For over three decades, the smooth curly strands of noodles have been keeping us happy. According to the Mordor Intelligence report, Instant Noodles Industry in India, the country has emerged as the most attractive instant noodles market in the world — witnessing a growth of 7.6% from 2010 to 2017, despite the ban on Nestlé’s Maggi in some markets for some time.
There are umpteen reasons for the growth of the category: the growing youth segment, rising disposable incomes, higher brand consciousness and changing consumer preferences, among others. The instant noodles market in India is valued at `3,400-3,600 crore and is projected to witness a growth of 6.65% till 2022, as per various reports.
The positive upward trend has even made Wai Wai, a noodles brand from CG (Chaudhary Group) Foods, to come out of its word-of-mouth publicity days and launch its first-ever brand campaign.
Abneesh Roy, SVP, Edelweiss Securities, notes, “Before the Maggi fiasco, almost 75% of the market belonged to the brand. But the market has changed since then.” When Maggi was off shelves in 2015 after a health hazard clarion call by Food Safety and Standards Authority of India (FSSAI), Wai Wai gained share in North India while ITC’s Sunfeast Yippee! gained significant market share in South India. However, in the 12 months from June, 2015, to June, 2016, the overall instant noodles market shrunk by 47% to Rs 2,000 crore.
Today, Maggi’s market share stands at 61% while Wai Wai takes 15-20% of the pie as per a report by Antique Stock Broking. It is followed by Yippee! at 8-10%.
A hot bowl full of challenges
It wasn’t an easy path for Maggi to claim back its share. It has, since April, 2016, launched about 40 products — the highest number of launches by a company in a span of 12 months. It has successfully regained its market standing backed by an increased presence in outlets, product innovation, renovation and marketing.
Says a Nestlé India spokesperson, “We believe that in order to offer Maggi with a twist, we need to keep adding fresh elements to our product portfolio. We recently launched Maggi Masalas of India to cater to the palette of our consumers.” And to give a fillip to this, in a first-of-its-kind association, the company collaborated with Google and Paytm Mall to roll out new products.
Given the category salience, kids (4-14 years) and their mothers (typically in the 25-44 age bracket), form the core TG, but most new launches also aim at expanding the consumer base to teens and health-conscious adults.
For instance, Nestlé, over the last 10 years, has brought down sodium levels in Maggi by 32.7% and plans to further bring them down by another 10% by 2020.
Believing that the consumer is always looking for unique, value-for-money offerings, Hemant Malik, divisional chief executive, foods division, ITC says, “Our new launches continue to focus on creating genuine differentiation.”
For example, ITC’s Yippee! atta noodles variant, Power Up Masala, has vegetables infused in each of its strands — a feature that sets it apart from other players in the health noodles segment in India. It recently launched Yippee! Mood Masala which has been crafted after a detailed study of changing consumer tastes and preferences, and contains two masala mix sachets — Masala Mix and Mood Mix.
Similarly, Chaudhary Group wants to create awareness about Wai Wai and build its market share by telling the audience that its USP is Munch it! Soup it! Lunch it! The group is launching a manufacturing plant in Serbia in July to cater to the European market.
“Wai Wai’s strength lies in its variety of noodles and flavours,” says GP Sah, VP, Chaudhary Group, who points out that the brand relies mostly on the word-of-mouth of college-going customers who are its ‘best brand ambassadors’.
From stores to your plate
It’s always different strokes for different, well, strands of noodles. “What works for Yippee! does not work for Maggi,” says Ram Gudipati, founder and CEO, Brand Harvest Consultancy while elaborating, “The tastes of different noodles brands are so unique that one cannot become a replacement for the other.” Brands, thus, have been working hard on creating their unique positioning.
Innovation and distribution have been the two main growth pillars for the category. HUL, a late entrant in the category, tried to make a mark with Knorr Soupy Noodles. “We look at our Knorr Soups and Soupy Noodles range and their share as part of the overall growing snacking landscape, and not only as part of the traditional noodles market,” says an HUL spokesperson.
In 2015, Patanjali Ayurved launched the healthier option of instant noodles with Atta Noodles almost concurrent with the return of Maggi post the five-month ban, but failed to make any meaningful impact in the market. This, even after it boasts of robust distribution through more than 3,000 distributors. This indicates that consumers were reluctant to get back to their old habits of consuming instant noodles due to the controversy around Maggi.
“We have planned to increase our reach by first mapping gap areas, and then creating a distribution channel that constitutes the distributor and manpower set up,” points out Sah as CG Group plans to increase penetration in South and West. To support demands of South India and to ensure that supply channels to its customers in the region remain uninterrupted, a bespoke plant has been set up in Chittoor, Andhra Pradesh.
The robust and extensive distribution network ensures visible availability of instant noodles across various outlets all over India, and gives the opportunity to continually enhance the dealer base. From being present on shelves of supermarkets to small-scale grocery stores, most brands opt for a region-specific marketing approach spanning across TVCs, radio spots, print advertisements and on-ground activations. Adds Malik, “The role of lower-tier cities and rural areas in driving growth of packaged food products continues to grow, and hence, expansion of distribution will be critical.”
GST implementation and limited pricing power in the ready-to-eat category are some of the challenges which the category will face going forward, feel experts. “Disruptive innovation is needed for the category to grow,” sums up Roy, while adding that other ready-to-eat products do pose a challenge to the category as Indians look for more innovative and healthier options.
- The Indian food processing industry accounts for 32% of the country’s total food market
- It contributes around 14% of manufacturing GDP, 13% of India’s exports and 6% of total industrial investment
- The Indian food retail market is expected to reach `61 lakh crore ($915 billion) by 2020
Source: IBEF website