No one cares about the price increase of tail brands, and the head companies have attracted much attention because they play the role of "category vane".
Author: Boya Editor: Hexiang
出品：零售商业财经 ID：Retail-Finance
The rumors about the imminent price increase of Master Kong's instant noodles are like a "butterfly" that can cause a tornado with a flap of its wings in South America.
As of May 17, the people involved in the incident include: a staff member who claimed to be Master Kong's Beijing company, a dealer in Beijing, and an agent in Henan. However, in the responses of all parties, the caliber of the official customer service staff of Master Kong's multiple online shopping platforms basically pointed to the following: no relevant notice has been received yet.
Picture: Master Kong's Taobao customer service response
Returning to the core issue of the incident - price, what we need to clarify is, what is the price increase cycle of the FMCG industry, especially instant noodle products?
And what impact does the consumer sentiment behind the market shock caused by "butterflies" have on instant noodles, a high-penetration and high-distribution category that plays the role of "basic food for people's livelihood"?
01 Incentives and market perception of price movements
Since 2023, a number of FMCG products, including Yakult, Nestle, and Pepsi, have completed a new round of price increases, and even some brands such as Pocari electrolyte water, which have not increased prices for a long time, have broken the convention and adjusted their product prices upward.
As for the reason for the price increase, most FMCG products attribute it to the increase in raw material prices in the official explanation. As for the instant noodle industry, the rise in raw material prices is also the most intuitive and core reason, and it is affected by market supply and demand. In addition, the increase in packaging and transportation storage costs, market competition and brand premiums will also affect the price fluctuations of products.
At this stage, the main players in the instant noodle market include the two listed leading companies, Master Kong and Uni-President, as well as two unlisted companies, Jinmailang and Baixiang, all of which have adopted an omni-channel operation strategy, but each has its own emphasis.
In offline channels, due to the consumption environment of the province, city, district (county) where they are located, dealers usually adopt different price strategies on the basis of the brand's suggested retail price, and it is difficult to discuss the price in the same dimension due to the different reception and execution of the brand's price adjustment notice.
In contrast, it is more objective to take the selling price of the brand's official flagship store in the e-commerce channel as a more objective perspective.
Taking the same type of bagged classic products as a comparison, the average selling price of the best-selling product in Master Kong's Taobao official flagship store is 2.49 yuan/bag (104g); The average selling price of "Eggplant Emperor" egg-flavored instant noodles with the highest sales volume is 3.99 yuan/bag (116g); The average selling price of "soup delicious" bagged instant noodles in the official flagship store of Baixiang Taobao is 2.89 yuan / bag (103g); The average selling price of Jinmailang's popular "one-and-a-half-bag" bagged instant noodles is 2.20 yuan per bag (133g).
Figure: Comparison of the prices of the classic line products of the four major brands of instant noodles
Taking high-end new products as a comparison, the average price of Master Kong's "Sichuan Spicy Beef Noodles at Suda Noodle Restaurant" is 19.95 yuan/bowl (85g of pastry); The average selling price of the unified "eggplant Italian tomato meat sauce flavor layout" is 4.5 yuan/bag (126g); White Elephant has successively launched new products such as crab roe noodles and coriander noodles, and the average selling price of its products is 21.95 yuan/box (208g) and 4.58 yuan/bag (115g) respectively; The average selling price of Jinmailang's "hot and sour golden soup fat beef" was 9.96 yuan/barrel (137g).
Figure: Comparison of the prices of high-end products of the four major brands of instant noodles
Whether it is the classic line or the high-end line, the white elephant that focuses on national feelings has more expensive products than Master Kong, while the price of Master Kong's classic products, which is also a listed company, is more affordable than that of Uniunity.
From this point of view, the price range of Master Kong's instant noodles is basically at a medium and inclusive level among the industry's leading players, and there will be neither excessively cheap but worrying quality products, nor so-called IQ tax products that pass on the cost to consumers with marketing gimmicks.
Although Master Kong has not officially confirmed the authenticity of the price increase, why did the rumors of the imminent price increase trigger extensive industry discussions?
The author believes that there are two reasons:
First, Master Kong's comprehensive advantages in market share and loyalty mean that it is easier to perceive market changes and grasp the trend of the industry, that is, it plays the role of a category vane, so its smaller market actions will attract strong attention;
Second, in addition to passive price increase factors such as rising costs and inflation, the subjective factors for instant noodle companies to choose to raise prices are also out of consideration for growth.
02 What kind of instant noodles do consumers need?
In recent years, with the upgrading of the industry and the update and iteration of technological development of convenient fast food products, more and more new fast food categories have entered the public eye.
More and more young customers are returning to rational consumption itself in the "sobriety of the world", which will inevitably make the market competition of instant noodles enter the ascending period of stock game and incremental expansion.
Combined with the "2023-2024 China Convenience Food Industry Development Research Report" jointly released by the Chinese Society of Food Science and Technology and iiMedia Research in September last year, diversified demand promotes the convenience food industry to be more segmented, and healthy, nutritious, and high-end convenience food will become the future trend.
Figure: "2023-2024 China Convenience Food Industry Development Research Report"
This report also reveals a message: whoever can grasp the needs of users and take the lead in seizing various subdivisions of products is expected to get the next stage of dividends.
Further, if an enterprise wants to achieve long-term growth, it depends to a certain extent on the ability of market intensification and the speed of product innovation and upgrading.
Focusing on the four leading players, in addition to marketing the "classic" fist products across the country and pursuing the "greatest common divisor" of taste, Master Kong has increased investment in industrial innovation and upgrading in recent years, and has launched bowls of good products with different styles and even benchmarking "aerospace quality", so as to meet the needs of consumers in different circles for high-quality and healthy diets.
The author observed that the "Kangtong" duoxiong that people talked about in the past was also unknowingly replaced by "Kang Bucket" (Master Kong's barreled noodles), and the unified instant noodles that had been fighting with Master Kong for more than 20 years had to face the risk of declining category potential. According to the 2023 performance data, the revenue contribution of the Uni-President instant noodle business in 2023 will be 9.594 billion yuan, a decrease of 1.026 billion yuan from the previous year's level of 10.62 billion yuan, a year-on-year decrease of 9.65%.
Figure: Comparison of Master Kong, Uni-President and Nissin 2023 financial reports
Although it has frequently attracted fans with the label of "Light of Domestic Products", White Elephant is not the pioneer in the high-end field and has always mediated in the low-end market, which also lays a low-end cognitive anchor for users, which in turn leads to its future transformation to high-end will be more time-consuming and laborious.
In 2022, it will begin to launch a new high-end brand "Ramen Fan", featuring 0 fried, healthy, and high-end labels.
Looking back at the FMCG market, the discussion of "price" can often provoke consumers' nerves, but price is not the only criterion for judging the strength of a brand, nor is it the only link between brands and consumers.
Once known as the "Ice Cream Assassin", Zhong Xuegao has been submerged in the torrent of the times, and a small price increase in line with the development cycle of the industry can gain the understanding of consumers, on the contrary, those ways to reduce gram weight, make a big fuss about packaging and marketing, and thus increase prices in disguise are difficult to convince.
In the long run, the competition of enterprises is "who can really launch epoch-making products", and can occupy the high point of mind in the dimensions of product quality, technology, reputation, and nutritional ingredients, which is the true portrayal of strength.