Oodles of noodles boil for business
- Source: Global Times
- [23:07 August 19 2009]
- Comments
By Guo Lu
An estimated 1.3 million Chinese a day slurp down instant noodles, making the country the world’s biggest market for the fast cooking food for which consumers spend about $5 per capita per year.
It’s a big business, but as the industry grows and the market becomes saturated with oodles of noodle brands, it’s also facing its biggest challenge ever.
Instant noodle prices range from 0.8 yuan ($0.12) to 5 yuan ($0.73) per packet for the high-end brands, and the industry had an estimated value of $6.6 billion at the end of 2008, according to yearly research from the China Company Competitive Info (CCCI). The country has 1,000 brands established by 22 noodle enterprises, according to CCCI’s research.
“There are dozens of brands of instant noodles in the supermarket, sometimes I really don’t know which to choose since there isn’t much difference between them,” complained Wang Xuepeng, a 23-year-old student from the Beijing Institute of Technology.
Players in the noodle field have recognized the problem and tried their best to boost the market share and brand recognition by using colorful packaging, celebrity endorsements and new flavors and recipes.
Increasing brand recognition is crucial and also costly. According to Nielsen, $237.4 million was spent promoting instant noodles in China in 2008, with an average 20 percent hike yearly.
However, turning advertising and promotions into increased sales is not an easy task. Two Taiwan companies, Tingyi (Cayman Islands) Holding Corp, or Master Kong, and Uni-president dominate the instant noodle industry in the Chinese mainland with 60 percent of the market share together. Master Kong is the biggest noodle maker by market share so far, said CCCI.
The third largest competitor, the Japanese joint venture Nissin Hualong, has 12.6 percent of the noodle market, followed by Henan-based Baixiang, with 8.2 percent.
“Noodle makers try too hard through advertising and promotional activities,” Zhang Liang, a specialist on China’s food and drink market at the brand website Global Brand, told the Global Times.
“Uni-president invited Jay Chou to be its spokesman since 2007 and paid him more than 3 million yuan ($350,000), which was also a big expenditure for the company,” Zhang said, “But in the meantime, Uni-president’s instant noodles had a net profit of 343.8 million yuan ($50.3 million) last year, down 18.9 percent from a year before.”
