China Consumer

Gone in an instant

Food delivery firms are eating into instant noodle sales

Eleme-w

The noodle-killers

Next year will mark six decades since the Japanese-Taiwanese inventor Momofuku Ando came up with the idea of instant noodles.

Originally created as a way to get the Japanese to eat wheat during periods of rice shortage after the Second World War, the noodles spread around the globe. There are local variants in Thailand, Russia, the UK and Nepal. But in China, the world’s largest market for instant noodles, demand has been falling as people get richer and seek out more nutritious alternatives.

Data collected by the World Instant Noodle Association suggests that consumption has fallen by 17% from 46.22 billion servings of so-called “convenient noodles” in 2013 to 38.52 billion servings last year.

One of the largest drivers behind the drop is the explosion of online food-delivery companies like Meituan Duanping and Ele.me, which allow their customers to order anything from simple home-style dishes to pizza or roast duck.

Although these meals aren’t as cheap as a Rmb4 pot of noodles, they are still affordable and delivered in under half and hour. “Ten years ago, we loved the instant noodle because it was convenient. But [now] it has faded out from our life because we can order quick, easy and higher quality meals online, which are not expensive and also convenient,” one analyst told the South China Morning Post.

The number of customers for online food ordering surged 42% in the first half of this year, according to data provided by the state-controlled China Internet Network Information Centre. People can even get their meals delivered to stops on high-speed train routes, collecting them on their journeys.

Phoenix News looked back at the early brands of instant noodle in a retrospective elegy recently. The noodles first appeared in southern China in the early 1980s, it explained, arriving in the north of the country a few years later. Originally, they were sold in rectangular packs with a smaller packet of powdered seasoning. Later they started arriving in polystyrene bowls with a sachet of oil, a few dried vegetables and a plastic fork. Consumers only needed to add hot water to make a meal.

Generally the noodles were made by flash frying, which meant that children could break apart the briquettes and eat them like crisps. Others were air-dried.

“Instant noodle got me and my dorm mates through our university exams,” said the author of the Phoenix piece. “Rising from our books in the middle of the night we could boil the kettle and fill our stomachs”.

The change in Chinese consumers’ diet and taste have hit Tingyi and Uni-President, two Taiwanese firms which have dominated the cup noodle market for decades (the former’s market value has dwindled about 50% in the last five years, see WiC340).

The two Taiwanese firms now plan to release new, higher-grade products to win customers back. Yet they may also get a boost from an unlikely source – the Beijing city government, which has been clearing the city of dangerous and overcrowded buildings typically inhabited by migrant workers (see WiC390). One of the consequences is that some of the city’s food couriers have had to leave the capital, causing delivery times to increase.

Longer term, the forced exodus of tens of thousands of cheap workers is also likely to lead to inflated prices in various services sectors.

“A campaign by the authorities in Beijing to clear out homes and businesses used by the poorest of the city’s eight million migrants from throughout China has set off a chain of events that could shrink the workforce, dent potential growth and generate inflation,” wrote Bloomberg this week.

The influential business magazine Caixin Weekly agrees: “Once workers with low-incomes cannot find a reasonably priced place to live, labour costs will rise and they will be added to service fees”.

Of course, if food delivery prices do rise substantially, perhaps people will go back to eating instant noodles.


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