No one expected that a sudden epidemic would bring the once-marginalized instant noodles back to life. According to Suning data, from February 3 to 6, sales of instant noodles at Suning Xiaodian surged 342% month-on-month, while on Tmall, overall sales of instant convenience foods grew 700% year-on-year in February alone, with instant noodles (and rice noodles) ranking first in sales. Additionally, from February 3 to 14, 2020, shares of Nissin Foods, Tingyi, and Uni-President rose by 12.18%, 12%, and 11.56%, respectively, ranking among the top gainers in A-share and Hong Kong-listed food and beverage companies. As of the close on February 18, Tingyi's market value stood at HK$82.557 billion. For a time, voices about the "recovery" of instant noodles were everywhere. At the same time, today's instant noodles are also competing with other convenience foods: Chinese specialty snacks such as vermicelli, rice noodles, and luosifen have been made into convenience foods and widely sold, and they share the same target consumers as instant noodles. -01- Luosifen's Rise and the Popularity of New Instant Foods: Will It Replace Instant Noodles as the "King"? Just as the domestic epidemic stabilized and full resumption of work was underway, the term "luosifen" quickly emerged. Frequently appearing in the news, it was dubbed the "new internet celebrity" and continuously topped online topic lists, attracting consumer attention and directly sparking another wave of discussion in the food industry, especially in the instant convenience food sector. ** The explosion of new instant food categories like luosifen is the result of both accidental epidemic factors and inevitable factors under long-term preparation.** Luosifen, a local street snack mainly from Liuzhou, Guangxi, was a niche and regional specialty until 2012 when it entered the public eye with "A Bite of China." According to available information, the documentary "A Bite of China" featured luosifen and sour rice noodles for a total of 10 minutes in the first episode of its first season. This level of platform promotion made luosifen known to a national audience, but it was only awareness; there was no immediate sales response at the time. Under the influence of CCTV and "A Bite of China," the Liuzhou government seized the opportunity, quickly organizing local manufacturers to expand R&D, developing various bagged luosifen products with high fidelity, targeting "instant convenience food." They also introduced multiple supporting policies for luosifen, laying a solid product foundation for its nationwide reach and providing a strong boost for luosifen to become a "new internet celebrity" and go viral across the internet. During the epidemic, due to stockpiling and other consumption effects, the instant convenience food sector received widespread attention, and luosifen was brought up again. Due to its special attributes, luosifen was amplified by its natural trending nature. In the instant convenience food arena, where young people (post-85s to post-90s account for over 50% of consumption) dominate, and on platforms with high social network usage and dependence, luosifen became a "new internet celebrity." From taste controversies to the peculiar effect of "once you eat it, you're addicted," luosifen quickly became a main topic for food vloggers, rapidly becoming a hot spot. Topics frequently trended, such as "How much do Chinese people love luosifen?" "Guangxi sends 30,000 boxes of luosifen to aid Wuhan," "How hard people try to eat luosifen," and "The English name of luosifen," continuously occupying top 20 trending lists. This further fueled luosifen's popularity. For example, on an e-commerce platform, a store named "Li Ziqi Luosifen" sold over 520,000 units of its 3-pack luosifen in just one day during the epidemic, surpassing the monthly sales of over 40,000 units in December of the previous year. Even in the post-epidemic era, as sales of instant foods like instant noodles gradually returned to normal, discussions about luosifen and its sales remained hot. This shows that the supply-demand relationship during the epidemic was only superficial, and the fundamental reasons behind luosifen's popularity deserve deep thought from both inside and outside the industry. Because there are hundreds or thousands of similar local specialty snacks in China. The rise of luosifen, in addition to internal and external factors, is influenced by other more essential factors. Besides innate consumer awareness, Liuzhou government policy guidance, and epidemic factors, the most fundamental reason for luosifen's explosion actually brings new insights to the food industry, especially the instant convenience food sector and the instant noodle industry. The food industry is the foundation of people's livelihoods and is also hailed as the latest trend in the "post-epidemic era," creating opportunities for the industry's own development. For the food industry, especially the instant convenience food sector, opportunities exist, but innovation and reform are imperative. This industry needs innovative products with differentiated characteristics that continuously meet consumer demands, particularly the needs of young consumers, to serve as the driving force for industry development. At this time, the emergence of luosifen has, to some extent, filled or met the need for this exact attribute, matching the development trend. Therefore, luosifen was able to become popular and be quickly accepted, opening up the market. From a product perspective, luosifen, with its high fidelity, not only has strong regional characteristics and a sense of regional ritual but also has its own differentiated taste. Driven by its unique taste, it not only sparked discussions but also satisfied the curiosity and novelty-seeking psychology of young consumers, and further showcased fashion and individuality through its "social attribute" or "social empowerment." From a competitive standpoint, although luosifen is a member of the instant convenience food sector, due to its attributes, it successfully avoided competition in mature markets (such as instant noodle giants Tingyi, Uni-President, Baixiang, etc.) by starting from a niche, segmented field with a marginalized product form, finding its own development opportunities and key points in competitive gaps. This not only made the leaders in the instant noodle field "anxious and helpless" but also successfully divided the audience and share that originally belonged to the instant noodle market, adding variables and escalating the already heated competition in the instant noodle market. Will new instant convenience food categories like luosifen replace instant noodles as the "new emperor" of instant convenience foods? This question has been continuously asked and discussed by the industry. How should it be answered? 1. Luosifen and similar products have opportunities, but "what makes them succeed can also make them fail" The popularity of luosifen lies in its differentiated taste, niche "marginalized competitive gaps" under segmented categories, and its "social attribute" or "social empowerment." But it is also these factors that have added invisible shackles and constraints to luosifen's future development. The most basic requirement for food is taste and flavor, followed by nutrition. Luosifen's taste is the result of a special process, leading to two extremes: those who like it find it "fragrant," while those who don't find it "smelly." These two extreme taste perceptions have brought topics and attention to luosifen's development, but to a certain extent, they have also solidified its "niche" label. How to turn this niche taste into a mainstream one? This is a greater challenge for luosifen. In addition, this special, differentiated taste brings another shackle: it is "single" and difficult to "diversify." This is even harder than "taste education" because deviating from the "snail" flavor between "fragrant" and "smelly" or implementing a classification strategy based on "noodles" is difficult. If that were the case, the category name "luosifen" would become "misleading." Through innovative development, luosifen has formed a relatively complete product form suitable for modern consumption scenarios and needs, allowing it to break regional restrictions and be sold nationwide. Even so, in the instant convenience food sector, due to its product characteristics, luosifen cannot yet compare with instant noodles in terms of convenience; it cannot be eaten immediately after soaking and requires additional steps, such as cooking. This undoubtedly increases time costs, which is an urgent issue for luosifen as a member of instant convenience foods. Additionally, the higher price range of 10-20 yuan is also a factor. Only after solving these problems can luosifen develop without worries, no longer concerned about consumers' "curiosity" or its regional and product limitations. Of course, industry development follows its own rules. When the industry reaches a certain stage, luosifen will still face reform and innovation like the instant noodle industry, and from the current perspective, the operational space is more limited and difficult compared to instant noodles. 2. The instant noodle industry faces multiple challenges, but its strength lies in its solid foundation and willingness to reflect Although instant noodles are widely regarded by consumers as "the worst-tasting, least nutritious food," the industry has indeed been advancing with determination. Industry professionals and companies are seeking ways to break through, but after all, the instant noodle industry has existed in China for decades, which is incomparable to "new internet celebrities" like luosifen. After decades of development, the instant noodle industry has formed its own processes, models, and mature operational experience, as well as the most cutting-edge insights and thinking about the industry's development. They know where the industry's shortcomings lie and have been looking for appropriate ways to address them, pushing the entire industry toward better, more optimal, and larger spaces. -02- Why Does Any Stir in the Food Industry Make Instant Noodles an Innocent Victim? Indeed, no matter what happens in the food industry, it seems the instant noodle industry is always an innocent "victim." For example, with the craze of luosifen as a "new internet celebrity," everyone has pointed fingers at the "instant noodle" industry, with statements like "falling out of favor again," "Will luosifen replace instant noodles?" and "Luosifen's sell-out makes instant noodle giants like Tingyi uneasy" frequently appearing. This reflects both a concern for the instant noodle industry ("sorrow for its misfortune and anger at its lack of ambition") and thoughts about its future. So why does the instant noodle industry continue to attract attention and discussion? There are both subjective and objective reasons. From a subjective perspective, instant noodles hold a place in every Chinese consumer's heart as an instant convenience food, representing experiences, youth, and memories, especially for those born in the 70s, 80s, and even early 90s. Who doesn't have a memory of a favorite "instant noodle"? This is a sentiment, a reminiscence. So when there is any stir in the food industry, people unconsciously think of their past stories with instant noodles. Even though instant noodles have shortcomings in taste and nutrition compared to other convenience foods, self-heating or self-cooking categories, and other frozen foods. Besides subjective sentiment, the development history of instant noodles itself is enough to be discussed and valued. It is like an inspirational idol, having experienced the glory of the pinnacle, the painful experience of falling to the bottom and being criticized, and carrying the audience's expectations and enthusiasm for how the instant noodle market will "fight back." China's instant noodle market has gone through a budding period, exploration period, development period, dormancy period, and the current new era. Each period has shown different characteristics with economic and demand changes. It appeared as a "light luxury food" from the 1960s to the early 1980s. Due to consumption capacity and economic development levels, instant noodles were in a "hard to get" stage, with little emphasis on taste, process, or strategy. Brands were few, varieties were single, and consumer awareness was only basic; for daily needs, they were "optional." This continued until the mid-to-late 1980s, when economic levels improved significantly due to reform and opening up and policy guidance. Instant noodles showed advantages under their special value attributes, entering a stage of rapid development. Awareness and consumption were continuously amplified, accompanied by market layout, strategic deployment, category differentiation, and brand competition. After a period of competition, Tingyi and Uni-President, leveraging differentiated angles such as "deliciousness" and "noodle texture" in segmented categories, secured their market positions. Subsequently, Jinmailang and Baixiang also gained market share through differentiated values like "chewy" and "soup expert." Eventually, the instant noodle market entered a golden period, achieving annual sales of over 40 billion packs, accounting for 40% of global sales, earning the reputation of a major instant noodle country. Instant noodles reached the pinnacle, gradually forming an "oligopolistic competition" pattern dominated by Tingyi and Uni-President. However, under the influence of health-oriented lifestyles, product diversification, and internet development, instant noodles gradually fell from grace because they could not meet growing consumer demands in terms of product, awareness, and marketing, showing a trend of decline. According to data, starting from 2013, the instant noodle market experienced severe declines. In 2014, sales were 44 billion packs, and by 2016, they had fallen to around 38 billion packs, a drop of nearly 13.6%. Data and doubts from inside and outside the industry caused the instant noodle market to hit rock bottom. Facing declining revenue and skepticism, major companies like Tingyi began innovation and reform. Through measures such as quality improvement and stability maintenance, they shifted the instant noodle market to a demand-driven approach. By segmenting the market, they curbed the decline with practical innovations like premiumization, diversification, and taste differentiation, and by 2019, the overall instant noodle market showed signs of recovery. In 2019, Tingyi's overall revenue was 61.978 billion yuan, a year-on-year increase of 2.13%, with instant noodle business reaching 25.3 billion yuan, up 5.79% year-on-year, accounting for 43.3% of market volume and 46.6% of market value, continuing good growth momentum. Uni-President achieved full-year revenue of 22.02 billion yuan in 2019, up 1.1% year-on-year, with instant noodle revenue of about 8.501 billion yuan, up 0.9%. Nissin Foods' China business revenue reached HK$1.788 billion, maintaining double-digit revenue growth for two consecutive years. Jinmailang and Baixiang also maintained quality development in their instant noodle businesses. Although the growth was modest and still lagged behind the high-speed development period, it was a positive development compared to the previous "instant noodles are dead" narrative. In the new era, facing mobile internet portals, social platforms, and the strong emergence of self-cooking product lines, self-heating product lines, Ele.me, Meituan, etc., the just-recovering instant noodle market faced significant challenges again. How instant noodles will develop in the future became the industry's biggest question at the end of 2019. But before an answer came, the sudden epidemic disrupted the original development rhythm. Surprisingly, when all industries were being written off, the instant noodle industry fought back. Not only was it unaffected by the epidemic, but it received special attention during the special period, generating unexpected sales. I remember a Tingyi marketing manager saying in an interview that in February 2020 alone, Tingyi completed its annual sales target. What kind of plot and rhythm is that? No wonder everyone used "market re-favor" to describe the instant noodle industry's start. However, as the domestic epidemic gradually came under control and work resumption progressed, the once-hot instant noodle industry returned to a natural consumption state. Just as everyone was waiting for the industry's answer, the suddenly popular "new internet celebrity" luosifen dealt another blow to the instant noodle industry, adding to the competitive heat. So, in the post-epidemic era, how will the instant noodle industry, which has already been "turned over," respond to challenges from self-cooking product lines, self-heating product lines, and even the "new internet celebrity" luosifen? -03- How Should Instant Noodle Products Develop in the Post-Epidemic Era? 1. Given the epidemic, the food industry is hailed as a new trend in the new era "People are iron, rice is steel; one meal without food makes you hungry." This is a stark reality and the foundation of people's livelihoods. It is precisely because of such daily needs that the food industry has been relatively less affected by the epidemic and has recovered the fastest. In the future, policy guidance and investment in the food industry will inevitably increase. Based on this, professionals inside and outside the industry regard the food industry as a new trend in the new era. What does this signify? Therefore, in the post-epidemic era, the entire food industry faces favorable development trends, with more opportunities and possibilities. Food industry companies should strengthen their confidence in facing the future. Under such favorable conditions, with the start of the post-epidemic era, transformation and innovation in the food industry are bound to accelerate. A good environment and favorable policies mean more entrants and intensified competition. In such a situation, whoever achieves corporate transformation first and product innovation first will have a greater chance of development. Therefore, while having confidence, it is also necessary to establish a mindset to face competition and challenges. After all, "opportunities are for those who are prepared." Based on the attributes of instant noodle products and the focus of public opinion, in the post-epidemic era, instant noodles must keep these factors in mind and implement them in actual production and sales. 2. For instant noodle products to develop, "differentiation" should be a key consideration What role and impact does "differentiation" have in the entire instant noodle industry? From an industry perspective, differentiation is the key to innovation and transformation in the instant noodle industry. Only by identifying differentiated products and strategies can the instant noodle industry break through and achieve rapid and sustainable development. From a corporate perspective, only differentiated products can help a company stand out in competition, and only differentiated products can establish a benchmark in the market and gain consumer recognition. In the instant noodle industry, there is indeed a dark horse that rose through differentiation and won its place in the "oligopolistic market" competition: Baixiang. Facing Tingyi's "deliciousness" and Uni-President's "noodle texture" market differentiation, after research and comprehensive analysis, Baixiang decided to take a different path, starting from the category to form its own unique differentiated value construction. Thus, starting from the "soup" subcategory of instant noodles, the "soup expert" differentiation conclusion was formed: "bone soup with noodles," "big bone soup," and "bone soup expert." They suggested building around "soup expert" to realize brand characteristics from the inside out. In this way, Baixiang's differentiated value strategy starting with "soup" was completed and has been used to this day, remaining a key promotional point and a main content for consumers to distinguish it from other brands. Driven by the "soup expert" differentiated value, Baixiang instant noodles successfully made a comeback, becoming a dark horse capable of competing with Tingyi, Uni-President, and Jinmailang, with increased sales. According to industry data, after the comeback, Baixiang instant noodles produced 10 billion packs annually and had secured the second position in the brand ranking by 2018. At the same time, Baixiang also opened a new era of "bone soup" instant noodles, launching products like Baixiang Big Bone Noodles and Baixiang Zhen Gu Bao. Tingyi, Uni-President, and Jinmailang were all latecomers, bringing new thinking, new ideas, and new paths to the entire instant noodle industry. How can the instant noodle industry complete or achieve differentiation construction? The main body of differentiation construction should still be in products and marketing. Why? Because after decades of development, the instant noodle industry has formed a mature and complete production chain, and production is no longer a threshold or barrier for companies, nor is it the first choice for innovation or competition. For instant noodle products, based on their basic attributes, categories can start from three main aspects: "noodle texture, soup base, and taste." Under current process and technology conditions, the consumption method can also be included, such as self-heating product lines and self-cooking product lines. Taste is the foundation and the strongest core advantage of instant noodles, easiest to spread and resonate with consumers. The "big and comprehensive" "deliciousness" is occupied by Tingyi, which has always made "deliciousness" its top priority in development and R&D, gaining unanimous recognition. Similarly, Uni-President, Jinmailang, and Baixiang have also completed differentiated value construction from "noodle texture" and soup base, gaining audience and market recognition and becoming representative brands of their attribute characteristics. So, is there no longer an opportunity in categories? In fact, under the impact of new instant foods like luosifen and self-cooking rice, instant noodles' "taste or nutrition" has shown a trend of "relative decline in nutritional value and consumption status." As the market develops and segmentation strengthens, more refined areas need exploration. After exploration, it is not that there are no opportunities. Regarding "deliciousness," Tingyi occupies the "deliciousness" segment and has formed its own differentiation, but it follows a mass-market route. Whether the niche route is its weakness and whether there are opportunities requires analysis and practice. Will deliciousness representing local characteristics have a chance? It seems the "new internet celebrity" luosifen has already given the answer. It is not impossible to operate, nor is it impossible to implement from the key point of taste and flavor. China has a vast territory, and local specialty foods are countless. It is hard to say who will be the next internet celebrity in taste or flavor. Perhaps it will be halal instant noodles, Sichuan face-changing dan dan noodles, Shanghai scallion oil noodles, Chongqing small noodles, or even Wuhan hot dry noodles, which are based on the epidemic's impact. "Local flavors" and "self-cooking technology" can be integrated with the instant noodle category and its product processes, but leading companies and brands have been slow to respond, with no corresponding actions or products launched yet. In terms of noodle texture selection, there are even more options. Instant noodle textures can be subdivided by process into ramen, elastic noodles, hand-pulled noodles, knife-cut noodles, etc. This is a conventional classification. If further subdivided, could there be other differences, such as width, length, thickness, etc.? It is not entirely without opportunity. As for soup bases, there is even more potential for diversification. Brands like Baixiang's "Soup Good to Drink" that occupy the "soup expert" feature are particularly suitable for "self-cooking product forms" and should seize this product upgrade opportunity. However, due to slow or no response, there has been no practical effect. Additionally, from the ingredients of the soup base to its form, there can be different differentiations and opportunities. For example, can cooked ingredients be packaged separately, so that after soaking the noodles, you can directly add the ingredients from the pack and stir? If so, could jokes about mooncakes like "chive and egg" or "spicy malatang" be legitimately used in instant noodles? If this is truly achieved in terms of process and technology, then braised beef instant noodles might actually contain large pieces of braised beef, and mushroom chicken noodles might really have mushrooms and chicken pieces. This would be the most direct response to the shortcomings of health and nutrition in instant noodles. As for the process of consumption methods, since self-cooking product lines exist, could there be even more convenient forms like "open and eat" or other differentiated processes? This is unknown as the industry develops and processes continue to innovate and mature. In addition, attention should also be paid to the development of high-end products, as this trend is an inevitable process of differentiation and is more aligned with the needs of consumer groups, especially young consumers. It is also a key operation to advance the instant noodle industry toward health and nutrition. After 2019, products like "Sudazhuomian," "Sudaziremian," "Scallion and Shallot Pork Ribs," "Millet Pickled Pepper," "Cheese Corn," and "Spicy Crayfish" are, to some extent, operations under this thinking. They have achieved sales growth, and their development in the high-end market has also brought multiple benefits to brand image communication. 3. Besides differentiation, what else should the instant noodle industry do to achieve its breakthrough? In addition to product and strategic differentiation, the broader marketing environment, especially the communication environment, also needs to be considered. The marketing environment, especially the communication and marketing environment, is changing rapidly, with new marketing methods and approaches emerging endlessly. Under such circumstances, for companies and products, more "social attributes" or "social empowerment" in new product development, thinking, and marketing operations are imperative. With new products that have social attributes or social empowerment, they already have the ability to carry topics and heat. The currently popular "new internet celebrity" luosifen is a benchmark under this route. Driven by the popularity of luosifen, related brands such as "Li Ziqi" and "Haohuanluo" and related industry forms have stood out. For example, news and topics like "China's first luosifen industry college established" received attention from People's Daily, successfully achieving a transfer of communication effects and driving brand exposure and market expansion for other products of these brands. In this light, the popularity of new instant convenience foods has, to some extent, indeed intensified and escalated competition in the field. For example, luosifen versus instant noodles: due to luosifen's entry and popularity, in the short term, it has indeed diverted the instant noodle market audience, reduced market share, and decreased sales. But in the long run, new entrants in the industry or field wanting to replace "giant" industries and "leading" companies with historical accumulation do not yet have the conditions in the short term. Moreover, overall, the entry of new products will force companies in the industry to accelerate innovation, and can also bring new paths and ideas for new product development and industry breakthroughs. Source: Niudao Finance (ID: niudaocaijing)
Capital, Earnings & M&A · Consumer & Categories
Will Luosifen Replace Instant Noodles?
The sudden outbreak of COVID-19 unexpectedly revitalized the once-marginalized instant noodle market, with sales surging and stocks of major players rising. However, the rise of luosifen, a regional snack turned instant food, has sparked debates on whether it could challenge instant noodles' dominance, highlighting the need for innovation and differentiation in the convenience food industry.