Instant noodles turn red easily, and long red may be difficult.
Editor’s note: This article is from WeChat public account “China News Weekly” (ID: Chinanewsweekly), author Zhang Ru. The original title “There are many reasons to eat instant noodles, and a “poor” word is too simple.”
Chinese people love to eat instant noodles.
The train swayed, the instant noodles were unveiled, and the scent swayed the entire carriage. This scene is a memory of many people’s journeys.
In the past, instant noodles could be used as a meal, but they were also criticized as “junk food”. After living standards were raised, they were even more disliked and became “low-end” food.
What happened between instant noodles and landings?
The rise and fall of instant noodles
The instant noodles that were sold in the past few years have started to sell well.
The data of Rees Consulting shows that in 2010, a total of 103.6 billion instant noodles were consumed globally, of which about 42.25 billion were in China, accounting for 38.85% of the total sales, ranking first. In the past three years, China’s instant noodles consumption has decreased by nearly 6 billion packs.
Instant noodles are not just a quick need to fill the hunger, but also a deep national “complex.”
In the 1990s, Taiwanese entrepreneurs and masters entered the mainland before and after reunification. At that time, supermarkets, food retail, and catering industries were still very few. People’s diet choices were far less abundant today. In line with the large-scale advertising campaign, instant noodles, this novel food quickly set off a rush to buy, and the two companies took the mainland market.
In a lot of memories after 80 and 90, cook an egg every morning, with a ham, instant noodles is a high-quality dinner. From 2000 to 2004, the sales of instant noodles increased by 20%-30% annually, and the braised beef noodles sold for 5 billion, which was called the super single item at that time.
Since 2013, the market demand for instant noodles has suddenly decreased. In 2016, market demand fell by nearly 6 billion shares, the lowest sales volume in the past 15 years.
Why do instant noodles fall out of favor?
Looking back, during the three-year period of the decline of instant noodle sales, the rise of the takeaway, customers were pulled away by the crazy subsidies of the major platforms, and the price of takeaways was even cheaper than that of instant noodles. The price of takeaways was exchanged for the market to increase year after year.The speed is more than 100%.
On the other hand, catering channels such as supermarkets, convenience stores, and snack foods are becoming more and more popular. Eating instant noodles is no longer the first choice.
In the face of external competition and a sharp turnaround, the instant noodle industry panicked. The leading enterprises have limited incentives, and they do not hesitate to use the weight of competition and use price weapons. The most intuitive is the average unit price of instant noodles, which is concentrated in the market with a relatively high price of 1.5 yuan to 3 yuan.
Even so, the days of the company are still suffering.
Unified by revenue and net profit, the unified company’s share price suffered a setback. In the midst of difficulties, according to its annual report, during the period of 2016-2017, the number of unified Chinese employees has shrunk by nearly 4,000.
The status is stable, such as Master Kong, which occupies half of the market, but it is still difficult to protect itself under the big situation. The annual report shows that corporate revenue has declined for three consecutive years and net profit has fallen for four consecutive years. At the lowest point in 2016, the annual net profit was 177 million US dollars (about 1.2 billion yuan), down nearly 1/3 year-on-year.
When the Hang Seng Index was removed, Master Kong may not think of the day of the counterattack. Nielsen data shows that after three years of bleak market in China, the overall sales in 2017 increased slightly by 0.3%, sales increased by 3.6%; sales in 2018 increased by 3.2%, sales increased by 8%, and the growth rate was greatly accelerated. Affected by the recovery, Master Kong turned over to become one of the best consumer companies in Hong Kong stocks.
Easy noodle industry evolution
The market tide has been ups and downs, but the instant noodle industry has more than 20 years of consumer base and market foundation in China. The main reason for the rapid retreat under external competition lies in itself.
To mention instant noodles, the impression of most people is still on the surface of braised beef. There are no surprises in the market for many years. Behind the company is not enough investment in innovation. The fast-moving enterprises that should be sensitive to the market have not been able to keep up with national income. And changes in consumption habits.
Hou Ronglong, general manager of Uni-President (China) Investment Co., Ltd. once regretted in his public speech, “We spent a lot of time focusing on competitors, but less time to pay attention to consumers. The homogenization of competition weakens innovation. Capabilities, while alternative innovative products, cannot be recognized by consumers whose income has increased.”
In the same period of the decline of Master Kong and unified performance, foreign instant noodle brands entered the Chinese market, but sold very well. According to the Mintel report, the total sales of instant noodles imported from South Korea increased by 134% in 2015-2016, and imported products from Japan and Malaysia were also popular in the Chinese market.
Now consumers are indeed more picky than they used to be, because they are rich in choice, more healthy and diverse, and conservative and single consumer products are bound to lose market.
In order to reverse the situation, instant noodles companies began to “reverse the counterattack.”
The first is the product rejuvenation. Tangda people have made improvements to the old craftsmanship.The unit price of the product is pulled from 3 yuan to 5 yuan, and it is free from the intensive competition of the low end and the middle end line. Subsequently, Uni-President launched a Manchurian meal with a price of nearly 20 yuan, replacing the dehydrated vegetables and beef diced with large pieces of beef.
Master Kong is speeding up the new year. In 2016, it launched the “Black and White Pepper” series and the “Golden Soup” series, the “Artisan Soup” series, and the porridge noodle. In 2017, the “pot boiled ramen” and DIY surface series were launched. The price is more than 5 yuan. High-end new products such as EXPRESS Speedup Noodle are aimed at high-end people who pursue quality of life and lock in competition in the industry. The local company Jinmailang has also developed a new product such as the old Fan’s noodle restaurant, one side of the dish, and the wide side of the knife. The market has a good response.
Second robbing channels. Traditional instant noodles consumption is based on the family scene. According to the Kay Consumer Index study, more than 85% of urban households in China purchase online, and less than 9% of urban households have purchased online. But for more purchases on the stock, there are an average of 9 packs/time.
Master Kong and Uni-President have developed hundreds of thousands of dealers for many years. The products are placed in supermarkets and small stores in the first, second and third tier cities of the country. The offline channels have strong control. But the online market environment is much broader, and it is also a new territory that can break through the existing pattern. CBNData “2017 online instant noodles related consumer series research” shows that instant noodle online sales increased rapidly in 2017, an increase of 200% over the same period of the previous year, and the growth rate of domestic instant noodles was as high as 311%.
Inward efforts in recent years have promoted industry upgrades and market growth. The instant noodle industry has stabilized in 2017. The data shows that the retail sales of the whole industry increased by 5.5% compared with 2015, of which 5.2% growth was due to product structure adjustment. Driven by the average selling price increase. It can be seen that the adjustment to cater to the rise of the middle class and the trend of consumption upgrading has begun to take effect. The mid-to-high-end products have become the growth engine of the whole industry, and the leading enterprises have also improved.
In 2018, Master Kong’s revenue reached 60.686 billion yuan and net profit was 2.463 billion yuan, a year-on-year increase of 35.42%. Among them, the instant noodle business contributed 23.9 billion yuan, accounting for nearly 40% of the total revenue. The financial report shows that the high end is the focus of its development, sales increased by 10.6% year-on-year; in contrast, the medium-priced, simply face sales fell more than double digits.
The unified annual report showed that the revenue during the reporting period was 21.772 billion yuan, and the net profit was about 1.03 billion yuan, a year-on-year increase of 17.2%. Among them, instant noodle business revenue was 8.425 billion yuan, accounting for 38.7% of the group’s total revenue. The market share has risen to nearly 20%, which is the first 1/2 of Master Kong’s products. The proportion of products with more than 5 yuan is close to 30%. The sales of its high-end products, Tangda people, increased by 30% in 2018, and the revenue exceeded 19%. 100 million yuan.
Li Yun Consulting Global Partner Zhang Yun analysis believes that the future instant noodle market will still have a polarized trend: in the mass market, consumers will continue to pursue more affordable products; in the high-end market, consumptionCognitive upgrades are no longer satisfied with different tastes, and put forward higher requirements for taste and quality.
The instant noodle revival does not equal the consumption downgrade
There are many reasons to eat instant noodles. A “poor” word is too simple.
“I have already eaten instant noodles, and I still manage whether it is a consumption upgrade or a downgrade.” In the eyes of many office workers, in the office to work overtime to late at night and on a business trip, a bowl of noodles is still a spiritual light.
The level of consumption is only second, instant noodles can first solve immediate needs. This alone, instant noodles correspond to a large number of people including white-collar workers and migrant workers.
From the perspective of consumer structure, the number of migrant workers in the main consumer groups of instant noodles is lower, consumer goods are also transitioning from incremental to stock competition, products that meet the characteristics of new consumer groups are emerging, and instant noodles need to cross cycles and adapt. Structural changes in the economy and population.
Now, young people who have not been hungry have become the main consumers of consumption. They have strong individualized needs. Consumption habits and tastes are broken up by endless stream of red snacks: convenient snail powder and self-heating in recent years. Convenience foods such as small hot pots and ready-to-eat dry noodles are also squeezed into the price range of instant noodles for many years, and aim at the same target group.
Instant noodles go to the high-end route “product upgrade” to attract consumers who originally had low-end instant noodles, which may be consumption upgrades; on the other hand, from the original not eating instant noodles to the beginning of consumption, not only downgrading can be summarized.
As the process progresses, instant noodles begin to rely on health and nutrition to try to reverse consumer perceptions. Food industry analyst Zhu Danpeng believes that the healthy reform of instant noodle enterprises has weakened the notion that consumers’ instant noodles are not healthy enough. Compared with take-out, instant noodles standardization and branding are superior in food safety. The average price of the former has been rising, and it has basically withdrawn from the market of 10-20 yuan.
Strong and powerful, no company can enjoy the market as before. Nielsen’s latest data shows that Master Kong’s market share has fallen from 54.5% in 2015 to 47.1% in 2018. According to the “2019 Taobao Big Data Report”, it is convenient for fast-food consumption and purchasing power. TOP5, influenced by social media, turkey noodles and other food industry network red, high value foods are sought after by the food.
The instant noodles are easy to turn red, and it may be difficult to grow red.