Mar­ket picks up af­ter limp­ness

China Daily - - FRONT PAGE - By CHEN YINGQUN cheny­[email protected]­

Metic­u­lously mak­ing an orig­i­nal cup of in­stant noo­dles at a mu­seum is high on Zhou Yi’s agenda for her visit to Ja­pan.

Since child­hood, she has been un­able to re­sist noo­dles, the com­fort food, some­times eat­ing them boiled with an egg, veg­eta­bles and meat­balls.

Zhou, 32, who works for a tech­nol­ogy com­pany in Beijing and is plan­ning to visit the Cup Noo­dle Mu­seum in Yokohama, Ja­pan, this month, said, “As a big fan, it will be a unique ex­pe­ri­ence to se­lect my fa­vorite soup and top­pings from many va­ri­eties, and make my own style cup noo­dles.”

Vin­cent Shao, busi­ness group di­rec­tor with con­sul­tancy Kan­tar World­panel, said China’s in­stant noo­dle mar­ket has picked up in the past 12 months af­ter sales dropped for three con­sec­u­tive years. Con­sumers are be­ing drawn back by con­tin­u­ous in­no­va­tion through­out the in­dus­try.

Con­sump­tion of in­stant noo­dles in China reached 40.25 bil­lion units last year, a rise of 3.3 per­cent year-on-year, ac­count­ing for 38.9 per­cent of such con­sump­tion glob­ally, with China the largest mar­ket, ac­cord­ing to the World In­stant Noo­dles As­so­ci­a­tion.

This growth con­tin­ues. Fig­ures from data an­a­lyt­ics com­pany Nielsen show that in the first six months of this year, in­stant noo­dle sales in China rose by 7.5 per­cent year-on-year.

How­ever, just four years ago, the in­dus­try was hit by a re­ces­sion. Sales started fall­ing in 2015, fall­ing to 38.52 bil­lion units the fol­low­ing year, ac­cord­ing to the as­so­ci­a­tion.

Shao said that dur­ing this time, the in­dus­try faced a direct chal­lenge from boom­ing on­line food de­liv­ery ser­vices.

“To gain and keep con­sumers, on­line food de­liv­ery plat­forms of­fered dis­counts, en­abling cus­tomers to buy a meal for about 10 to 20 yuan ($1.42 to $2.85),” he said. “Many con­sumers then started to choose on­line food de­liv­er­ies over in­stant noo­dles.”

Fig­ures from the Meituan Re­search In­sti­tute, an or­ga­ni­za­tion with on­line food de­liv­ery and tick­et­ing ser­vices plat­form Meituan Dian­ping, show that the on­line food de­liv­ery mar­ket in 2017 was worth about 204.6 bil­lion yuan, a rise of 23 per­cent year-on-year.

Ac­cord­ing to re­search by the School of Eco­nom­ics and Man­age­ment at the China Univer­sity of Geo­sciences, when the on­line food de­liv­ery mar­ket grows by 1 per­cent, con­sump­tion of in­stant noo­dles falls by about 0.05 per­cent.

With dis­counts sig­nif­i­cantly re­duced in the past year, the on­line food de­liv­ery mar­ket has slowed, with some con­sumers switch­ing back to buy­ing in­stant noo­dles, Shao said.

But more im­por­tant, he said many in­stant noo­dle mak­ers have made great ef­forts to im­prove the taste of their prod­ucts and pro­mote health­ier recipes and more in­no­va­tive cook­ing tech­niques, which have be­come pop­u­lar among cus­tomers.

Fe­lix Ma, a prin­ci­pal at con­sul­tancy Roland Berger China, said in­stant noo­dles were once re­garded by some Chi­nese as “junk food” — be­ing fried, non-nu­tri­tious, high in calo­ries and with added preser­va­tives. Con­sumers with an in­creas­ing aware­ness of healthy food turned their backs on noo­dles.

“But these as­pects of in­stant noo­dles were too ex­ag­ger­ated, and many man­u­fac­tur­ers now at­tach great im­por­tance to the health con­cept,” he said.

Ma added that the in­dus­try has made con­certed ef­forts to im­prove the fla­vor of prod­ucts, in­clud­ing adding more fresh veg­eta­bles or meat to the cup. More­over, many pro­duc­ers are us­ing chicken soup or rib soup — tra­di­tion­ally con­sid­ered nu­tri­tious by Chi­nese — in an at­tempt to make con­sumers re­con­sider their view that noo­dles are un­healthy.

In the first half of this year, in­stant noo­dle maker Mas­ter Kong achieved rev­enue of 11.54 bil­lion yuan, year-on-year growth of 3.68 per­cent, and its net profit reached 875 mil­lion yuan, up by 31.15 per­cent on the same pe­riod last year.

In a writ­ten in­ter­view, the com­pany said it has been in­no­vat­ing and up­grad­ing its prod­ucts to of­fer “bet­ter in­gre­di­ents, bet­ter cook­ing tech­nol­ogy and bet­ter taste”, to meet con­sumers’ health needs and de­mand for qual­ity prod­ucts.

“China’s con­sump­tion mar­ket is be­com­ing more di­ver­si­fied and per­son­al­ized. We have al­ways been con­cerned about con­sumers’ needs, es­pe­cially those of the mid­dle class, young fam­i­lies with chil­dren and the new gen­er­a­tion of ur­ban­ized young peo­ple,” it said.

As the mid­dle class and young fam­i­lies with chil­dren gen­er­ally pay great at­ten­tion to qual­ity and nu­tri­tion, Mas­ter Kong is speed­ing up in­no­va­tion, up­grad­ing nu­tri­tion and launch­ing high-end prod­ucts. It said it has a 66.5 per­cent mar­ket share in de­vel­oped ar­eas of the coun­try.

For mid­dle-class con­sumers, it has de­vel­oped the Ex­press se­ries of in­stant noo­dles, whose fla­vor and in­gre­di­ents are as good as the noo­dles avail­able in restau­rants. It has also launched a se­ries of prod­ucts, such as DIY noo­dles and pot-boiled va­ri­eties, to meet the needs of young fam­i­lies with chil­dren.

To bol­ster the brand’s image of be­ing health-con­scious, the com­pany has di­ver­si­fied its prod­ucts to match dif­fer­ent sce­nar­ios. In May, to­gether with the Na­tional Win­ter Sports Ad­min­is­tra­tive Cen­ter, Mas­ter Kong tai­lor-made an Ex­press se­ries of in­stant noo­dles for Chi­nese win­ter sports ath­letes based on their eat­ing habits and nu­tri­tional needs.

Jin­mailang, a do­mes­tic in­stant noo­dle maker, said it saw dou­bledigit growth both last year and this, and its main prod­ucts are noo­dles that sell for about 4 yuan a cup.

One se­ries of prod­ucts, which comes in a larger cup, has been par­tic­u­larly pop­u­lar, with sales this year ex­ceed­ing 4 bil­lion yuan. The com­pany pro­moted the se­ries, which uses cups one-and-a-half times big­ger than usual, af­ter some cus­tomers said they still felt hun­gry af­ter eat­ing noo­dles served in tra­di­tional-sized cups.

Fan Xian­guo, chair­man of Jin­mailang Mian­pin Co, said, “Con­sump­tion of in­stant noo­dles will be sta­ble in terms of quan­tity, but a mar­ket worth about 50 bil­lion yuan in China could be trig­gered due to the im­prove­ment in the qual­ity of such a prod­uct.”

Fan at­tributes the com­pany’s growth to its pre­cise aware­ness of con­sumers’ chang­ing needs.

To dis­pel fears that eat­ing in­stant noo­dles is un­healthy, it uses spe­cial freez­ing and steam­ing tech­niques to make its prod­ucts taste more like freshly cooked dishes, and also adds some fried in­gre­di­ents, in­clud­ing scram­bled eggs with toma­toes, and shred­ded pork with green pep­per.

“More­over, we will di­ver­sify our sales chan­nels and of­fer dif­fer­ent prod­ucts to con­sumers in dif­fer­ent re­gions,” he said. For ex­am­ple, in air­line lounges, Jin­mailang has of­fered non­fried noo­dles — whose taste is closer to those that are freshly cooked — to busi­ness trav­el­ers re­quir­ing both con­ve­nience and qual­ity.

Fan said, “Jin­mailang has also ex­panded its sales to South Korea, bring­ing Chi­nese fla­vor to over­seas mar­kets, which has been ex­tremely pop­u­lar,” adding that the com­pany sells 4,800 units a day of Sichuansty­le in­stant noo­dles with se­same sauce at its South Korean con­ve­nience stores.

Xue Enyuan, ex­ec­u­tive di­rec­tor of con­ve­nience store chain Bian­lifeng, said that from Jan­uary to Oc­to­ber, daily sales of in­stant noo­dles at each of its stores on av­er­age rose by 128 per­cent year-on-year. Bian­lifeng sells seven brands of noo­dles, in­clud­ing prod­ucts from Ja­pan and South Korea.

Xue said more Chi­nese con­sumers are in­creas­ingly will­ing to try new prod­ucts or those of niche brands. The com­pany’s stores have been in­tro­duc­ing new brands, one of the most pop­u­lar be­ing in­stant noo­dles that fea­ture the soft drink Sprite among the in­gre­di­ents. The recipe for these noo­dles, which ini­tially sold well on­line and were later in­tro­duced to phys­i­cal stores, was de­vel­oped by film star Huang Lei.

“This prod­uct sells very well in our stores,” Xue said. “‘Star ef­fect’ may be one rea­son, but the other main one is young con­sumers’ cu­rios­ity and pur­suit of prod­ucts that are well-known on­line.”

He said that com­pared with tra­di­tional fla­vors, many rep­utable and high-end prod­ucts sold on­line by dif­fer­ent man­u­fac­tur­ers have proved to be ex­tremely pop­u­lar with con­sumers, as they have added more va­ri­ety to the in­stant noo­dle mar­ket.

“In the past, who would have thought about adding Sprite to the sea­son­ing of noo­dles? Would the fla­vor pro­duced be a nice sur­prise or a to­tal dis­as­ter? I’m sure many con­sumers bought them for the first time out of cu­rios­ity,” he said.

Xue said that with the pace of life quick­en­ing, peo­ple are be­com­ing in­creas­ingly re­luc­tant to cook. More­over, due to an in­crease in the num­ber of sin­gle peo­ple, more con­sumers are look­ing for ‘food for one’.

“In­stant noo­dles cater to con­sumers’ de­mand for speed and con­ve­nience and are just right for one per­son,” he said, adding that the po­ten­tial for the mar­ket is huge.

Ma, from Roland Berger, said the mar­ket has be­come in­creas­ingly di­ver­si­fied. On the one hand, there is a large group of peo­ple who need to eat con­ve­niently and cheaply, but on the other, some mid­dle-in­come or young con­sumers re­quire healthy prod­ucts with a bet­ter taste.

“It is less likely that sin­gle-fla­vor prod­ucts will cater to all con­sumers across China,” he said. “To re­tain busi­ness, it is crit­i­cal for in­stant noo­dles mak­ers to con­tinue in­no­vat­ing and up­grad­ing their prod­ucts, whether they be noo­dles, top­pings, soups, the method of pro­duc­tion, or de­sign of the bowls and cups.”

He added that nearly 60 per­cent of sales among sev­eral ma­jor do­mes­tic brands now come from medium and high-end prod­ucts, but man­u­fac­tur­ers will have to con­tinue in­no­vat­ing to ex­pand.

“There is great po­ten­tial for them in mak­ing prod­ucts with fla­vors tai­lored specif­i­cally for dif­fer­ent re­gions and groups of con­sumers,” Ma said.

Con­sump­tion of in­stant noo­dles will be sta­ble in terms of quan­tity, but a mar­ket worth about 50 bil­lion yuan in China could be trig­gered due to the im­prove­ment in the qual­ity of in­stant noo­dles.” Fan Xian­guo, chair­man of Jin­mailang Mian­pin Co


Top: Pas­sen­gers eat in­stant noo­dles at a rail­way station in Shenyang, Liaon­ing prov­ince.


net profit achieved by in­stant noo­dle maker Mas­ter Kong in the first half of this year, up by 31.15 per­cent on the same pe­riod last year A vis­i­tor takes pho­tos of pack­aged in­stant noo­dles from var­i­ous coun­tries at the Cup Noo­dle Mu­seum in Yokohama, Ja­pan.


Above: A worker checks an in­stant noo­dle pro­duc­tion line in Longyao county, He­bei prov­ince.

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