Happy days are here again for Chinese instant noodle makers

China's instant noodle makers are back in the black after a three-year hiatus, with most companies reporting higher sales and net profit.

During the first six months of this year, instant noodle sales rose 7.5 percent year-on-year in the country, according to Nielsen Holdings Plc, a data analytics firm.

That follows the unexpected sales growth of 3.3 percent to 51.5 billion yuan ($7.25 billion) last year, said the Chinese Institute of Food Science and Technology, after the institute analyzed sales data from 22 of China's major instant noodle makers.

In volume terms, sales rose 0.73 percent year-on-year to 34.44 billion units last year, when the industry saw a drop in sales volume for three years in a row, according to the World Instant Noodles Association. Total consumption of instant noodles in China was 40.25 billion units in 2018, accounting for 38.85 percent of the world's total, said Ries Consulting.

Bai Wei, a consultant at the World Federation of Chinese Catering Industry, said instant noodles are no longer seen as a cheap food alternative for migrant workers and students. Many products are now seen as healthy and flavorful food products and alternatives to regular dining choices, especially for people who do not have enough time to cook.

"An increasing number of domestic instant noodles makers are innovating their products and banking on original flavors with an accent on health and taste to win back pickier consumers, as they are now presented with various choices from food deliveries," Meng Suhe, head of the Chinese Institute of Food Science and Technology, said at a recent industry forum.

Take two major instant noodle makers, Tingyi (Cayman Islands) Holding Corp, which is more commonly known as "Kangshifu" in China, and Uni-President China Holdings Ltd as examples.

Last year, Tingyi's ready-to-eat instant noodles, which consumers can eat without boiling and are priced lower than average, saw a 24 percent year-on-year drop in sales, while its high-end instant noodle product lines, which are considered to be more healthy and have innovative flavors, saw a 10.6 percent year-on-year increase in sales, media reports said.

Tingyi's instant noodle products had a 47.1 percent market share in China in 2018, according to Nielsen data. The brand launched a series of new products, like pork stomach instant noodles with black pepper flavor in 2018 to attract new consumers.

For Uni-President, sales for instant noodles that are priced over 5 yuan accounted for 26 percent of the brand's total sales in 2018, up 5 percentage points from a year ago.

Uni-President has specialized in high-end product lines for different scenarios, like Q-Fresh for eating at home, and products under this line are priced at around 20 yuan per unit. While its "Kaixiaozao" series of products, which are priced at around 30 yuan per unit, are targeted at people going for picnics but who still wanting healthy products with a choice of flavors.

Yang Shouzheng, general manager of Uni-President, said: "Instant noodle makers are expected to see another sales boom, thanks to growing demand from people aged between 15 and 35, who will account for a large share of China's population by 2020. Companies with innovative flavors and healthy ingredients are set to be the major gainers as this set of consumers will opt for healthy choices due to their busy work-life schedules."

"Although the industry was challenged with the rapid development of online food delivery services like ele.me in recent years, instant noodle brands' wide variety of flavors and use of healthy ingredients are attracting more consumers," Bai said.

Tingyi has seen its profit grow by 15.05 percent year-on-year to 1.5 billion yuan for the first six months of this year. Its businesses related to instant noodles netted revenue of 11.5 billion yuan during the first six months, up 6.38 percent year-on-year.

Uni-President reported a profit growth of 39.6 percent to 998 million yuan in the first half of this year. Its sales in the instant noodle sector has seen a 2.8 percent year-on-year growth to 4.27 billion yuan.

"I really like that some brands are promoting instant noodles with flavors authentic to local cuisines. I remember I had one with spicy lobster flavor, similar to the noodles cooked at my home in Changsha, Hunan province. It was a comfort to eat such products when I am working far away from home," said Beijing-based film maker Zhang Yang.

"It was cheaper and more accessible than food deliveries," she said.