---
title: "Uni-President's Lo Chih-hsien: Mainland Performance Improves, Optimistic for Q3, Instant Noodles to Enter Fresh Food Market"
description: "At Uni-President's shareholders' meeting in Taipei, Chairman Lo Chih-hsien outlined three operational priorities, expressed optimism for Q3 following better-than-expected inventory adjustments in mainland China, and announced plans to expand into the fresh food market with instant noodles."
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published: "2017-06-22"
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# Uni-President's Lo Chih-hsien: Mainland Performance Improves, Optimistic for Q3, Instant Noodles to Enter Fresh Food Market

> At Uni-President's shareholders' meeting in Taipei, Chairman Lo Chih-hsien outlined three operational priorities, expressed optimism for Q3 following better-than-expected inventory adjustments in mainland China, and announced plans to expand into the fresh food market with instant noodles.

Uni-President's Lo Chih-hsien: Mainland Performance Improves, Optimistic for Q3, Instant Noodles to Enter Fresh Food Market
Yesterday, Uni-President held its shareholders' meeting in Taipei, with Chairman Lo Chih-hsien, General Manager Hou Rong-long, and other executives in attendance. Chairman Lo Chih-hsien provided insights into market prospects and the company's operational plans for this year.

**Three Operational Priorities to Sustain Brand Value**
Lo Chih-hsien proposed three operational priorities at this year's shareholders' meeting: safeguarding food safety, pursuing continuous improvement, and implementing the 'Three Qualities' policy, continuing the core strategy of managing brand value.
He stated that Uni-President will continue its policy of "adjusting structure, stable growth, and value marketing" this year. In the current economic environment, in addition to aligning with social trends, food safety regulations, and consumer perceptions, the company will more actively connect group members, proactively discover and create resources within the group, and generate group synergies.
Food safety is the highest operational principle that Lo Chih-hsien emphasizes internally. He believes that "food safety is no longer just an operational risk but a matter of the company's survival." In the future, the company will invest tens of millions of yuan annually to enhance food safety testing, safeguarding the food and distribution businesses. Inside Uni-President, the slogan "No food safety, no Uni-President" is often seen.
The company aims to build a glorious history and continuously optimize to become a 'Three Qualities' enterprise with character, brand, and taste. He pointed out that character is the fundamental way of conducting ourselves; brand is the concept of creating something distinctive that consumers love; and taste conveys the composure and elegance of our exceptional character and outstanding brand.

**Uni-President China Inventory Adjustment Better Than Expected, Optimistic for Q3**
Regarding recent operations, Lo Chih-hsien said: "The second quarter feels 'happy'; the current situation looks quite comfortable, with growth across all business segments."
The mainland food business has been a recent pain point for Uni-President. Uni-President China's first-quarter net profit after tax was RMB 170 million, down 59.7% year-on-year, marking the largest decline among Uni-President's investments.
In response, Lo Chih-hsien stated that since the second half of last year, Uni-President China has been clearing channel inventory and adjusting shipment strategies for various beverage plants, leading to three consecutive quarters of profit decline. The mainland strategy has not changed; it's a matter of execution. Currently, all beverage categories are growing healthily. During peak season, beverage plant capacity utilization is 60-70%, with an annual average of about 40-50%. Maintaining market prices is more important than increasing capacity utilization. Uni-President China's inventory adjustment is better than expected, the second quarter looks "comfortable," and the third quarter can be viewed with optimism.

**Mainland Consumption Maintains 10% Growth; Challenge Lies in Manufacturers' Adaptability**
Discussing the mainland beverage and instant noodle markets, Lo Chih-hsien said that operational difficulties are due to manufacturers' own efforts. "Currently, mainland consumer spending continues to grow at 10%-12%, so the market overall is fine, but manufacturers face high challenges in adapting themselves."
"Transitioning from a manufacturing (market) to a consumer (market) is like two completely different worlds." In the past, the focus was on production; now it's about improving quality of life. This forces manufacturers to think about how to adapt to new production and manufacturing roles, ensuring product value is recognized by the public. Both mentally and in work, it's a completely different realm, requiring significant changes in personnel, processes, and materials.
Regarding the mainland domestic market, Lo Chih-hsien also mentioned that local standards are constantly rising. With advanced information, previously discussions centered on post-80s and post-90s generations, but now mainland China considers post-80s as old and is already discussing post-00s, reflecting the continuous shift in market and consumer thinking.

**Instant Noodles to Enter Fresh Food Market; Future Strategy Centered on '1 Core + 4 Main Axes'**
Lo Chih-hsien also mentioned that Uni-President's future strategy will revolve around "1 core + 4 main axes," with brand management as the strategic core, and manufacturing + R&D, trade and distribution, channel operations, and strategic alliances + strategic M&A as the four main development directions, actively deepening Pan-Asian regional layout.
In the instant noodle segment, mainland China sales stabilized and recovered last year, with slight growth of 1.3%. The company continues to launch innovative, differentiated products, driving industry upgrades, and market share has increased to 21%. In the future, it will strengthen R&D and enter the fresh food market.
Lo Chih-hsien reiterated at the shareholders' meeting: "Focus on operations, keep it simple." Developing 100 different brands or products is not as good as doing one big brand well and deeply. The company will cultivate billion-yuan products like Uni-Noodles, Chali Wang, and Xiao Ming Tong Xue to maintain stable growth momentum.

Extended Reading:
## Instant Noodles, Consumed 100 Million Packs Daily, Recover: Value of 'Delicious, Convenient, Time-Saving' Rediscovered
Nielsen data shows that in 2016, instant noodle market sales grew 1.3%. Kantar Worldpanel data indicates that the overall instant noodle market showed a recovery trend in 2016, with industry year-on-year growth of 0.9%, achieving the first positive sales growth in recent years.
The diamond bachelor has been revived.
The sustained weak growth of food FMCG has been seen as the "new normal" in recent years, with instant noodles, a typical representative, not being favored due to four consecutive years of decline. However, the latest industry data suggests the market may have changed.
On the evening of May 22, Master Kong (0322.HK) released its first-quarter results, showing revenue of RMB 14.1976 billion, with instant noodle revenue of RMB 5.811 billion, up 5.76% year-on-year, accounting for 40.93% of total revenue. According to Nielsen data, Master Kong's instant noodle volume share in Q1 2017 was 44.5%, and value share was 51.2%. Its 2016 annual report showed net profit of RMB 120 million in the second half of last year, up 1413% year-on-year, showing a U-shaped steady recovery.
Similarly, on March 24, another instant noodle giant, Uni-President China (0220.HK), released its 2016 annual report, showing that despite an overall performance decline, instant noodle revenue hit a record high of RMB 8.221 billion, up 8.6% year-on-year, with market share further breaking through to 21.0%.
Meanwhile, Nielsen data shows that in 2016, instant noodle market sales grew 1.3%. Kantar Worldpanel data indicates that the overall instant noodle market showed a recovery trend in 2016, with industry year-on-year growth of 0.9%, achieving the first positive sales growth in recent years.
The instant noodle industry, which had been declining for four consecutive years since 2012, was seen as evidence of China's economic transformation and consumption upgrade. However, various signs indicate that the industry began to stabilize and recover in the second half of 2016. Why did instant noodles recover? What new signals does this recovery send for the future market trends of the entire food industry?

**First Signal: Consumption Upgrade Favors the Adaptable**
The previous decline was due to consumption upgrades, and the current recovery is also due to consumption upgrades. The recovery of instant noodles is first reflected in the rising share of high-end instant noodles.
According to Kantar Worldpanel's continuous monitoring of 40,000 Chinese urban households, in the 52 weeks ending September 2016, high-end noodle sales accounted for 13.4% of total sales, with market penetration steadily increasing. 22.5% of urban households had purchased high-end instant noodles, up 1.6 percentage points year-on-year. Nearly 30% of urban households with monthly income above RMB 9,000 had purchased high-end instant noodle products.
With the continuous growth of residents' income, especially the growing middle class, China's instant noodle market is evolving from a pyramid-shaped consumption structure to an olive-shaped one. High-end products representing quality and health are gaining increasing recognition from consumers. The steady increase in market share and penetration of high-end noodles is the main engine driving the gradual recovery of the instant noodle industry.
In the market, this is reflected in the end of the "price war" in instant noodles, with significantly enhanced willingness for category cooperation. Major brands have focused on the high-end market to varying degrees. Master Kong, after shedding most of its 1.5 yuan bagged noodle market in 2016, moved up the product line to the 5 yuan range. Uni-President has been effective in cultivating high-end blockbusters; in the 52 weeks before September 2016, the single product Tang Daren contributed 77.3% of Uni-President's instant noodle sales growth. Following closely, Jinmailang's 2016 performance is expected to surge 26%, with its "One Dish One Noodle" two new flavors winning continuous praise from white-collar workers in first-tier markets.
Behind the rise of high-end noodles is a shift in consumer dietary and consumption concepts, reflecting the pursuit of a higher quality of life. It is undeniable that high-endization is becoming a trend, with consumers willing to pay for healthier, higher-quality products. The growing middle class will create more demand space and market opportunities for transforming food FMCG and the entire Chinese food industry.

**Second Signal: Returning to Demand and Rebuilding Value**
Reviewing the development of instant noodles in China, their rapid spread in the 1980s was closely linked to the deepening reform and opening-up and the rapid development of the market economy. In the early days of reform and opening-up, Shenzhen saw a slogan that would later resound across the country: "Time is money, efficiency is life." This coincided perfectly with the unique advantages of instant noodles: "quick, delicious, and safe." Since then, instant noodles have grown exponentially, driven by this deep motivation.
In today's China, time and efficiency are still advocated in the "mass entrepreneurship and innovation" trend. In the internet age, which values efficiency and time cost, instant noodles, with their inherent characteristics of "delicious, convenient, and time-saving," undoubtedly have an even more irreplaceable "core competitiveness." This is beyond doubt. The key issue remains how to better meet the diverse needs of current consumers.
In fact, imported instant noodle brands have begun to seize business opportunities. On May 12, Nissin Group announced on the Hong Kong Stock Exchange that it had decided to spin off its Greater China business and apply for an IPO with a total financing of $200 million. In the industry's view, this move reflects international instant noodle companies' optimism about the future potential of the Chinese market.
Stones from other hills can serve to polish jade. Looking at the development trajectory of Japan's instant noodle industry, it has shown steady growth over the past 60 years. Although it briefly declined in 2012, the decline was far smaller than China's, and it has since steadily recovered. Japan's per capita GDP is more than four times that of China, and correspondingly, Japan's annual per capita consumption of instant noodles is 42 servings, nearly a quarter higher than China's 34 servings. This fully demonstrates that the instant noodle industry can develop in harmony with a developed food industry and higher per capita income, adding confidence to China's instant noodle market and providing more ideas for the industry and the entire food industry.

**Third Signal: Progress in Consumer Concepts**
In recent years, the sustained downturn of instant noodles, besides competition from substitutes, market concept challenges, and internet impact, has also been hindered by widespread misunderstandings about instant noodles, spread through convenient information channels, which is a major obstacle to the industry's healthy development.
During the 2017 Two Sessions, Yao Zhongliang, National People's Congress representative and Chairman and CEO of Baixiang Food, expressed his views on food safety: "Food safety standards are indeed much better now. We hope the relevant national departments will make some modifications to the standards and strengthen education." Every participant should attach great importance and actively assume due responsibility.
Fan Xianguo, also an NPC representative and Chairman of Jinmailang Noodle Co., Ltd., specifically proposed promoting food education legislation to improve national health quality. Food education refers to food safety and nutrition education. Without proper channels to acquire food safety knowledge, correct purchasing behavior cannot be achieved. Based on the experience of developed countries, it is necessary to popularize food safety knowledge among the whole population, especially implementing food education projects in primary and secondary schools, so that people have correct perceptions.
On April 25, the China Food and Drug Administration released a batch of widely circulated food rumors confirmed by experts, including the claim that "instant noodles are 'junk food'." However, completely changing this stereotype still requires long-term efforts from all responsible parties.
Opportunities and challenges are always two sides of the same coin. The impact of consumption upgrades on instant noodles and the entire food industry is precisely the opportunity for transformation. Applying the right remedies, adapting to structural changes, and embracing consumption upgrades are the phoenix-like rebirth that the instant noodle industry is undergoing, and a process that more industries will experience in the future.
From this perspective, instant noodles serve as a good case of adapting to consumption upgrades and rediscovering self-worth. We can be cautiously optimistic about this rebirth process. As Nietzsche said in "Thus Spoke Zarathustra": "What does not kill me makes me stronger."
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