Instant noodle market’s golden days are over

Instant noodle market’s golden days are over

The instant noodle market has become saturated after a long period of hot development. However, investors are still pouring more money into the sector.

Analysts noted that the market’s heyday, when the growth rate was high at over 20 percent per annum, is over.

Since 2013, the growth has slowed down to 5 percent. Manufacturers now compete fiercely with each other to obtain larger market shares. The ad pieces about instant noodle products rarely appear on TV and mass media these days.

Some manufacturers advertised that their products are safer than others because their noodles are made of potato and green beans. Others say they do not use toxic colorings for their products. More recently, manufacturers rushed to market new products – noodles with eggs. Meanwhile, a new war of products with spicy and sour flavors has broken out.

Distributors have also joined the instant noodle market with products bearing private brands which sell at 5-10 percent lower prices than popular products.

Experts noted that the technologies used by manufacturers to make instant noodles are nearly the same. The difference are the types of products and marketing methods.

The instant noodle market is remapped every time an enterprise succeeds with its PR campaigns.

The director of an enterprise revealed that his budget on ads account for 60 percent of total marketing and sales costs.

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Analysts reported that supermarkets in HCM City now distribute instant noodles bearing 60 different brands, most of which are domestically made. Three largest manufacturers - Vina Acecook, Masan and Asia Food – hold 80 percent of the market share.

Kido Group, a newcomer, has signed a contract on setting up a joint venture with Saigon Ve Wong, while moving ahead with a plan to build four factories throughout the country.

Japanese Nissin has also announced it would continue pouring capital into a factory in Binh Duong province after three years of operation.

Brand Footprint 2014, a report of Kantar Worldpanel, noted that instant noodle is now the largest FMCG (fast moving consumer goods) sector. However, some analysts noted that the vast market worth VND25 trillion a year is saturated. Therefore, they think Kido’s plan to become the third largest manufacturer in the years to come is ‘too ambitious’.

For example, Taiwanese Uni-President still cannot gain success in Vietnam though it has been present here for 14 years and provides a wide range of products. The group is believed to be financially powerful, and makes wheat and seafood.

vietnamnet