On May 16, the news that "Master Kong's instant noodles are about to increase in price across the board" rushed to the hot search!
However, the news has not been confirmed by Master Kong for the time being, and the accounts are inconsistent. Zhongxin Financial Reporter asked Master Kong's official customer service on the 16th, and the reply was, "I have not received a notice of price increase for the time being." The customer service of Master Kong's official flagship store of e-commerce also said, "I have not received a notice of price increase, and the price has not changed now." ”
Shaanxi Network Bailu Video contacted the customer service of Master Kong's official flagship store of Pinduoduo, which said that there has been no price increase at present, and the price will increase in the future.
However, according to the feedback from many media outlets, Master Kong's price increase may indeed be true.
Times Finance learned from a person who is said to be a salesman of Master Kong that there is indeed a price increase in Master Kong's bags and classic bucket instant noodles. There has been no official announcement within the company, but there is a general direction, "the recommended retail price of bagged noodles will be increased from 2.8 yuan to 3 yuan, and the classic barrel will be increased from 4.5 yuan to 5 yuan." At present, downstream retailers are asked to increase the price first, and the supply price will be adjusted after a while. ”
Zhongxin Jingwei quoted relevant sources as saying that according to the dealer, the price of Master Kong's instant noodles will increase in May, and the manufacturer's salesman has begun to give oral notice to warm up. The price increase will cover the "full line of products" of Master Kong's instant noodles. As for the reason for the price increase, it is the "formula upgrade".
Is it really necessary to repeatedly raise prices?
As for the reason for the price increase, the Red Star Capital Bureau contacted a Master Kong instant noodle agent in southwest China, who said that they were notified by the manufacturer that the price of instant noodle products would increase across the board in early May, "as if it was because the vegetable package was upgraded."
In fact, in the past few years, whether it is a drink or instant noodles, Master Kong has raised prices several times.
In 2023, Master Kong issued a notification letter, saying that from November 1, the suggested retail price of some products will be raised, which will cover the medium-packaged tea/juice series and the 1-liter tea/juice series, and the suggested retail price of the medium-packaged tea/juice series will be adjusted from 3 yuan/bottle to no less than 3.5 yuan/bottle, and the suggested retail price of the 1-liter tea/juice series will be adjusted from 4 yuan/bottle to no less than 5 yuan/bottle.
Earlier, according to Beijing Business Daily, in the third quarter of 2021, Master Kong raised the prices of 20% of its instant noodle products to varying degrees; In the first quarter of 2022, due to the continuous rise in the cost of raw materials, the instant noodle industry saw the first linkage price increase in ten years, among which Master Kong's classic bag noodles were adjusted from 2.5 yuan to 2.8 yuan, a 12% price increase, and the classic barreled instant noodles increased from 4 yuan to 4.5 yuan, a price increase of 12.5%.
If you pay close attention, Master Kong attributes most of the reasons for the price increase to the rise in the cost of raw materials, followed by the increase in labor costs.
Image source: Master Kong's financial report
However, the increase in the price of upstream raw materials may only be part of the reason. If the terminal is not worried about selling, even if the price increases, Master Kong's performance should also be supported. However, according to the 2023 results released by Master Kong, among its revenue of 80.418 billion yuan, the instant noodle business achieved revenue of 28.793 billion yuan, a year-on-year decrease of 2.84%, and the proportion of turnover decreased from 37.65% in 2022 to 35.8%.
Image source: Master Kong's financial report
What's more, compared to the previous quarter of 2022, in addition to the sharp increase in sugar prices, the price of flour, which is more related to the production of instant noodles, has risen slightly, and the price of palm oil has even decreased.
Why can't instant noodles sell?
It's not just Master Kong's family, instant noodles are not easy to sell. According to the 2023 performance report released by the unified release, the revenue contribution of the instant noodle business is more than 9.5 billion yuan, a decrease of about 1 billion yuan from last year.
In terms of last year, from the perspective of the industry as a whole, NielsenIQ data shows that in the first 11 months of 2023, the sales of instant noodles in the Chinese market across all channels fell by 2.4% year-on-year, of which offline channels fell by 0.7% and online channels fell by 17.5%.
According to comprehensive analysts, the poor sales of instant noodles last year were mainly caused by the decline in the home market after the end of the epidemic.
From the perspective of a longer time axis, inflation cannot rise, there are more patterns than takeaways, and the development of instant noodles is also caused by the problems of the times.
In the early 90s of the 20th century, Master Kong's braised beef noodles were priced at 1.98 yuan per package, and with the strategy of being a little cheaper than high-end (5-6 yuan) imported noodles and a little more expensive than low-end noodles for a few cents, he became the winner in instant noodles. In the era of large-scale infrastructure construction and urbanization, braised beef noodles have become an indispensable scene in the portrait of the times, and a series of "honorific titles" such as Spring Festival artifact and overtime companion came into being.
With the rise of food delivery platforms, driven by large subsidies, and residents' pursuit of healthy food and life, the moment of instant noodle magic failure began in 2013. According to a survey by Huajin Securities, the sales volume of instant noodles has risen from 17.8 billion packs in 2000 to 46.22 billion packs in 2013.
Since then, due to the decline in the growth rate of the number of migrant workers who have gone out to work, and the rapid rise of takeaway to replace instant noodles, sales have declined year by year. As of 2016, 38.52 billion packs were sold, down 16% from 2013.
Returning to the topic of Master Kong this time, the dealer said in an interview with Times Finance that the situation of convenience in his own supermarket is becoming more and more common. Under normal circumstances, when sales continue to decline, merchants often make two choices, one is to stimulate sales by cutting prices, and the other is to increase the unit value of loyal consumers through price increases. At the moment, Master Kong is more inclined to the latter.
The news that Master Kong's instant noodles are suspected to have increased may also stimulate dealers' hoarding behavior in the short term, and long-term price increases may help boost their performance.
China Business Daily quoted a dealer of Master Kong as saying: "After Master Kong's price increase, it may trigger a chain reaction." Master Kong's brands of the same type, such as Uni-President and Nissin, may also follow the price increase. In the first four months of this year, instant noodle sales were poor, and my warehouse still had a backlog of instant noodles that had not been digested at the beginning of last year. This part of the product must be discounted and promoted, and if the follow-up brand issues a price increase notice, it may also restrict the dealer's discount promotion of inventory products, and this part of the inventory will be more difficult to digest in the future. ”
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