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— This is the script of CNBC's news report for China's CCTV on July 9, 2018, Monday.
Food delivery service develops with boom in the past decade, and the result of that is instant noodle market facing big challenge, for example, in 2013, sales of instant noodles on the Chinese mainland and HK was around 46.2 billion packets, according to the World Instant Noodles Association, however that declined 17% to 38.5 billion packets in 2016.
And in this period, in Asia area, especially the scale of Chinese food delivery market improved fast. Thus, food delivery is known as “The Terminator” to instant noodle. Tingyi had a revenue slump in its instant noodle business from 4.332 billion U.S. dollars in 2013 to 3.239 billion U.S. dollars in 2016, losing more than 1 billion U.S. dollars. However, Japan instant noodle giant Nissin is taking a series of actions now, trying to change the downswing in instant noodle market.
Kiyotaka Ando, CEO of Nissin, said to CNBC that instant noodle and soup noodle still maintain a unique advantage that can’t be replaced by delivery service.
[KIYOTAKA ANDO, ceo of nissin] "When we order the noodles by Uber EATs or some mobile systems, it takes 20 mins or 30 mins so soup become low temperature, noodle become too soft. So thats the reason why premium instant noodle market is recoverying."
Currently, Nissin Foods is processing a series of reforms on product strategy, struggling to stay alive. First, branching out into the “premium” category, Nissin announced that this service is planning to collaborate with Japanese ramen chains to offer doorstep service, such as Ippudo has become Nissin’s partner. An interesting point is that instant noodle and Ramen used to be competitors, but they have to cooperate with each other now because of the boom in delivery service. In addition, price factor and health-conscious are the strategy that Nissin Foods insist on instant noodle business.
For instance, in terms of price, KIYOTAKA ANDO said that the consumers of instant noodle are usually sensitive to price, so requesting “very high quality” at a reasonable price is the market’s demand, and Nissin Foods improves upon the standard of its products while keeping costs in check. For example, in HK market, Nissin doesn’t change the product price almost for 10 years. Meanwhile, For the health-conscious, Nissin Foods has also introduced a series of Cup Noodle Light options featuring non-fried noodles with lower calories and less fat while maintaining a texture and flavor which Ando touts as being “very similar” to their traditional counterparts.
Next, we may see that many instant noodle producers will take actions, because the growing in delivery service will squeeze their living space.
According to the data from a marker research institution Euromonitor International, from 2013 to 2017 instant noodle market had declined from RMB 93.3 billion to RMB 84.7 billion in China, and its scale will further drop. On the other hand, the delivery business has surpassed RMB 200 billion in 2017 and that is estimated to reach RMB 243 billion in 2018.
So, how will the competition between these 2 markets going on? We will keep an eye on this issue.