Due to the successful “reforming and opening-up”, China’s social structure has changed rapidly and the urban lifestyle has become more and more fast-paced. The average worker has a busier schedule; therefore, do not have time to treat themselves with decent meals. Therefore, because of the large population base, China is the largest instant food market in the world. In August 2018, the total sales of snacks were 3.45 billion RMB. However, China’s overall expanding speed in the instant food industry is decreasing and people are expecting higher quality, especially healthier and better tasting instant food. According to Chinese News, supermarkets and local markets are seizing one-third of the spaces that was originally for the instant noodles; instead, the spaces are occupied with more variety of other types of ready-to-eat foods which are more nutritious, like instant rice and instant hot pot. With this trend observed this report analyzes the reasons behind the changing focus of Chinese citizens on the instant food market and provides a broad prediction of the future for this industry.
What parts of the instant food market are on the decline?
China’s instant noodle market
The ready-to-eat market consists of two parts: Instant meals and snacks. In this review, we discuss the instant food market in China. Instant food includes instant noodles, instant meat, canned food, instant rice, quick-frozen food and etc. Among them, instant noodles are the most popular one. Since 1970, China has started to manufacture instant noodles and international instant food brands entered China in the 1990s. For now, instant noodles have a history of 60 years. According to the World Instant Noodles Association’s research, in 2014, the total instant noodle demand around the world was 103.96 billion packets, which China consumed 44.4 billion packets. However, as the graph shows, the demands for the instant noodles are slightly decreased from 2014 to 2018; in 2018, the forecasted total demands dropped to 36.8 billion, which demonstrates a 17% decrease.
China’s canned food market
As for the canned food market, the market is expected to reach USD 118 billion by 2023, at a CAGR of 3.8%, during the forecast period (2018-2023). China has been the largest canned food producing country with around 12.9 million tons produced in 2017, but a large of them exported to other countries, which means the actual consumption of this canned food in China can be decreasing. China’s annual per-capita consumption of canned food is 8kg, which is much lower than USA (90 kg) and Western Europe (50 kg). According to the graph below, the sales revenue of canned food market in China are fluctuating from 2014 to 2018, from 163.17 billion RMB to 180.69 billion RMB.
Chinese instant food market: The reason behind the sales decrease
The possible main cause for the significant decrease in instant noodle sales and fluctuation relating to the canned food market would be the fast development of Chinese food delivery system. According to The Economist’s analysis, by the end of June in 2017, the registered users for the food delivery system had risen to 295 million, which was a 40% more than at the end of last year. According to Chinese Industry Information, as China’s industrialization and urbanization is continuing, the food delivery market penetration rate will reach 10% in 2020, which means the whole industry will expand to more than 500 billion RMB; if the penetration rate can reach 15%, the transaction level will then become more than 500 billion RMB in 2020, which is indeed a vast market. Therefore, such high penetration rate will certainly affect the willingness of the consumers to consume instant food; instead, calling for food delivery from local restaurants might be healthier and more rational choice.
source: Daxue consulting