China Insights

Instant noodles enjoy surprise revival in China

Jason Yu

Greater China General Manager

Shoppers 31.01.2018 / 18:04

Instant noodle 2 col

Three factors contribute to instant noodles rebound in 2017. But the increasing popularity of food delivery apps might push this category back into decline.

When talking about consumption upgrading in China, people often use the category of instant noodle as a typical victim. As people chose to eat fresher and healthier food, they began to stay away from instant noodles. As a result, since 2013, the sales of instant noodles did enter a downward spiral. However, instant noodle makers never give up their fight and managed to have a surprising comeback. Kantar Worldpanel data showed that in the 52 weeks ending December 1, 2017, the sales of instant noodles in urban area increased by 6.2% in value and 4.1% in volume. There are multiple factors contributing to this category’s revival. We can analyse from the trends in product, consumer and channels.

New premium products unlock growth

Following consumers’ desire to switch from “eating enough” to “eating well”, instant noodle manufacturers have launched several premium products to cater to this trend. For example, Master Kong and President both have introduced instant noodles featuring tasty soups. Kantar Worldpanel data showed that the sales of premium instant noodles achieved double-digit annual growth in 2017. In the 52 weeks ending December 1, 2017, among all urban families, 31% have bought premium instant noodles. About 10.63 million families are new consumers to this category.

Rekindled interest from middle class families

Our data showed that middle class urban families (household income higher than 9,000 yuan per month) have significantly regained interest in instant noodles: the annual spending from these families increased by 19% from a year ago. Middle class families contributed 40% of sales value and 37% of sales volume of instant noodles in China. Their support is pivotal to this category’s revival.

Huge room for growth in e-commerce

While hypermarkets, supermarkets and other offline channels are struggling, online sales of instant noodles have been doing very well: in 2017, the e-commerce sales of instant noodles jumped 28% from a year ago. The average basket size for online purchasing was much bigger: across all channels, the basket size for instant noodles was 5.4 units per purchase, while it was 9.0 units per online purchase.

Compared with the shining data from current situation, the future of e-commerce is even more appealing. Now only 5.8% of urban Chinese families have bought instant noodles online – a very small number compared with the penetration of offline channels. More than 30% of urban families have bought premium instant noodles through offline channels.

Threat from food delivery apps

Besides abovementioned positive drivers for instant noodle category, there is a fast increasing service that might end its revival: food delivery apps. Since March, 2016, Kantar Worldpanel APP Meter has begun tracking mobile app usage behaviour of 32,000 sample consumers across five city tiers in China. We noticed when consumers get used to order food through food delivery apps, they will reduce spending on instant noodles. After a user begin to use a food delivery app, within the first half year, his/her purchasing of instant noodles won’t change much. But it will start to decline gradually if the user continue to rely on food delivery app for meals.

We are not alone in noticing this threat. Instant noodle manufacturers have taken proactive measures to counter these apps’ erosion. They’ve launched DIY noodles, snail noodles, and instant hot-pots to keep attracting new users. Maybe it’s better to have a bowl of hot noodle that is instantly ready to eat on your desk than wait for a meal that is often late and arrives cold in your hands. Instant noodle manufacturers in China are trying their best to create value and stay relevant in consumers’ fast-changing lives.

Source: Kantar Worldpanel

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