China's noodle makers vie for share of $13 bln market
TAIPEI (Reuters) - With many of China's 1.3 billion people eating them every day, it's not surprising that instant noodles are big business in China where an economic boom has created a generation of instant noodle eaters.
From office workers in Shanghai to laborers on Shenzhen construction sites, instant noodles are eaten with relish due to the low cost and convenience.
"My husband and son love instant noodles. They eat them as breakfast and as a midnight snack, more than twice each week," says Yun, a 41-year-old housewife as she wandered down the instant noodle aisle in a downtown supermarket in Shanghai.
Estimated at $6.6 billion, China's instant noodle business is set to double to around $13 billion by 2012 and players are scrambling for market share and brand recognition.
As Yun pushes her trolley through a supermarket aisle, she is confronted by literally dozens of brands all competing for the yuan of China's instant noodle eaters.
Colorful packaging, tie-ins with the Beijing Olympic Games in August and new flavors and recipes, such as low fat noodles, are some of the strategies adopted by manufacturers fighting out the "noodle wars" in Chinese supermarkets.
China is the world's biggest instant noodles market. Its consumers spend around $5 per capita per year on instant noodles, according to Euromonitor International.
Instant noodle packet prices range from one yuan to five yuan for the high end brands, which are becoming particularly popular among noodle eaters and where margins are high.
So how can noodle manufacturers get a piece of the action? Product development, advertising and distribution appear to be key, according to players and experts.
"The core to our business is brand management," said Alex Lo, president of Uni-President Enterprises Corp (1216.TW), Taiwan's largest food conglomerate and the No. 3 noodle maker in China.
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 won't be an easy task. Despite the size of the market, China's noodle industry is dominated by one company: Taiwan-founded Tingyi (0322.HK).
Its Master Kong brand commands a lofty 43.3 percent share, according to CIMB-GK Securities (HK) Ltd. Its closest rival, Japanese joint venture Nissin Hualong, has 14.2 percent, followed by Uni-President with 10.5 percent, according to
CIMB-GK.
HEALTHY NOODLES Continued...
