Media: Domestic instant noodle sales have picked up, or because there are fewer takeout subsidies

category:Society
 Media: Domestic instant noodle sales have picked up, or because there are fewer takeout subsidies


It is reported that instant noodles are gaining popularity in China after years of declining sales.

In July 2019, the latest report released by Rees Consulting showed that in 2018, 103.6 billion instant noodles were consumed in the world, 38.85% in China, and about 40.25 billion were sold, ranking first in the world. This is the first time that Chinas instant noodle market has returned to 40 billion copies after years of gloom. Riess Consulting expects that in 2019, the Chinese instant noodle market will gradually recover.

Bubble noodle sales, unrelated to upgrade and downgrade

Some people believe that the decline in sales of pickled mustard was once a symbol of the so-called consumption escalation. Does this mean that there is a downgrading trend of consumption in China?

I dont think so.

Lets start with Engels coefficient. Engel coefficient is the proportion of total food expenditure to total personal consumption expenditure. In the 19th century, German statistician Engel drew a rule on the change of consumption structure according to statistics: the less a familys income, the larger the proportion of expenditure in the familys income (or total expenditure) to buy food. With the increase of family income, the proportion of expenditure in the familys income (or total expenditure) to buy food. The proportion of expenditure will decrease. The Engel coefficient of over 59% is poverty, between 50% and 59% is food and clothing, between 40% and 50% is well-off, between 30% and 40% is rich, and below 30% is the richest.

In 2018, Chinese earned more and more --- real per capita disposable income increased by 6.5%; but they ate less and less --- Engel coefficient dropped to 28.4%, and then reached a new low.

This means that Chinese people dont spend much money on food, and food is not a big part of Chinese expenditure. In Shanghai, the salary of a restaurant waiter is about 5,000 yuan, which usually includes accommodation and three meals. That is to say, even for many low-wage people, the proportion of food expenditure will not be very high. Therefore, the trend of consumption upgrading or downgrading is difficult to show in food, let alone cause a large fluctuation in a certain category of food in the short term.

For this reason, I have always disagreed with the conclusion that consumption has been upgraded or downgraded in terms of changes in certain foods. Like online car appointment, large-scale subsidies were introduced in the early stage of its development. At that time, many ordinary citizens who took public transport snatched up a handful of wool. Later, subsidies were gradually abolished, and then returned to public transport. Can we draw a conclusion from this: when the online dating car appeared, the Chinese peoples consumption ability increased greatly, and then the Chinese peoples consumption ability returned?

Bubble noodle sales have picked up, or because takeout subsidies have been reduced

The change of instant noodle industry may be closely related to the change of takeaway industry.

At the beginning of the rise of the takeaway industry, in order to attract consumers in the takeaway market and cultivate consumersawareness of themselves, major restaurants often give out profits. And the platform also needs to cultivate consumer consumption habits. Reducing prices with subsidies to attract users is a good way to promote consumersaccess to new models and formats.

More importantly, the internet, especially the financing-listing model of mobile internet, is extremely dependent on market share and needs to obtain financing in the venture capital market with the number of users and market share. After several rounds of financing to expand the scale, only the industrys top players can get the ultimate listing opportunity, so market share becomes crucial. Therefore, the platform will be desperately competing for customers, and subsidies are the simplest and most effective way.

However, Chinas takeout industry has gradually gone through this stage, and has now formed a duopoly model of beauty group takeout and hungry Mody. After the listing of the parent company, the former must pay attention to the real financial figures while paying attention to poetry and distance; the latter, after integrating into Ali, will inevitably reduce the demand for market share figures.

After the formation of a duopoly, the market will stabilize in price. In the market, there is tacit understanding between oligarch competitors to some extent. They will not challenge the competition status of the market severely, let alone adopt the strategy of vicious price competition. It is inevitable that the price of take-out food will rise.

In this process, the consumers who turned from instant noodles to take-out noodles because of the low price will return to instant noodles. Here returning to instant noodles is not an absolute group concept, but the proportion of individual consumerschoice. In the past, takeaway was more preferred, but now instant noodles are more likely to be preferred.

It should be noted that consumers are insensitive to food prices and there is no contradiction between the price changes caused by alternatives.

Price competition between alternatives and competitors is still effective. For a simple analogy, the competition between BMW and Mercedes-Benz is still valid. What we should also see is that the rapid recovery of instant noodles market is not only a return to the status quo, but also shows the trend of consumption upgrading, with the characteristics of high-end and characteristic. From 2015 to 2016, sales of high-end imported instant noodles in Korea increased 134% year on year. Domestic manufacturers also follow this trend. In 2016, a number of domestic instant noodle enterprises have launched a number of new products. Most of these products are priced at more than 5 yuan. To sum up, the revival of instant noodle market in China has nothing to do with upgrading, let alone downgrading, but consumersindividual choices. Source: Author of New Beijing News: Liu Yuanju (Researcher, Shanghai Institute of Finance and Law) Responsible Editor: Liu Yuxin_NBJS7825

Price competition between alternatives and competitors is still effective. For a simple analogy, the competition between BMW and Mercedes-Benz is still valid.

What we should also see is that the rapid recovery of instant noodles market is not only a return to the status quo, but also shows the trend of consumption upgrading, with the characteristics of high-end and characteristic. From 2015 to 2016, sales of high-end imported instant noodles in Korea increased 134% year on year. Domestic manufacturers also follow this trend. In 2016, a number of domestic instant noodle enterprises have launched a number of new products. Most of these products are priced at more than 5 yuan.

To sum up, the revival of instant noodle market in China has nothing to do with upgrading, let alone downgrading, but consumersindividual choices.