US Insights

Chinese consumers renew their love for instant noodles

Jason Yu

Greater China General Manager

Brands 01.31.2018 / 18:04

noodles

Instant noodle manufacturers have launched premium products to appeal to customers.

As Chinese consumers have sought out fresher and healthier foods, sales of instant noodles have taken a hit. However, manufacturers have managed to make a comeback by enhancing their product to make it more appealing.

Kantar Worldpanel data shows that in the 52 weeks ending December 1, 2017, sales of instant noodles in China's urban areas increased 6.2% in value and 4.1% in volume. There are multiple factors contributing to this category’s revival.

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, or approximately $1,430 at current exchange rates ) 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

Food delivery apps could repesent the biggest threat to instant noodle's resurgence in China. Since March, 2016, Kantar Worldpanel APP Meter has been tracking mobile app usage behavior of 32,000 sample consumers across five city tiers in China. We noticed when consumers get used to ordering food through food delivery apps, they reduce spending on instant noodles. After a user begins to use a food delivery app, within the first half year, his or her purchasing of instant noodles won’t change much. But it will start to decline gradually if the user continues to rely on food delivery apps 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.

Source: Kantar Worldpanel

Editor's Notes

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