China's surging instant noodle business sets off scramble for market share

It is no surprise that instant noodles are big business China, given that many of the country's 1.3 billion people eat them every day.

The noodles - priced a less than a dollar and quick to prepare - are eaten with relish everywhere from offices in Shanghai to construction sites in Shenzhen.

"My husband and son love instant noodles. They eat them as breakfast and as a midnight snack, more than twice each week," said a 41-year-old woman who gave her name as Mrs. Yun, as she wandered down the instant noodle aisle in a Shanghai supermarket, confronted by dozens of brands of instant noodles.

With an estimated value of $6.6 billion, China's instant noodle business is set to double to about $13 billion by 2012, and players are scrambling for market share and brand recognition.

Colorful packaging, tie-ins with the Olympic Games in Beijing in August and new flavors and recipes, like low-fat noodles, are some of the strategies adopted by manufacturers fighting out the "noodle wars" in the aisles.

China is the world's biggest market for instant noodles. Its consumers spend about $5 per capita per year on instant noodles, according to Euromonitor International.

Instant noodle packet prices range from one yuan, or 14 cents, to five yuan, or 70 cents, for the high-end brands, which are gaining in popularity and yield high margins.

So how can noodle manufacturers get a piece of the action? Product development, advertising and distribution appear to be crucial, according to players and experts.

"The core to our business is brand management," said Alex Lo, president of Uni-President Enterprises, Taiwan's largest food conglomerate and the third largest maker of noodles for the Chinese market.

Increasing brand recognition is crucial and total advertising spending promoting instant noodles in China in 2006 amounted to $237.4 million, a 19 percent jump from the previous year, according to Nielsen.

But turning advertising and promotions into additional sales will not be an easy task. Despite the size of the market, the Chinese noodle industry is dominated by one company, Tingyi, founded in Taiwan. Its Master Kong brand commands a lofty 43.3 percent share of the market, according to CIMB-GK Securities. Its closest rival, the Japanese joint venture Nissin Hualong, has 14.2 percent, followed by Uni-President, with 10.5 percent, according to CIMB-GK.

Driven by demand from more affluent and health-conscious eaters, one of the biggest growth areas is in low-fat versions of traditional instant noodles, which are deep fried as part of the production process.

"Healthy positioning of instant noodle brands are the key factor driving consumer buying patterns in Greater China," said Michelle Huang, an analyst at Euromonitor International. "In mainland China, instant noodles manufacturers launched new variants with added nutritional value in an effort to break the traditional perception of the instant noodles as being unhealthy."

Nissin, one of the biggest noodle makers in Japan, has been promoting non-fried variants in China and at home.

Through a 2004 tie-up with Hebei Hualong F&N Industry Group, it has formed Nissin Hualong Food. Its main competitor, Tingyi, owes its success to entering the market early and building up strong brand loyalty with wide distribution.

"Tingyi has been able to garner significant market share due to its distribution network," said Renee Tai, an analyst at CIMB-GK in Hong Kong. "It's not just ads and pushing products through with promotional activities, but it's really getting the products through to customers."

Tingyi has located its manufacturing facilities close to distribution centers, which ensure it gets its products to market quickly and smoothly, Tai added.

To maintain market share and lower the impact of soaring raw material prices, Tingyi is focusing on the high-end noodles where margins are bigger, said Tai in a recent research report.

Noodles in China have a long history. Opinions differ over whether the Chinese, Italians or Arabs invented the food, but a 2005 discovery of a sealed bowl, believed to be 4,000 years old, in northwestern China could swing the debate in China's favor.

Less controversial is the instant noodle, whose origins date to 1958 when Momofuku Ando, founder of Nissin Food Products, created his now famous "Chicken Ramen" noodles to feed the masses in post-war Japan.

Offering instant noodles in a styrofoam container, in which they could be cooked by adding hot water, made the product a worldwide hit with people looking to eat on the run.

Nissin is now poised, along with other market players like Uni-President, to gain from a blitz of retail and marketing promotions leading up to the Olympic Games in Beijing.

Uni-President, a relative latecomer to the market, is one of the event's most likely beneficiaries, after being named as an official sponsor by the Beijing organizing committee in 2006.

Uni-President, whose noodle business has been making a loss, is banking on the games and the recent listing of Uni-President China Holdings in Hong Kong, to build its mainland presence. The company has volunteered to donate one yuan from each sale of instant noodles to a fund to build schools throughout China.

However, analysts say the costs involved with being an official sponsor and the additional marketing expenses could steepen losses and not necessarily translate into to increased sales.

"It will be able to create brand awareness, but will it be able to catapult them into winning market share?" said Jack Chang, an analyst at Yuanta Research Center in Taipei. "That's the biggest question."

Uni-President is also looking at local area marketing in China. It established a research team in Kunshan, near Shanghai, to develop flavors to meet local tastes - no small task considering the sheer size of the country and the diverse range of culinary styles.

(Source: International Herald Tribune, 2008-2-24)

Saatchi & Saatchi Taiwan wins Master Kong instant noodles

4-Aug-09, 16:00

TAIWAN - Saatchi & Saatchi Taiwan has scooped the Master Kong instant noodle account in Taiwan after a three-way pitch against the brand's roster agencies Publicis Taiwan and Grey.

BBDO is believed to have held the account previously.

“Our initial assignment will be to help Kang Shi Fu [the brand’s Chinese name] to communicate two specific flavour offerings,” said Saatchi & Saatchi Taiwan’s account director, Skye Wong.

Master Kong’s parent company, Tingyi Holdings, is the dominant instant noodle maker in China, It is listed in Hong Kong and run mainly by Taiwanese, though it has no branch in Taiwan. Instead Tingyi is represented by Wei Chuan, the island’s oldest food company.

In Taiwan, the market share of Kang Shi Fu is a distant second to that of rival Uni-President’s brands. Uni-President owns the 7-Eleven chain, which markets its own noodle brands.

Saatchis Taiwan would not reveal which Kang Shi Fu flavours are included in the assignment. Nor would it discuss the size of the account.

Taiwan adspend for Kang Shi Fu is believed to have been NT$20 million (US$0.6 million) in 2006, most of it TV, but that sum declined by half last year.

WAI WAI NOODLES: SUMO WRESTLERS IN YOUR SOUP

noodles that won’t swell

Bizarre advertising is not limited to Japan!! Wai Wai Noodles (produced in Nepal and India) has just joined in the fun! College students subsisting on instant noodles might understand the new ad best. I can’t say I’ve had more than 3 packages of instant noodles in the past 10 years, but I’m guessing from the ad that some instant noodles become overly soggy. Wai Wai Noodles has just produced a wacky ad which compares other instant noodle brands to "swollen" sumo wrestlers. Wai Wai Noodles, which claim to never “swell,” are compared to young, slim women.

love that we get a real glimpse of instant noodle eating etiquette on the other side of the Pacific through this video! The quick video made us laugh and is likely to be remembered by US college-age consumers, precisely the generation that likes slightly strange advertising and is most likely to eat instant noodles!

Full-Scale Start of Instant Noodle Business in Poland Ajinomoto Completes Acquisition and Merger of SAMSMAK Foods Launched 4 kinds of SAMSMAK cup-typ

January 25 2005－Tokyo－Ajinomoto Co., Inc. (Ajinomoto, President & CEO: Kunio Egashira, Headquarters: Tokyo, Japan) has begun full-scale instant noodle operations in Poland.
Ajinomoto established Ajinomoto Poland Sp. z o. o. (Ajinomoto Poland; President: Yuko Takahashi; Headquarters: Warsaw, Poland) in 1999 to import and sell instant noodles. In order to build an integrated consumer food business from development and production to sales and marketing, Ajinomoto purchased instant noodle manufacturer SAMSMAK Foods Sp. z o. o. in September 2003, and merged it into Ajinomoto Poland in November 2004. Moreover, in connection with these efforts, Ajinomoto launched renewals for the Polish market of five kinds of SAMSMAK brand pillow-type noodles in November 2004 and four kinds of SAMSMAK cup-type noodles in January 2005. Ajinomoto aims to expand its market share, with a short-term sales target of 1.0 billion yen.
Poland's instant noodle market has continued to expand with the introduction of products with a European taste in addition to products with an Asian taste imported from Asia. Further annual growth of 7-8 percent is projected, and Poland is considered a major market in the region. Ajinomoto Poland plans to strengthen marketing of SAMSMAK brand products in addition to the Asian-taste YumYum brand products it already sells. Profile of Ajinomoto Poland Company name: Established: Head office address: President: Type of business: Capital: Composition of capital: Number of employees: Ajinomoto Poland Sp. z o. o October 15, 1999 Ul. Sobieskiego 104, Warsaw, Poland Yuko Takahashi Production and sale of instant noodles Approximately 1 billion yen (1 zloty = 27.5 yen) Ajinomoto Co., Inc. 100% Approximately 150 (including two dispatched from Japan)

Crowdsourcing Instant Noodle & Beverage Flavors in Japan

Cscout Japan points us to a great use of crowdsourcing to come up with new flavors for ramen noodles and fruit drinks in Japan. Recognizing the large community of ramen eaters online, the instant noodle company Acebook, has been collaborating with Japan’s largest social networking site Mixi to crowdsource new flavors and marketing slogans to go along with them. Over 4000 users voted for the following winning flavors that will be debuted in December: Collagen noodles, Milk Tantanmen, Bacon, egg, and vegetables and Ginseng Chicken.

In the beverage world, Calpis has adopted a similar strategy, crowdsourcing flavor combinations from Mixi users for their fruit Caplis series. The collaboration included not only the flavor combinations, but also the packaging design and advertising copy. The winning entry for mixed fruit was a blend of apple, pear, mandarin orange, and banana.

Both crowdsourcing activities represent great examples of how brands can find inspiration for new products, as well as make a long-lasting personal connection to consumers by engaging them in the decision-making process

Luxury Instant Noodles - Harrods Posh Pot Noodle

Famous UK department store Harrods has launched a luxury Pot Noodle - the Posh Noodle sells for £29.95 with all the proceeds going to charity. To add to the exclusivity, only a limited quantity of 100 are made.

The vegetarian-friendly posh noodle comes in a hand-flocked and gold-leafed pot. It also comes with a fork and table linen.

Nissin 出前一丁杯麵

Let's talk a bit about brand portfolio management. 出前一丁 and 合味道 are the two brands owned by Nissin. In consumers' mind, 出前一丁 is a brand of instant noodles that we need to cook for a quick meal. On the other hand, 合味道 is a brand of cup noodles for killing hunger quickly like a snack. As far as I'm aware, there are more product extensions under the 出前一丁 brand name, including cup noodles like those in the print ad. I really wonder why they do that. Instead, I would rather put the effort of new product development to grow and renew the 合味道 cup noodle varieties as it would be more effective. Strange

Nissin Cup Noodle Hip Hop dance competition

Let's continue our discussion about how Nissin manages its brands. Instead of launching new variants for 合味道 , it chooses to build the brand among the young consumers with advertising, promotion and event marketing. Here is an example of an event marketing initiative, a Hip Hop dance competition. Although this event could be appealing to the young, my problem is that it is not quite associative with the brand, in terms of positioning, consumption, location, occasion and so on. Except you may argue : you hip hop, feel hungry and eat cup noodle. Can we come up with a better idea ?

Chewy

another long-forgotten brand name which means 即食米粉. Have to say instant noodle is not an easy market. It's a low-priced category, like HK$2-3 per bag. Even if you are profiteering and earning like 80% gross margin, you still need to sell a lot of bags to keep the production running and make some meaningful profit. And you will need to sell even more in order to have some money for marketing and advertising. So it's a typical situation of 強者越强. Now that only 出前一丁, the market leader, has the volume and critical mass that afford them to advertise. Other brands, like 公仔麵 too, are losing their shares in the mind of consumers.

Doll instant noodle TVC

Top Ramen : Its not Noodles, Its Smoodles

Brand : Top Ramen

Company : Indo Nissin
Agency : Dentsu

Top Ramen is the second largest Noodles brand in India trying hard for the past 18 years to beat Maggi Noodles. Top Ramen is a global brand from Nissin. Launched in 1991, Top Ramen has been trying all possible marketing tool to dethrone Maggi.

As a hardcore Noodles fan, I remember trying out this brands on two occasions. First occasion was when the brand was launched. The brand quickly went into limelight with its famous positioning as Smoodles. I guess that Smoodles means Smooth Noodles . But after the initial trying,I went back to Maggi noodles.

The next occasion was when Maggi changed the taste. That was an occasion where, as a brand loyalist , I dumped Maggi . For a while I bought Top Ramen . Then when Maggi reversed the taste, I switched back....

Top Ramen at that point of time was one of the heavy advertisers in the media. And since the taste was also comparable , many Maggi users may have switched to this brand. But it could not retain the customers like me. One factor is the price. Top Ramen was always perceived as a premium brand compared to the affordable Maggi. ( Its my perception since I don't exactly remember the price difference ). The high price may have prompted many Maggi users to switch back .

Another factor was the promotion. Top Ramen could not sustain the share of mind it generated during the formative years. Maggi was able to bring in lot of noise because it had become an umbrella brand and was advertising for various other products .

Top Ramen had an interesting distribution strategy . For the past 10 years, the brand has been distributed by Marico. It is a case of marketing alliance where Top Ramen was utilizing the distribution strength of Marico. In 2008, the alliance was mutually called-off . Now Nissin is building its own distribution network.

It is puzzling to see that a global brand with lot of support from its parent could not put up a big fight with Maggi .The major issue faced by Top Ramen was the differentiation. Top Ramen could not offer any serious differentiation to Maggi either in terms of the product or brand. Since there was no serious differentiation, Maggi was able to gain back the lost ground because it was the pioneer brand who built the category. Top Ramen also lost out when Maggi repositioned itself in the health platform.

Having said that, Top Ramen had its share of innovations. This brand is credited with innovating a new category of cup-noodles in Indian market. The difference between cup noodles and instant noodles is that cup-noodles need not be cooked, it is ready to eat just after adding hot water into it.
Top Ramen currently holds more than 90 % share in the cup-noodles market. Maggi has recently entered the cup-noodles market with its brand Cuppa- Mania. It is expected that the entry of new players will expand the category.

Unlike instant noodles where the brands are targeting kids, Cup-Noodles is targeting adults. The segment aimed by Top-Ramen is 16-35 .

Top Ramen is also credited with the launch of curry-noodles in India. While ordinary noodles are dry, curry noodles have both gravy. Top Ramen to me is heavily associated with Curry Noodles. and that is one of the reasons why I did not buy the brand ( i hated the curry variant).

So the brand has not been remaining dormant. It has been doing the right things in the market but somehow the brand is not able to manage the perception among the consumers. It is in the promotion front that Top Ramen has failed to make an impact.

When Maggi repositioned itself as a healthy food, Top Ramen should have followed suit since the market was moving towards healthy foods. When Maggi launched its rice noodles, Top Ramen should have followed since it could have added value to the brand.

Except for the first phase of brand promotion, Top Ramen did not have any worthwhile campaign in its 18 years of existence. Hence as a customer, the brand is not giving me enough reasons to change my addiction to Maggi brand. Even it is not giving enough reasons for kids to buy this brand.

Related Brand
Maggi