests so far include: 1. Tao Shiquan, Founder of Jiangxiaobai; 2. Yao Xuhong, General Manager of Meiyijia Holdings; 3. Lu Xiuqiong, Global Expert Partner at Bain & Company and former Vice President of Marketing for Coca-Cola China; 4. Chen Xiaodong, Senior Vice President of Nestlé Greater China; 5. Zhang Fujun, President of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, General Manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, Vice President of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, General Manager of E-commerce at Gold Hong Ye Paper Group... A grand event for FMCG practitioners, you must be there! Are you 'watching' me?