The global instant noodles market is highly competitive with key industry players adopting various strategies such as expansions, acquisitions, product launches, and various strategic joint ventures/partnerships to strengthen their market positions. Most companies in the market are focused on expanding operations across regions, augmenting their capabilities, and building strong partner relations.
The graph indicates the percentage of developments undertaken by key manufacturers in the global instant noodles market. Nestlé S.A. (Nestle) accounts for the highest development share of 28% from 2013 to 2018. Nestlé is majorly focussed on launching new products to extend its product portfolio, strengthen its business portfolio, and improve the consumer experience. For instance, Nestle’s brand Maggi released a new range of noodle pots in the UK; the product is offered in three flavors—chow mein, spiced curry, and sweet chili. This product range offers authentic Asian taste experience and more convenient meal choices to consumers. In May 2017, Nestle launched iron fortified Maggi noodles to curb iron deficiency. Moreover, it launched its organic food range in Brazil to expand its geographical reach. In February 2018, Nestle announced its plan to start direct operations in Afghanistan. In 2016, the company opened a new quality control lab in Brazil.
PT Indofood Sukses Makmur Tbk (Indofood) accounted for a decent 24% of the total development share. Indofood is majorly inclined toward expanding its product portfolio by launching new products. For instance, in March 2017, Indofood launched two new variants of instant noodle products in the Indomie Real Meat category. In February 2017, it launched its new variant, Matah Sauce Fried Indomie, Balinese sauce. Furthermore, in September 2015, the company launched Indomie Kuliner Indonesia with the distinctive taste of local Indonesian culinary delights from Padang and Lamongan. Its two new variants are Indomie Goreng Dendeng Balado and Indomie Soto Lamongan flavors. Moreover, the company launched Sarimi Mi Goreng Rasa Sate Ayam, one of the best Indonesian national dishes in September 2015. In the same month, the company launched Supermi Rasa Sop Buntut, a new variant of Sop Buntut made from the finest ingredients and rich-flavored spices.
Campbell Soup Company (Campbell) and Ajinomoto Co., Inc. (Ajinomoto) aim at the growth in the global instant noodles market especially through geographic expansion, product launch, joint venture, and acquisition in the market. It has accounted for a decent 12% of the total development share. For instance, in July 2018, Campbell entered into an agreement to acquire Pacific Foods for USD 700 million, to expand its business portfolio. Furthermore, in November 2018, company and its joint venture partner Swire Pacific agreed to restructure manufacturing and streamline operations for its soup business in China. Additionally, in December 2014, Campbell entered into commercial arrangements with Grupo Jumex and Conservas La Costena to expand its access to manufacturing and distribution capabilities in Mexico for its beverages, soups, broths, and sauces. Ajinomoto invested USD 56 million to construct new R&D building to accelerate the technological integration of Ajinomoto Co., Inc. and its subsidiaries including Ajinomoto Frozen Foods Co., Inc., Knorr Foods Co., Ltd. and Ajinomoto AGF, Inc to extend its business infrastructure. In May 2016, Chennai-based Japanese noodle maker Maruchan Ajinomoto India Pvt Ltd signed a joint venture with Toyo Suisan Kaisha and launched two new products under the brand A&M. In addition, in August 2015, Ajinomoto launched cup noodles in Peru aims to boost food business revenue in South America and Southeast Asia.
Analysis of the Key Developments by Major Players
The developments undertaken by the key players in the global instant noodles market include strategic acquisitions, geographic and business expansions, product launches, joint ventures, and strategic agreements.
According to Wantstats analysis, product launches accounted for a major 72% of the total developments in the market during the period of 2013–2018. Key players are taking major steps toward product launches as well as for reaching untapped markets, thereby increasing consumer base and strengthening global footprints. For example, in 2018, Nestle’s brand Maggi released a new range of noodle pots in the UK, the product is offered in three flavors chow mein, spiced curry, and sweet chili; this product range offers authentic Asian taste experience and more convenient meal choices to consumers.
Expansion in geographical regions and developing new infrastructure has helped companies to extend their business. Therefore, expansions accounted for a significant 20% of developmental share. For instance, Unilever announced a new global food innovation center in Wageningen, Netherlands, which will be functional from mid-2019. The facility will be a central branch for Unilever’s R&D departments in Vlaardingen, Heilbronn (Germany), and Poznan (Poland).
Acquisition and joint venture accounted for a decent 4% share of the total key developments by market players. Companies in the global instant noodles market are strategizing theirs moves toward acquiring the various brand and signing joint ventures to improve their business portfolio. For instance, in July 2018, Campbell entered into an agreement to acquire Pacific Foods for USD 700 million. In addition to this, in May 2016, Chennai-based Japanese noodle maker Maruchan Ajinomoto India Pvt Ltd signed a joint venture with Toyo Suisan Kaisha and launched two new products under the brand A&M.
Threat of New Entrants
The instant noodles market is highly competitive with the presence of both local and global manufacturers providing ready-to-eat nutrient-rich diet that is tasty and innovative. New players have to invest in R&D highly and commercial campaigns to subdue the established taste of already available brands. Moreover, stringent regulations by various health institutes and government bodies over the use of harmful ingredients, such as monosodium glutamate, and lack of balanced nutrients in instant noodles are leading to an increase in production cost. The final cost to consumers of these instant noodles is a major concern hindering the entry of new players, especially in developing regions which are the dominant markets. The threat of new entrants to the market is low.
Bargaining Power of Suppliers
The major raw materials currently used in making the instant noodles are not costly such as wheat flour, vegetable oil, and others. Therefore, the cost of production is low. However, the selling price to consumers is also considerably lower, kept by the leading players to maintain the consumer monopoly. Moreover, there is scope for high revenues due to increasing consumption of instant noodles globally, which relaxes the entry of new players in the market.
However, instant noodles market is dominated by established players and to enter the market, new players need to invest enormously in creating their brand identity through strategies such as high R&D investments and by producing quality products with the help of advanced technology. Also, instant noodles sector is highly competitive. Major players have their presence across the globe. Existing players, to survive in the market, must focus on product development, and improved strategic product formulations, considering the changing trends to create distinct identities of their brands. Therefore, the bargaining power of suppliers is moderate.
Threat of Substitutes
Instant noodles have conventional noodles as the main substitutes which require boiling and are not stir-fried. The conventional noodles are also used in the traditional dishes and can have unlimited variations to it. Moreover, the instant noodles market is facing intense internal competition at product type and ingredient levels, as there are multiple brands available across the globe and many governments and health awareness agencies have questioned the ingredients used in making these noodles, such as the amount of starch used. However, with the increasing consumer awareness and scrutiny of the brands based on their products nutritional efficiency many instant brands are coming up with whole wheat, low monosodium glutamate, and other healthy modifications to lure health-conscious consumers. Moreover, changing consumer preference for ready-to-eat foods is expected to favor the growth of the instant noodles market in the near future. The threat of substitutes in the instant noodles market is moderate.
Bargaining Power of Buyers
The market for instant noodles is highly fragmented as it includes products from both regional and global food companies. Consumers have the liberty to select their favorite type of instant noodles which can be based on the taste, flavor, cost, and nutrient profile. Moreoever, the presence of major industry players, such as Nissin foods, Ajinomoto, and Nestle, in the instant noodles market has also created a loyal consumer base. Hence, due to a large number of existing manufacturers in the market, the switching cost of consumer lowers. New entrants in the market are attracting consumers with their variety of offerings and comparatively lower costs. The bargaining power of buyers is high in the global instant noodles market.
Rivalry
The rivalry in the instant noodles market is mainly over the taste, pricing, and product positioning. The market players have started intensive marketing campaigns some even positioning their instant noodles at par with the conventional diet. There is high internal rivalry among the instant food manufacturers mainly over the cost, flavors, and packing type. Major companies in the industry are investing heavily on R&D and coming up with innovative country-based flavors, along with experimental healthy ingredients. Also, there is a plethora of pack sizes and similar flavors from each company with even low-cost instant noodle alternatives making it a highly competitive market. The intensity of competitive rivalry in the instant noodles market is high.
