In 2021, the growth of instant noodle market is not satisfactory. Recently, unified enterprise China (00220. HK) and Master Kong Holdings (00322. HK) successively released the financial reports for 2021. The revenue of their instant noodle business is less than 40% of the total revenue, and the beverage business has become the driving force to drive the revenue growth.
The annual report shows that last year, Master Kang achieved a revenue of 74.082 billion yuan, a year-on-year increase of 9.56%, and the net profit fell 6.39% year-on-year to 3.802 billion yuan. According to the statistics of Wande data, this is the first year-on-year decline in Master Kang’s net profit in five years. On the other hand, uni president achieved a revenue of 25.23 billion yuan in 2021, a year-on-year increase of 10.8%, a record high, but the net profit fell 7.7% year-on-year to 1.507 billion yuan. Both the two instant noodle giants fell into the situation of increasing revenue without increasing profits.
In 2022, there are still problems in the instant noodle Market: under the continuous influence of the epidemic, the rising pressure of raw materials forced the instant noodle industry to raise prices in a large area in the first quarter of this year; The scandal of “laotan pickled cabbage” exposed at the party on March 15 made instant noodles once at the center of public opinion, and it took some time to regain the trust of consumers; Prefabricated vegetables and self heating food are also eating into the instant noodle Market… What will be the future of instant noodles, known as the “king of instant food”?
raw material pressure is still at
According to Nielsen’s industry data, the overall sales volume of instant noodles decreased by 1.2% year-on-year in 2024. In the environment of double reduction of market volume, the two instant noodle giants of Master Kang and unified have achieved revenue growth, but the overall gross profit margin has decreased to varying degrees: the gross profit margin of Master Kang decreased by 2.78 percentage points to 30.39% year-on-year; The unified gross profit margin decreased by 2.8 percentage points year-on-year to 32.6%.
Unified explained in the annual report that this was mainly due to the rise in the price of bulk raw materials and the impact of promotional discounts. Master Kang also mentioned in the annual report that “the sharp rise in the price of bulk raw materials brings pressure”.
According to the financial report, the income of Master Kang’s instant noodles business in 2021 was 28.448 billion yuan, a year-on-year decline of 3.6% (an increase of 12.44% compared with 2019), accounting for 38.4% of the group’s total income. During the period, due to the rise of raw material prices and portfolio changes, the gross profit margin of instant noodles decreased by 4.94 percentage points year-on-year to 24.36%. Due to the year-on-year decline in revenue and the year-on-year rise in raw material prices, the profit attributable to shareholders of the company in 2021 decreased by 26.67% year-on-year to 2.004 billion yuan.
In fact, under the continuous influence of the epidemic, the cost of instant noodle raw materials has indeed increased a lot. Taking palm oil commonly used in instant noodles as an example, according to the prediction of Wande and China Merchants Securities Co.Ltd(600999) (Hong Kong), the price of palm oil has recently increased by 55.2% year-on-year to about 14000 yuan per ton Guotai Junan Securities Co.Ltd(601211) Securities pointed out that as of February 14, 2022, polyester chips, white sugar and flour had increased by 31.3%, 7.5% and 3.7% year-on-year respectively. It is expected that the adverse impact of raw material price changes on Master Kang will continue until at least the second half of 2022.
In order to cope with the cost pressure, there was a large-scale price increase in the instant noodle industry in the first quarter of this year. Earlier, Riqing food announced that the ex factory prices of its main products in China would be increased from March 1, 2022. The affected products include Hewei cup noodles, zuqianyiding, Riqing pasta, La Wang and other instant noodles, with a maximum increase of 12%. Riqing food explained that this was due to the pressure brought by the unstable supply of raw materials and soaring prices, and pointed out that “the price of instant noodles in China was adjusted 11 years ago”.
Master Kang and Tongyi also raised prices successively. According to relevant media reports, as early as last July, Master Kang has raised the price of large food barrels and medium price bag noodles, which account for about 20% of the sales of instant noodles. In the first quarter of this year, the retail price of some instant noodles was raised uniformly. The retail price of barrel noodles increased by 12.5% to 4.5 yuan / barrel from 4 yuan / barrel, and the retail price of bag noodles increased by 12% to 2.8 yuan / bag from 2.5 yuan / bag. In February, Master Kang raised the retail price of some instant noodles, which was similar to that of uni president. The price of classic barrel noodles increased by 12.5% to 4.5 yuan / barrel, the price of classic bag noodles increased by 12% to 2.8 yuan / bag, and the price increased products (calculated by sales revenue) accounted for more than 60%.
In the face of the shrinking instant noodle market, raising prices can indeed alleviate some of the pressure. Zhu danpeng, an analyst of China’s food industry, believes that the instant noodle market is still in a low-level operation stage, which is very unfavorable to the innovation and upgrading of the whole industry, iteration and the improvement of the service system and customer stickiness.
“Through price adjustment, enterprises can provide consumers with better products and better service system. After all, enterprises should improve their profitability through price adjustment, and then they can concentrate on promoting their high-end products and upgrading their product line.” Zhu danpeng said.
product structure continues to move up
The instant noodle industry is facing not only the pressure of rising costs, but also the impact of the rapid development of takeout industry and other diversified fast food products.
According to media reports, from 2012 to 2021, the sales scale of China’s takeout market increased from 21.68 billion yuan to about 794.1 billion yuan, and the number of online takeout users increased from 80 million to 469 million in June last year; In 2020, the market scale of self heating food in China reached 7.1 billion yuan, with a compound annual growth rate of 97.3%.
At the same time, consumers have higher and higher requirements for convenience food. “With the promotion of consumption upgrading and the development of the Internet, consumer demand has become more diversified,” unified pointed out in its annual report Under the trend of consumption upgrading, the hot prefabricated dishes and frozen food are also diverted to instant noodle consumers.
Now you can walk into supermarkets, convenience stores, or open e-commerce platforms, including countless new fast food products such as snail powder, self heating rice, self heating hot pot and so on; In the past, instant noodles dominated by “instant noodles” are also upgrading to instant noodles. Various online popular brands of instant noodles have emerged one after another, with more and more expensive prices and more patterns. For users, these new choices of “alternative instant noodles” have greater freshness, diverse categories and richer tastes.
In order to cope with the new competitive environment, instant noodle giants are not willing to show weakness. The reporter found that many enterprises are adopting multi price strategy, adjusting layout, developing high-end products and emphasizing efforts on soup and materials, such as unified Tangda people, jinmailang’s ramen, fan Japanese ramen, Master Kang Tang, Suda noodle restaurant, etc.
Take unified as an example. In 2021, the revenue of unified food business segment was 9.5 billion yuan, and the revenue growth was mainly driven by the trend of high-end. According to its annual report, high-end products represented by “kaixiaozao” and “eggplant emperor” have a strong development momentum. Among them, the compound growth rate of income of “Tangda people” has maintained double-digit growth in the past five years.
Last year, uni president also actively laid out the high-end bag boiled noodles market, launched the “jiweiguan” series to meet the consumer demand of home scenes, won the favor of medium and high-end users, and the sales volume increased steadily.
The annual report points out that the compound annual growth rate of the revenue of brands with more than five yuan has reached 24% in the past two years. Among them, the compound growth rate of self heating food “kaixiaozao” and authentic street food “Najie Naxiang” has reached three digits in the past two years. We believe that “health, safety and characteristics are the trend of food innovation and development in the future”.
Master Kang adheres to the multi price belt strategy, and gradually strengthens the layout of high-end products to meet the diversified needs of consumers with multiple flavors and specifications. According to the annual report, Master Kang continued to launch high-end and ultra-high-end products with multiple specifications and flavors: “master Tang” cut into the high-end instant noodle market with “proficient in every good soup”, and successively listed five products, including Chinese style and Japanese style; The super-high end face “Suda noodle restaurant” has a comprehensive layout of multiple scenes such as office, family and outdoor.
“how to become healthier?”
For the instant noodle industry, the future will not be easy. The diversification of consumption scenes, the development of o2o model and community model, the continuous rise of raw material prices, and even the “laotan pickled cabbage” scandal on March 15 mean that the instant noodle industry is facing new challenges and opportunities. The industry believes that raising prices is not a long-term solution. The key to the development of instant noodles lies in whether the speed of innovation and upgrading can keep up with the speed of consumption upgrading and the core needs of the new generation.
Looking back on the instant noodle market in 2021, young people composed of generation Z, new generation and cutting-edge white-collar workers have become the main force of consumption, and the trend of health and youth is becoming more and more obvious. Each company carries out brand rejuvenation construction through communication content and media selection, so as to open the market. Unified wrote in the annual report that in 2021, its brand “Tang Daren” joined hands with generation Z and spokesperson Wang Junkai to create brand TV advertising, “Tengjiao” cooperated with Netease cloud music to convey the brand tone of “electric shock” through music interaction, and established emotional links with young people with the help of Netease cloud user’s original content attributes.
In contrast, Master Kang pays more attention to the creation of joint IP in promoting the brand rejuvenation strategy, so as to strengthen the interaction and communication with young ethnic groups. Among them, “braised beef noodles” through the spokesperson Zhang Yixing united with the variety show “China Chaoyin”, “spicy beef noodles” and “peace elite” IP, while the “fragrant and crisp” noodles continued to link the two-dimensional virtual Idol “Luo Tianyi”, and linked the new media platforms such as station B and microblog through the card collection activities.
With the rising health awareness of consumers, natural, fresh, healthy and other attributes have become an important decision-making factor for consumers to choose food, and they are even willing to pay a higher premium to pay for health. High temperature fried food can not meet the health needs of consumers, “how to become healthier” has become the focus of the instant noodle industry.
Therefore, at present, the instant noodle industry is strengthening scientific research and development, trying to improve the nutritional value of instant noodles from the production and R & D side. Master Kang mentioned in the annual report that the company has continuously increased investment in industrial innovation and upgrading, improved the taste of instant noodle products and further expanded consumption scenarios. For example, the company has launched a series of hand rolling noodles for family dinner scenes.
The reporter noted that at the end of 2021, Master Kang delivered two products to the winter sports management center of the State General Administration of sports, “champion canteen high-energy beef nutritional noodles” and “champion canteen light beef nutritional powder”. It is reported that the above products have realized the scientific proportion of raw materials to meet the daily nutrition needs of athletes. The vegetable package in the product uses the “FD freeze-drying technology” in the aerospace field, so that the vegetables can maximize the recovery of the original taste of the food materials and can be stored for a long time.
Based on the current development trend of China’s instant noodles, it is not difficult to predict that China’s instant noodles will enter a more differentiated innovation stage for the population, and this innovation will mainly focus on the health attributes of products.
Take Japan, the birthplace of instant noodles, as an example. At present, the Japanese market has launched instant noodles with different health attributes based on different groups, such as instant noodles with small weight, easy chewing and reduced salt for the elderly, low calorie and high dietary fiber products for women, and products containing L-carnitine and soybean peptides for consumers with fat reduction needs. When the “universal” selling points such as non fried, fresh, no addition and no loss of nutrition can no longer impress consumers, foreign experience may provide an innovative reference for China’s instant noodle market.
