First, let's look at an announcement. On December 14, 2017, Tingyi (Cayman Islands) Holding Corp. announced that it had entered into a food product purchase agreement with Weizhen Investment, concerning the group's procurement of freeze-dried ingredients, dried meat floss, and other meat products from Weizhen Investment and its subsidiaries, for a term of three fiscal years ending December 31, 2020. According to the agreement, the annual caps for 2018, 2019, and 2020 are RMB 680 million, RMB 803 million, and RMB 947 million, respectively. The announcement stated that the annual caps under the food product purchase agreement were determined based on historical transaction amounts with Weizhen Investment and its subsidiaries, with an approximate 24% annual growth for 2018 and approximately 18% annual growth for the remaining years. The growth is based on the company's expectation of increased demand for food products required in its production. In the above announcement by Tingyi, two points particularly caught my attention:

  1. The freeze-dried ingredients in the three-year procurement agreement.
  2. The 18% annual growth rate is based on the company's expected production needs. From this, it appears that Tingyi is already on the path of developing new products and will make such products an important segment in the coming years. This reminds me of the recent high-profile launch of a freeze-dried instant noodle by Xiaomi. What is it about freeze-dried ingredients that is so attractive that even Xiaomi, an electronics company, would enter the instant noodle market? I. Players in the Freeze-Dried Ingredient Instant Noodle Market Xiaomi's instant noodles, which have been hot recently: The tomato and egg freeze-dried noodles listed on Xiaomi Youpin come in a 62g cup, 12 cups per box, with a total price of RMB 59.9, which is about RMB 5 per cup with free shipping. The official promotion highlights non-fried freeze-dried technology, fresh taste, and rich soup. It uses all-physical processing and aerospace freeze-drying technology, which dehydrates fresh ingredients (noodles, bone broth, vegetables) by 98% in a -30°C vacuum environment. To eat, just add boiling water to restore the flavor, claiming to taste like it was cooked in a kitchen. However, this product has also received some complaints from buyers, with a 91% positive rating on Youpin Mall. From the reviews, most people think the tomato and egg freeze-dried noodles are quite tasty, but the portion is too small and the logistics are slow. Some netizens also said that for women and light eaters, such a portion is sufficient, as health and convenience are the main points. But for otaku or overtime workers, it's better to look elsewhere; this isn't for you. Actually, before Xiaomi, Jinmailang Noodle Co., Ltd. launched its high-end product "Dad's Kitchen · One Dish One Noodle," which also uses freeze-drying technology to restore the original taste of food. In 2015, high-end products represented by "Dad's Kitchen · One Dish One Noodle" drove Jinmailang's sales growth by over 20%. Jinmailang's "One Dish One Noodle" initially launched with a tomato and egg flavor, but the product has been upgraded, and now there are three flavors: green pepper with shredded pork, and mushroom with stir-fried meat. Compared to Xiaomi's instant noodles, Jinmailang continues its brand's consistent style with generous portions. On JD.com, it sells for RMB 95 per box, 12 cups per box, 112g per cup, which is about RMB 7.9 per cup. On JD.com, the positive rating is as high as 98%, and most netizens are full of praise for the taste. II. Judgment on Market Upgrade Why are Jinmailang, Xiaomi, and Tingyi all optimistic about freeze-dried ingredients? 1. The labels of "unhealthy" and "not nutritious" for instant noodles have always lingered Characteristics of freeze-dried ingredients: " The food is first frozen at low temperatures, then dried under vacuum conditions with heating, causing the frozen water in the food to sublimate directly from solid to gas, so it is also called sublimation-dried food. The advantages of this food are: nutrients are well preserved, and it can be stored for a long time. Since the food is dehydrated under vacuum, the internal tissue and vascular system are minimally damaged, and after rehydration, it can restore the original shape and taste. It is usually in small packages, so it is very convenient to carry. " Instant noodles in China have been overly "demonized," bearing too many unfounded accusations: "takes 32 days to digest," "packaging contains wax," "high oil and salt"... The completely different treatment of instant noodles in Japan, South Korea, and Hong Kong may offer some lessons for domestic companies: through technological improvement, they can enhance the health and safety of instant noodles, provide more flavors to consumers, eliminate consumer prejudice, and make instant noodles a delicious food worthy of the dining table. Perhaps the freeze-dried ingredient packets came into being under this background. The ingredient packets made with freeze-drying technology are precisely labeled as healthy, nutritious, and like freshly cooked in the kitchen, which has attracted consumer attention and praise. 2. Making products that align with consumer purchasing trends Nowadays, the trend of premiumization in instant noodles is increasingly evident. With the instant noodle industry saturated, competition intense, and low profit margins difficult to break, premiumization has become a way for companies to break through, and consumers' greater focus on health has also become a catalyst for premium instant noodles. The premium concept provides more room for price increases, which also offers opportunities for profit improvement for instant noodle companies in the fierce competition. III. Market Cultivation Needs Strengthening, and Product Innovation Is Also Key Although instant noodles featuring "health" and freeze-dried ingredient packets have certain advantages in "freshness" and "taste," market acceptance still needs more verification. Do you remember the "Wugu Daochang" that once promoted non-fried? Although it was the first domestic health-oriented instant noodle to propose the "non-fried" concept, and it once became popular through its health positioning and intensive TV advertising, its failure to sustain investment in market cultivation led to shrinking sales. Coupled with problems such as capital shortages due to large-scale expansion, it eventually had to be sold to COFCO for survival. Unfortunately, COFCO could not turn it around, and Wugu Daochang faced the fate of being sold again, which is lamentable. On the other hand, the impact of imported instant noodles is becoming increasingly evident. A Kantar analyst said, "In the past three years, the share of imported instant noodle products has continued to grow." Besides consumers' higher confidence in the safety of imported food, imported instant noodles mainly attract consumers through novel flavors, such as curry, Tom Yum, and Laksa, which are rare domestically. In addition, imported instant noodles update their products very quickly, with some brands launching new flavors every month or even every week. Nissin, known for its wide variety of flavors, once updated 15 flavors in a single month. This is undoubtedly an effective means to stimulate young consumers. In the FMCG industry, how to innovate with consumption upgrades is becoming increasingly important. "Health" and "like freshly cooked in the kitchen" are certainly sales gimmicks, but while deepening efforts in this field, exploring other markets is equally crucial. Huang Runlin, a well-known marketing expert and special commentator for New Distribution, said: "Freeze-drying technology is another revolutionary milestone in the instant noodle industry. Compared to Wugu Daochang's non-fried concept, it has been fully applied in fields such as aviation, so there is not much trial-and-error cost from a technical perspective. From a demand perspective, it greatly satisfies modern people's pursuit of convenience and nutrition. From a cost perspective, there will inevitably be a marginal diminishing effect, which is the inevitable trajectory of any successful product revolution!" Are you optimistic about instant noodles with freeze-dried ingredient packets? Feel free to leave a comment and discuss with us. -END-