China's instant noodle industry in decline as competition heats up

Source:Xinhua Published: 2017/12/18 18:33:39

Instant noodle industry losing out to tastier, more convenient options

A resident in Nanjing, capital of East China's Jiangsu Province purchases instant noodle at a supermarket. Photo: VCG

With their tangy sauces and sachets of dried meat and vegetables, instant noodles were once the bedrock of China's convenience food, but their sales have declined drastically in recent years.

For Geng Mei, an English teacher in Beijing, munching bowls full of steaming instant noodles was a highlight of her childhood.

"Cheap and delicious, instant noodles were so popular when I was a child," says Geng, who is in her 30s. "But now I can't even remember the last time I had them."

Instant noodles were invented in Japan in the 1950s, spreading quickly throughout Asia, Europe and the rest of the world. They flourished in China in the 1980s and 1990s, with noodle bowls and packets sold in almost every snack shop and supermarket.

In 2013, sales of instant noodles on the Chinese mainland surpassed more than 46.2 billion packets, according to the World Instant Noodles Association -- that's equivalent to 1,465 packets of instant noodles opened every second.

Feeling the pinch

However, instant noodle companies have recently been feeling the pinch. By 2016 sales had dropped to just 38.5 billion packets.

Tingyi, which makes and sells Master Kong instant noodles, had a revenue slump in its instant noodle business from $4.3 billion in 2013 to $3.2 billion in 2016. The company even had to sell its inoperative noodle and beverage factories in the city of Xi'an, northwest China, earlier this year.

Zhang Xin, associate professor with the department of economics and finance at Tongji University, says the drop in migrant population numbers has damaged the industry, as they were one of the largest groups of instant noodle consumers.

China's migrant population decreased for the first time in about 30 years in 2015, as the economic rise of China's interior regions lures them back from coastal cities. Skills and capital acquired in cities are also helping migrant workers start their own businesses in their hometowns.

The explosive growth of China's high-speed railway networks is also turning out to be an unexpected enemy of the instant noodles industry.

"I ate instant noodles for breakfast, lunch and as a midnight snack during my 20-hour train trips in the past," says Tang Mingsheng, who works in the eastern Chinese city of Fuzhou.

But since 2013, Tang's journey home for Spring Festival reunion is on a high-speed train that takes just six hours, eliminating the need for midnight instant noodle snacking.

"Trains were once an important market for instant noodles, but railway stations are ordering less and less instant noodles these days," says Long Shuhai, an instant noodle distributor in Yunnan Province.

Instead, trains sell expensive Haagen-Dazs ice cream, imported fruits and lunch boxes, as the instant noodle market continues to dwindle.

Growing competition

The rise of food delivery has also played a role in the declining fortunes of the instant noodle industry. From her office, Geng can see dozens of delivery men crowding the streets below, hurrying from office to office to drop off meals.

"Food delivery gives consumers access to quick meals of more diversified tastes," she says.

Users of food delivery services reached 295 million by the end of June, a 41.6 percent increase from the end of 2016, according to the China Internet Network Information Center.

Food delivery services have even reached high-speed trains. In mid-July, 27 major railway stations across China launched a pilot on-demand food delivery service for high-speed trains passing through the stations.

"The decline of instant noodle sales shows a shift in China's consumption patterns," says Zhao Ping with the Academy of China Council for the Promotion of International Trade. "These days, consumers are more interested in life quality than just filling their bellies."

The instant noodle industry is trying to regain its former glory through developing more flavors. It is also upgrading products in a bid to change people's perception of instant noodles as "low-end" food. But unlike cooking a packet of instant noodles, that is something that will not happen in an instant.

Newspaper headline: In Hot Water

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