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Instant Noodles market in India to grow by 5.6% till 2023

Instant noodle is made from the mixture of wheat flour, water, starch, salt and other flavor enhancer which have become indispensable in the urban kitchen with the rapid changing lifestyle in Indian market because instant noodles are easy to cook being time saver.

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Definition / Scope

Asian noodles represent a major end use of wheat, with estimates of more than 12% of total world wheat production used for making these products. Of the many types of noodles, the instant fried noodle is the fastest growing sector and it is increasing in popularity in many non-Asian countries. [1]

Commercially instant noodles were first introduced in Japan followed by Korean and then Asian countries. Due to ease of preparation and convenience of instant noodles the market is growing very rapidly. Instant noodles are steamed, fried and dried which gives it distinct flavor and texture so they are different from other noodles. Also shelf life of instant noodles increases along with low microbial deterioration or oxidative rancidity. [2]

In India instant noodles was first introduced with the brand name Maggi by Nestle in mid 80’s. Maggi has became household name in category of instant noodles due to smart strategy by the company and the property of noodles being easy to cook. [3]

Market Overview

The report published by World Instant Noodles Association showed India to be fourth in global consumption of instant noodles with 5.5 billion servings per year.

Instant noodles have become indispensable in the urban kitchen with the rapid changing lifestyle in Indian market. This is because instant noodles are easy to cook being time saver besides being easy on the palate and also they are greatly relished by the children.

Since the last five years the total market for instant noodles is growing at a healthy rate with more than 20% CAGR. But due to controversy of MSG in Maggi noodles the sales was reduced by almost 14% in the year 2015-16. This became a significant opportunity for other competitors like CG Foods and ITC Sunfeast Yippee to grab a larger share of this category

From packaging point of view instant noodles is divided into two segments i.e. packet/pouch noodles and cup/bowl noodles. From packaging side, flexible plastic is mostly preferred by customer.

Retail suppliers are the one who generates more than two third sales revenue of instant noodles. [4]

Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

Recently high amount of lead was found in Maggie noodles. This had sizable negative impact on the demand for noodles as a whole marring growth of other competitors too. In another instance, presence of MSG (Monosodium Glutamate) among the ingredients caused a major trust deficit among the consumers. [5]

Top Market Opportunities

  • Health awareness among consumers in India is growing and this is creating demands for healthy noodles.
  • Market players have identified the pattern of consumer preferences, so the introduction of new type of instant noodles across flavors and types such as Amritsari Achari, Mumbaiya Chatak, Super Chennai, Atta Noodles and Bengali Jhaal, amongst others have influenced the growth of the instant noodles in India over the recent years
  • From innovation in terms of ingredients, formulation and packaging, Indian instant noodles industry are trying to build up themselves in the competitive market. [6]

There are roughly 10 big brands that have high market share available in India such as Top Ramen, Yippee, Ching’s Secret, Knorr Soupy Noodles, Wai-Wai, etc. Patanjali group has also launched noodles in India with brand “Patanjali Atta Noodles” and advertised the noodles as healthy noodles which is made from wheat flour and their share is growing with 11.8% among FMCG product. [7]

Market Drivers

The major drivers for the growth of instant noodles in the market are

  • Ease of preparation of instant noodles suits the fast paced urban lifestyle
  • Rising disposable income and growing affordability

Introduction of new variant in noodles type, flavor, packaging such as sachets or cup have showed important role in the growth of instant noodles market. [8]

Market Restraints

After finding excess lead and MSG in Maggie noodles, the Food Safety and Standards Authority of India (FSSAI) has directed states to test all instant noodles brands available in the market. Food Safety and Drug Administration (FDA) of Uttar Pradesh government has also filed case against Nestle India due to presence of excess of lead in their brand Maggi. This caused sales of Maggi to go down rapidly because they were compelled to withdraw their product from every stores of the market. Maggie was banned in Kerela, Uttarakhand, Gujarat, Jammu and Kashmir as well. [9]

Industry Challenges

Upon laboratory test made by Ahmedabad-based Consumer Education & Research Society (CERS) on instant noodles brand, the health claims made by 15 brands was found to be below nutritional level.

Maggi, Knorr, Sunfeast, Top Ramen, Ching’s Secret, Yippee, Foodles, Wai Wai X-press, Tasty Treat etc. are the brands which were tested in laboratory. High sodium salt level, low fibre content, high fat and several other factors were found to be false upon testing in laboratory.

CERS said that the brands who claimed parameters such as wholesome, enriched with proteins and iron, full of fibres, healthy, etc. were found to be fault and above safe limit of several harmful elements. The claims that the noodles company made in terms of healthy snacks was not found to be true. Cardiac disorder and blood pressure may be the problem that may be faced by consumer due to high level of fat, sodium, carbohydrates in noodles.

When interpreted against Food Standards Agency (FSA) of UK standards for fats and sodium none of the brands were found to be true. The tests for basic parameters that included total ash, moisture level, acid insoluble ash, fat, crude fibre, proteins, sodium, calcium, irons, carbohydrate, and energy. Labeling information on packaging was tested against the regulations laid down by Food Safety and Standards (Packaging and Labelling) Regulations, 2011. [10]

Regulatory Trends

After the controversy of Maggie noodles, Food safety regulator Food Safety Standards Authority of India (FSSAI) is setting new regulation for quality standards especially for instant noodles in order to bring clarity in quality standards. Previously there was common standard for ready to cook products. FSSAI had asked to take action against those noodles companies who add MSG on their product despite having label with “No MSG” or “No added MSG”.

FSSAI had also banned Nestle’s Maggie noodles in the previous year due to presence of high lead content and MSG. The Bombay High Court lifted the ban imposed by Indian Food Regulators on Maggie and asked them to check their sample in three independent laboratories across India. Nestle re-launched Maggi noodles in Indian markets in November 2015. [11]

For manufacturing instant noodles, FSSAI set standards to specify ingredients used, quality and safety parameters to the industries. The standards also provide that the product shall be of good characteristic in terms of colour, texture, appearance, aroma and taste and shall be free from added colour, insect’s larvae, dirt, undesirable taste and impurities or any other extraneous matter. There is also limitation for parameters such as moisture content, acid value, acid insoluble ash in this standard. Any violation of labeling requirement can cause action to the industry as per Food Safety and Standards Act 2006 and regulations there under shall be taken by the state authorities concerned.[12]

Market Size and Forecast

Due to rising demand for instant noodles in the global market it is expected to reach 145.8 billion packs by 2020 according to Netscribes research. In the global market the market share for India is ranked as fifth in terms of instant noodles.

The Indian instant noodles market was valued at USD 1438.04 million in 2017 is expected to register a CAGR of 5.6 % during the forecast period (2018-2023).

This growth is caused due to the increasing youth population, increasing disposable income, higher brand consciousness, and changing consumer preferences. Market leaders, such as Nestle SA, CG Foods India Pvt. Ltd, invested in cup noodles which take less time to be prepared, offers good taste, and can be eaten straight from the packaging as compared to packet noodles. Growth of Cup noodles was fulfilled by customers who have busy lifestyles. The traditional grocery stores accounted for the dominant market share of about 60% in 2017 and are expected to register a CAGR of 5.5% during the forecast period. Market of noodles is categorized as supermarket, grocery, online stores, etc. [13]

After coming back again in market, Nestle India Ltd reported a 50% jump in its net profit for the quarter ended 30 June. Net profit for the June quarter stood at Rs 395.03 crore as against Rs 263.43 crore in the year-ago quarter. Revenue from operations grew by 8.6% during the quarter, helped by volume growth across categories, to Rs 2,698.40 crore from Rs 2,484.73 crore in the same quarter last year. Its revenue from domestic market grew by 8.5% and exports by 8%% during the quarter under review.[14]

Market Size.PNG

Market Outlook

Instant noodle is made from the mixture of wheat flour, water, starch, salt and other flavor enhancer. Fortification is also done sometimes in the preparation of noodles like using buckwheat flour to wheat flour is the ratio 1:4 for preparing buckwheat noodles.

The trend of consumption of convenience food began in western world and spread to other regions rapidly. Consumer looks for noodles which are easily available, have nutritive value, etc.

Due to changing lifestyles, consumer wants convenient foods which are easy to cook and consume. Instant noodles are considered convenient as there is no need to put in efforts in cooking & chopping vegetables, globally the market (Volume) for instant noodles is estimated to grow at the rate of about 5% from 2017 to 2023.

Market of instant noodles is segmented on the basis of packaging like packets or cups. Packet noodles have highest market proportion and are projected to dominate instant noodles market during forecast period. Cup noodles can also expand its territory in near future.

Segmentation is also done on the basis of broth which includes sea-food, chicken, vegetable, and others. Vegetable noodles will show higher growth rate over the forecast period. Similarly, on the basis of distribution channel, store based and non-store based.[15]

With the ban of Maggie, the instant noodles market has new players with the expansion of market share. Nestle used to have 60% market share. Sunfeast Yippee have 22% market share. Hindustan Unilever’s Knorr has 2% share where Ching’s Secrets has 1.9% market share. Patanjali's Atta Noodles, which was launched after the ban, has market share 1.3% in less than two years of its launch. Similarly brands such as Joymee, Paam Eatables, Marwari noodles and others too have gained over 2% market share.[16]

Distribution Chain Analysis

Noodles Factory -----> Distributor -----> Wholesaler -----> Consumer

During past few years there has been a significant expansion in distribution channels in India.

A firm can deliver its products to the user through a variety of channels, using a range of marketing intermediaries. Most Indian manufacturers use a three-tier selling and distribution structure. This structure involves redistribution stockists, wholesalers and retailers.

Companies have various strategies to improve their distribution logistics in an effort to address a fiercely competitive market. Emergence of independent distribution and logistics is part of it. Marketers are increasingly outsourcing some of the key functions in the distribution and logistics areas to courier and logistics companies and searching for more efficient ways to reach the consumer.[17]

Competitive Landscape

There are various strategic plans which is adopted by various instant noodles companies in India. Strategy includes new product development, expansion of market, merge and partnership, acquisitions, etc. some of the key market players in instant noodles business are Nestle S.A., ITC, CG Foods India Pvt. Ltd. and Capital Foods Pvt. Ltd.

New product launches, market expansion, partnerships, acquisitions are the preferred strategic approaches adopted by most companies involved in India instant noodles market. Some of the prominent players in the India instant noodles market include Nestle S.A., Hindustan Uniliver, Patanjali, ITC, CG Foods India Pvt. Ltd. and Capital Foods Pvt. Ltd.[18]

In noodles market different companies are trying to achieve maximum share. Customers are attracted through various ways like way of taste, way of quantity, way of healthiness etc. Various offerings are made by companies to enhance their product by adding new flavours. Different size packs variation like right from single noodle packs of 50-75 gm. to value eight noodle packs are introduced.[19]

Key Market Players

Some of the Noodles brand in India is listed as:

  • Maggi: Maggie was introduced in 1983. It is one of the favorite brands among noodles companies which are consumed by almost all Indians. This brand has faced many controversies like fail in food safety but after so much banned it returned and covered its entire market share instantly.
  • Yippee: Yippee belongs to company ITC which was introduced in 2000. During the ban of Maggie, yippee was market leader who crossed the market share of Maggie.
  • Top Ramen: Top Ramen is produced by Nissin India. The company covered Indian market in the year 1988. It took a while for Top Ramen to become one of the leading noodle brands in India.
  • Ching’s Secret: Ching’s Secret is a product of Capital Food Indian Limited which is the more popular one and is giving stiff competition to the top noodle brands in India. It offers a vast range of products to its customers that include Schezwan Instant Noodles, Singapore Curry Instant Noodles, Hot Garlic Instant Noodles, Egg Hakka Noodles and Veg Hakka Noodles.
  • Knorr Soupy Noodles: Knorr Soupy Noodles is a product of Hindustan Unilever which is also a popular brand in India of late. Knorr is famous for its unique range of soups in India and is the leading brand for the same. Knorr noodles range consists of Mast Masala Soupy Noodles, Knorr Chinese Noodle Hot Spicy, Knorr Chinese Noodle Schezwan, Chinese Noodles and Fried Rice.
  • Patanjali Noodles: Yog guru baba ramdev introduces desi noodles to take on Maggi Noodles and through this launch of this product the Market become more competitive. Patanjali was a good competition for Maggie also. Patanjali will gain more share because of powerful distribution system and its association with desi and Healthy Noodles.
  • Horlicks Foodles: Foodles offer two healthy variants: Regular and 4 Grain with a trademarked Healthmaker sachet which has 9 Power Vitamins. The 4 Grain variant is made with nutritious grains like Rice, Ragi, Wheat and Corn. As a sub-variant, each of the two varieties comes in three different flavours.
  • Nissin Scoopies: Nissin Scoopies belongs to Nissin India who manufactured and marketed the Noodles in India in 1958 with a brand name “Chicken Ramen”. Nissin Foods began introduction of a long list of successful and innovative ramen products.
  • Wai Wai Noodles: Chaudhary Group introduces Wai Wai noodles. This product we can say that this Nepal’s best kept secret in Noodles. Wai Wai is growing too fast with good market share in Tamilnadu.
  • Joymee Instant Noodles: Joymee Noodles is the products of Inbisco with production about 300 tons of noodles a month and 600 tonnes of candies a month at its Hyderabad plant. Also they are planning to expand their business to pan India by setting up new plants in the different areas.[20]

Strategic Conclusion

Noodle is a food product which is consumed in a great amount in Indian scenario. Instant noodles were first introduced in Japan followed by other countries. The market of instant noodles is high because of its property like easy to cook and various nutritive values. The controversy in Maggie noodles because of high lead and MSG created risk for all other brands in market. Also upon laboratory test other brands were also found below nutritional level as they write in their packaging labels. Food safety regulator Food Safety Standards Authority of India (FSSAI) is setting new regulation for quality standards especially for instant noodles in order to bring clarity in quality standards.

Noodle is a food product which is consumed in a great amount in Indian scenario. Instant noodles were first introduced in Japan followed by other countries. The market of instant noodles is high because of its property like easy to cook and various nutritive values. The controversy in Maggie noodles because of high lead and MSG created risk for all other brands in market. Also upon laboratory test other brands were also found below nutritional level as they write in their packaging labels. Food safety regulator Food Safety Standards Authority of India (FSSAI) is setting new regulation for quality standards especially for instant noodles in order to bring clarity in quality standards.

Most Indian manufacturers use a three-tier selling and distribution structure. This structure involves redistribution stockists, wholesalers and retailers. Some of the key market players in instant noodles business are Nestle S.A., Hindustan Uniliver, Patanjali, ITC, CG Foods India Pvt. Ltd. and Capital Foods Pvt. Ltd.

References

  1. https://researchbank.rmit.edu.au/eserv/rmit:11215/Choy.pdf
  2. https://researchbank.rmit.edu.au/eserv/rmit:11215/Choy.pdf
  3. https://www.researchonindia.com/instant-noodles-market-in-india-2021.html
  4. https://www.prnewswire.com/news-releases/india-instant-noodles-pasta--soup-report-2017-growing-at-a-cagr-of-more-than-20-from-the-last-5-years---research-and-markets-300447219.html
  5. https://food.ndtv.com/food-drinks/the-dark-side-of-instant-noodles-what-makes-them-harmful-766902
  6. https://www.mordorintelligence.com/industry-reports/india-instant-noodles-market
  7. https://www.mordorintelligence.com/industry-reports/instant-noodles-industry-in-india
  8. https://www.researchonindia.com/instant-noodles-market-in-india-2021.html
  9. https://www.downtoearth.org.in/news/government-tightens-noose-around-instant-noodles-brands-50077
  10. https://www.moneylife.in/article/shocking-all-instant-noodle-brands-are-fooling-you-on-nutrition-health/29306.html
  11. https://www.thehindubusinessline.com/news/fssai-plans-specific-regulations-for-noodles/article8616466.ece
  12. http://www.rediff.com/money/report/fssai-makes-public-draft-standards-on-making-instant-noodles/20160812.htm
  13. https://www.mordorintelligence.com/industry-reports/india-instant-noodles-market
  14. https://www.livemint.com/Companies/FkCd9kVwP4J3MsUxR7zUIM/Nestle-India-profit-jumps-50-in-June-quarter-on-lower-input.html
  15. https://www.marketresearchfuture.com/reports/instant-noodles-market-1841
  16. https://economictimes.indiatimes.com/industry/cons-products/food/yippee-top-gainer-in-instant-noodles/articleshow/60757278.cms
  17. https://www.export.gov/article?id=India-Distribution-and-Sales-Channels/
  18. https://www.mordorintelligence.com/industry-reports/india-instant-noodles-market
  19. https://brandyuva.in/2017/02/10-top-best-noodle-brands-of-india.html
  20. https://brandyuva.in/2017/02/10-top-best-noodle-brands-of-india.html

Appendix

  • Acronyms
  • CAGR: Compound Annual Growth Rate
  • CG: Chaudhary Group
  • FDA: Food Safety and Drug Administration
  • FMCG: Fast Moving Consumer Goods
  • FSA: Food Standards Agency
  • FSSAI: Food Safety Standards Authority of India
  • ITC: Imperial Tobacco Company
  • MSG: Monosodium Glutamate
  • Pvt. Ltd.: Private Limited
  • UK: United Kingdom
  • USD: United States Dollar


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