The average Japanese person eats 46 packets of instant noodles every year and a total of 600 selections are available from vending machines
- Definition / Scope
- Market Overview
- Market Risks
- Top Market Opportunities
- Market Drivers
- Market Restraints
- Industry Challenges
- Technology Trends
- Pricing Trends
- Other Key Market Trends
- Market Size and Forecast
- Market Outlook
- Competitive Landscape
- Competitive Factors
- Key Market Players
- Strategic Conclusion
Definition / Scope
Instant noodles are also known as the precooked noodles which is one of the popular convenience food eaten by people all over the world. They are inexpensive and quite easy to prepare but they may not have health-benefits. Most types of instant noodles tend to be low in calories, fiber and protein, with higher amounts of fat, carbs, and sodium and select micro nutrients.
The basic ingredients which are used in the instant noodles manufactured by the companies are flour, oil, a little salt, MSG, ginger, garlic, soy sauce and extract from pork and chicken for flavoring and other ingredients.The basic processing of the instant noodles takes about an hour only. A machine is used which kneads the flour into dough, flattens it and cuts it into long strips. The noodles are steamed, then dipped into boiling oil.
The first instant noodles also known as Chicken Ramen was invented by Japanese businessman, Momofuku Ando, in a backyard hut in 1958. Later, Ando became the “noodle king” and initiated the Nissin Food Products Company which is also known as Nissin Food Holdings Pvt. Ltd at present.Worldwide instant noodles in a cup is eaten by 100 million people a day. The cup noodle account for more than 60% of the instant noodle market. Sales of Nissin’s Cup O’ Noodles is 25 billion units a year.
The most popular brands of Instant Noodles in Japan are follows:
Nissin has many hit products, such as UFO, Donbe, and Raoh where UFO is an instant fried noodles called Yakisoba flavored worcestershire sauce. Donbe is an instant Udon with a soup made soy sauce and more. Raoh is the first high quality instant noodle in Japan.
Toyo Suisan which is in the go after Nissin also has multiple brands of instant noodles among which its top-sellers are Maruchan-Seimen, Akai-kitsune and Midorino-Tanuki.
Sanyo foods has the third share, its top-seller is Sapporo Ichiban.
The recepie of the instant noodle is the ‘principle’ of tempura where the basic process is to steam and douse the noodles in chicken broth and then dip them in hot oil. The other ingredients which are used are salt, sugar and MSG which makes the instant noodles high in sodium, as a single serving of instant noodles consist of 861mg of sodium.
The sugar may contribute in the extra bad calorie consumption and finally MSG which has been reported to cause weight gain, increased blood pressure, nausea and headaches. Finally, the oil which is used is palm oil which is 49 percent saturated fat, higher than pork lard (40 percent). Thus, to this date all the instant noodles are based in these three basic ingredients.
Thus, instant noodles are not nutritious but means to kill hunger. These instant noodles are becoming the popular food for the poor people around the world as it is mostly used for survival. People are becoming health conscious and at such times if the industry fails to address the health factor associated with the product, instant noodles industry all over the world may eventually go down with lessening consumption.
Top Market Opportunities
Understanding the general trait of the population in Japan, people here are reserved in nature which makes them difficult to socialize and this is the major reason people are using e-commerce websites for purchasing their basic needs. Thus, companies who are involved in the noodles industry must consider e-commerce as a channel to sell noodles. E-commerce websites also provide choice to sell in deals and discounts which will improve the distribution as well as branding of the products offered by the companies.
The noodles consumption in different countries around the world vary accordingly. For instance, people of Myanmar and Brazil consume less noodles in comparison to that in Japan whereas, that in India the consumption is 4 times but still less than one tenth of that in Japan. Thus, companies must strive to offer customized product or as per the local tastes in those countries to win new customers.
- Consumer Preference
In one survey, Japanese respondents were asked to the food they thought represented Japanese cuisine, 79 percent selected instant noodles. It is also regarded as the national food of Japan. The consumers in Japan consume it in daily basis at high volumes due to which their preferences are likely to change a lot. In Japan the noodle manufacturers are introducing a 600 different flavors and variety each year. This suggests that the companies are actually addressing to the changing consumer preferences in Japan which is driving its sales and keeping up the popularity as well.
- Increase in consumption by targeted consumer segments
In Japan, the male bachelors in their 20s or 30s are considered the main users of cup of noodles. Basically, these food are essential to sustain the lives of poor young people who live alone or are too busy balancing their work and study life. Also, the working class people are often seen slurping noodles on their way to work because instant noodles is convenient and time saving. Also the bagged noodles are mainly enjoyed by the children for snack or as lunch in school.
- Online Distribution
According to one online shopping in Japan, in the category of instant foods, 16 of the top 20 are occupied by instant noodles. The online has become the most effective stream for distribution of instant noodles. As the penetration of online shops are increasing in Japan and people are more often using this means to purchase goods because of their busy schedule and convenience factor. The sales of instant noodles is further driven through this new channel.
As the population of Japan is shrinking, the consumption is increasing but at a decreasing rate. Thus, to grow further the companies have to opt for opportunities to sell and penetrate the overseas.
Some of the segments of customers have stopped purchasing the instant noodles eventually because of external players such as food delivery companies increasing in the market.
The one stop affordable meal delivery of such companies allowed people to order food of any choice at any time as per their convenience. These foods can be ordered on the go and delivered instantly at the location ordered. Thus, such services are becoming an increasing threat to instant noodles.
The consumers in Japan are becoming quite health conscious. Due to the awareness of health effects of instant noodles highlighted by media people have been reluctant to consume such products. Instant noodles is now being tagged as the ‘unhealthy food’ especially after of the recent oil scandal of an instant noodles brand called Master Kong.
There are various other segments of consumers such as affluent class which is untouched by the instant noodles market as these are mostly targeted to working population, students and poor people due to its affordability.
However, the purchasing power of Japanese people is increasing every day and this has led the people to shift towards restaurant meals and instant noodles has become the new ‘try once’ product which these segment rarely consume on regular basis.
Among the 300 varieties of instant noodles that gets launched every year only 1% of that remain in the market. This suggests that the life cycle of the noodles products is very short as consumers are always looking for something new in the taste. This requires all the manufacturers to be very creative and keep coming up with new flavors.
Another concern is the packaging. For instance, the cup noodles is made up of material called Styrofoam. Two basic points with Styrofoam is overheating and leeching. As the cup noodles are heated along with the cup, the higher temperatures can lead the chemicals in Styrofoam to separate and get mixed into the food.
These can cause health hazards and also environmental degradation as only 1% of the total Styrofoam packets is recycled. Thus, companies need to start thinking about sustainable packaging solutions for the instant noodles.
The raw materials which is used for the production of instant noodles are flour, palm oil, and petroleum-based items for packaging and wrappers. Among these, the palm oil has become one of the biggest concerns as these are depleting gradually because of over extraction.
There is need for plantation or else the palm tree will eventually become extinct. All the top sellers of Instant noodles of which three are located in Japan have found to be using massive amounts of palm oil in their products. As a result, deforestation is caused and eventually the lack of palm oil could bring the entire industry down in near future.
Japan has a long history in noodles, as it is the country which has invented the instant noodles. In 1971, the first space ram which is a cup noodles that could be taken to a zero gravity space.
It was established by Momofuku Ando and one of the Japanese astronauts called Soichi Noguchi took it to the Space Shuttle discovery in 2005.Since then it has been one of the most popular food items taken by astronauts on space journey
One of the top players in the industry, Nissin has recently introduced a low calorie variety of the cup noodles aimed at dieting people by reducing the calorie to 198 kilocalories which is only 60% of the calorie present in the usual product. The noodles were made fibre rich with the help of air-drying technology that replaced the deep-frying technique.
As the products of various companies in noodles market have been promoting the instant noodles by inventing a vending machine that automatically heats the cup and makes it ready to consume anywhere. It is directly accessible to people at streets, bus stops or nearby malls.
The instant noodles category also known as instant ramen is basically sold from four channels and the prices of the products also vary according to the channel type. The four channels are: Supermarkets, convenience stores, cheap shops and chain stores respectively.
- Supermarkets: The cost of the instant noodles is going to depend upon the brand value of the supermarket. Generally the packets are sold in bundles where the price may range from $0.70 up to $3.51 per cup/packet
- Convenience Store: They may offer dried instant noodles or simply add boiling water to the instant noodles and have counters where one can taste right away. The prices range from $1.49 up to $4.39.
- Cheap Ramen Shop: Although the name has cheap in it, the soul of noodles is found in these shops and as the tastes are so authentic the price may range somewhere between $2.63 to $5.27.
Other Key Market Trends
World Instant Noodles Association also known as WINA is headquartered in Japan and is persistently reaching out the consumers residing in other parts and serving them with instant noodles. WINA helped many countries like China, India, Philippines, USA, Austria, Switzerland, Slovakia, Germany, Czech, Hungary, Poland, Thailand, Japan, Brazil, Myanmar and many more at times of in times of calamities and crisis by sending them instant noodles in effected regions.
Japan also has developed few attractions regarding the industry which are: CUP Noodles Museum located at Yokohama, Japan which has a theater, Chicken Ramen factory, Cup noodles Park and Noodles Bazaar and also the World Noodles Road.
Market Size and Forecast
As of 2017, 100.1 billion packets of noodles are sold globally in which 80% of share is captured by the Asian countries. Although Japan is the origin of instant noodles only 5.7 billion packets are sold by Japanese instant noodles company at present which accounts as 6% of the total global sales.
The market size of instant noodle in Japan is $4.3 billion dollars as of 2017. The market size of fresh noodles is $ 1.14 billion and that of cup noodles is $3.5 billion respectively. Thus, combining all three categories, the overall market size is $ 8.94 billion respectively.
The instant noodles and is expected to increase to $10.89 billion in 2018 and $10.94 in 2019 respectively. The market is expected to grow at a CAGR of 1% from 2018 to 2021.
The all-time high unit sales of the instant noodles was recorded in 2017 at 5.66 million units. The average Japan resident eats some 30 servings of instant noodles in cups each year which makes instant noodles most popular meal in Japan.
As of 2017, China, the largest national market for instant noodles with total of 38.6 billion servings, Indonesia at second with 12.62 billion servings and thirdly, Japan with 5.66 billion servings respectively.
Within the prepackaged instant noodle space there basically exists three types of segments which are:
- Fresh type noodles: They are 155.7 million servings belonged to the fresh type of noodles category.
- Noodles in cups: As of 2017, 3.98 billion servings was occupied by the prepackaged noodles cup
- Bagged Noodles: As of 2017, 1.63 billion servings were that of the bagged noodles.
After Taiwan’s Ting Hsin International Group, is now the world’s topmost player in instant noodles by sales with a 15% market share in global sales, Nissin Holdings of Japan stands at second position with 12% share followed by Indonesia’s Indofood Sukes Makmur at 7% respectively.
Regarding the Instant noodles market in Japan, there are five companies which account 99% of the total market. These are Nissin, Toyo Suisan, Sanyo Foods, Myojo Foods and Acecook. Among these companies, the first four are Japanese Based whereas the last one is the Vietnamese Company.
Nissin holdings Ltd. was the pioneer of instant noodles and thus holds 50% of the Japanese instant noodles market. However in the overseas market, Toyo Suisan accounts for 70% of instant noodle market in the USA, 90% of the market in Mexico. The share of overseas net sales in Acecook’s total net sales is at approximately 50%.
Nissin foods is the top brands in the noodle market of Japan which has been able to set its footsteps successfully in the global platform as well. Its main competitive advantage is that it has robust manufacturing facilities in the country. It is exporting its products overseas in countries like China and USA.
Nissin opened a leading-edge factory in the Chinese province of Zhejiang in 2017, which is now functioning at full capacity. The Chinese subsidiary of Nissin has also been listed its Chinese unit on the Hong Kong exchange at the end of 2016.
Although, Taiwanese noodles companies are excelling and becoming popular in international market, the Japanese noodles company Nissin is trying to win the global customers by offering authentic taste of Japanese noodles and taking advantage of the variety of traditional noodles available in Japan and target it accordingly to the different customer segments as per their needs.
Nissin has launched ads on social media and other platforms to reach younger consumers. Sanyo Foods another leading competitor is focusing on the health aspect of the noodles by offering such products to older aged people by promoting a kind of ramen that declares to have as much fiber as a head of lettuce consists.
Nissin holding Ltd. is taking steps to go green by considering a switch to decomposable plastic packaging for its noodles in the next two to three years.
Nissin has introduced variety of noodles within its instant noodle segment such as, Cup Noodles Light and Cup Noodles Nice which are low in calories are becoming popular among men and women who are fitness conscious.
Ajinomoto is a company that is the inventor of MSG also known as monosodium glutamate and aspartame artificial flavoring products, has a presence in more than 130 countries. It has strong presence in countries like India and Nigeria. The toyo Suisan and Ajinomoto aims to capture 15% of total Indian and Nigerian Market in near future and compete with global brand Nestle which currently occupies 70% of the total Indo market.
Key Market Players
According to the market share and revenues earned from the sales of instant noodles in Japan, the top five companies are:
- Toyo Suisan
- Sanyo Foods
- Myojo Foods
Instant noodles, a Japanese invention, have seen similar growth in popularity all around the world, despite of being the inventor of instant noodles, the growth of Japan is not up to the expected mark and the main reason is the shrinking population of Japan due to which the overall consumption volume remains low in comparison to other nations.
Japan’s strategic solution for increasing the growth of the instant noodles industry would be to seek for the overseas market and meet the requirements of consumers there.
There are nations which still are unaware about the instant noodles and capturing those markets will be essential for the Japanese instant noodles manufacturers to increase their global market share as well as sales.