Master Kang’s future cannot be expected from instant noodles

By orchioo May6,2023

Recently, Master Kang launched a new bottled water product called “Drinking Mineral Spring”. It is reported that the “drinking mineral spring” is selected from the Qinglong Spring in Changbai Mountain and Bishan Spring in Mount Huangshan Mountain.
This water is targeted at young people aged 25 to 28 who pursue natural health and is priced at about 2 yuan per bottle.
Through the Baidu index, it is not difficult to find that during the 315 period last year, due to the pickled Chinese cabbage scandal in the earthen pit, Master Kang received great attention and his reputation dropped. After this incident, Master Kang disappeared from people’s sight for a long time.
Now, the release of new products seems to have slightly brushed off a sense of existence.
1、 Instant noodles defeated by takeout
The heyday of the development of China’s instant noodle industry was ten years ago, in 2013.
According to the statistics of the World Instant Noodles Association, the total demand for instant noodles in the Chinese market reached 46.2 billion yuan this year, making it the largest market in the world.
At that time, Master Kang and the unified separatist industry were two leading players, and they also became the biggest beneficiaries of this trend.
In 2013, Master Kang created a revenue of 66.71 billion yuan, while the unified revenue reached 23.33 billion yuan, both of which are their historical highs.
However, the good scenery has not always been there.
The rise of the takeout industry has taken the lead in giving instant noodles a fatal blow.
2011 is the highlight of the group buying era, with more than 5000 domestic group buying platforms. In just a few months after the Qiantuan War, nearly 80% of the group buying websites closed down, and Meituan and Hungry survived the chaos, before launching a takeout business.
According to data, in 2013, the order volume of the takeout industry surged to 5.5 billion yuan. According to the “Analysis of Factors Affecting the Consumption of Instant Noodles in the Market” released by the School of Economics and Management of China University of Geosciences, the consumption of instant noodles decreases by 0.0533% for each 1% increase in the domestic and foreign market size.
The strong rise of takeout began to carve up market share of instant noodles. At the same time, convenient and fast food is also entering the market strongly. Featuring “fast and convenient” online fast food and self heating food, they have become the choice of more young people due to their ability to meet people’s needs for diverse tastes and convenient eating.
First Financial Business Data Center once selected the top 10 online instant food consumers in 2019 through Alibaba Data. Luosifen and hot and sour powder are the most popular sub categories, and instant noodles only occupy two places among them. This shows the growth of the convenient and fast food market and the extrusion of instant noodles.
This squeeze also comes from the love of capital. In 2021, Mo Xiaoxian, Li Ziqi, Zihi Pot and other fast food upstarts received hundreds of millions of yuan in financing.
Under various impacts, the development of the instant noodle industry has ushered in an unprecedented downturn.
According to data, China’s instant noodle production began to decline in 2017 and experienced a precipitous decline in 2018. The production decreased from 11.032 million tons in 2017 to 6.995 million tons, a year-on-year decrease of 36.59%.
In 2019, China’s instant noodle production again experienced a double-digit decline, falling to 5.733 million tons, a year-on-year decrease of 18%.
Master Kang and Unity, who are at the forefront of the industry, are also unable to withstand external shocks and the downward trend of the industry.
Master Kang’s net profit plummeted from 3.015 billion yuan in 2013 to 1.475 billion yuan in 2016, shrinking by nearly half.
During the epidemic, the overall consumption of instant noodles improved, but after the epidemic, it seems that instant noodles have become a “discarded” category again. For Master Kang, transformation seems imminent.
2、 Master Kang’s Self Rescue
Entering the high-end market has become a major method for Master Kang to break through the dilemma.
Master Kang has launched a series of high-end products, such as instant noodles, Burning Soul Noodles, Master Tang, and Suda Noodles, while drinks include products such as black sugar milk tea, nourishing spring, and Bubbly Smile Bubble Bubble.
However, it is still unknown whether Master Kang can transform itself through high-end products and balance the ever-increasing price and quality.
In his financial report, Master Kang divided the instant noodle business into three categories: high priced noodles, high-end noodles/ultra high end faces, and medium priced noodles/crisp noodles, and clearly stated that high priced noodles are its core product. The classic flavor of “braised beef noodles” also invited idol Zhang Yixing as the brand spokesperson in order to attract more fans and promote sales. At the same time, strengthen the high-end product layout of high end face/ultra high end face, and meet the consumption upgrading needs of the middle class by enriching product flavors and specifications.
However, the high-end process is not ideal. In the first half of 2022, Kang Shifu’s high-priced bag noodles accounted for 42%, almost equal to 41% in the same period in 2021. It can be seen that the high-priced noodles did not show significant growth due to the popularity of consumers.
On the online layout, Master Kang joined the army of live streaming goods. As of March 1, 2023, Master Kang’s official account of Tiktok has 1.479 million fans, and the sales volume of the store has exceeded one million. Master Kang’s instant noodle restaurant self-heating noodles rely entirely on online digitization to capture the dividends of online consumption.
From the perspective of Master Kang’s marketing strategy, it can also be seen that he is “close” to young people. The first is to cooperate with popular variety shows and constantly expand the intersection with young people. In recent years, Master Kang’s Iced Black Tea has continuously cooperated with talent shows such as “Creation 101”, “Creation Camp 2019”, and basketball reality show “I Want to Play Basketball”.
Secondly, Master Kang’s Iced Black Tea continues to bind the brand to celebrity endorsers, creating stable staffing for the brand, such as signing endorsements from popular stars such as Wang Yibo and Wu Lei. Then, interact with young people on social platforms for a long time. As early as 2018, during the cooperation with “Creation 101”, the official Weibo of Master Kang’s iced black tea brand often regularly featured behind-the-scenes highlights and live clips of the program to enhance user viscosity.
In addition, over the years, Master Kang has also co branded with many popular IP addresses among young consumers, such as Disney, Douluo Continent, and Luo Xiaohei, thereby narrowing the gap with consumers.
From the perspective of category development, it can be seen that Master Kang is gradually reducing the proportion of instant noodles and increasing the proportion of beverage lines. According to the financial report, the overall revenue of the beverage business in 2020 was 37.28 billion yuan, with a year-on-year growth of 4.72%, accounting for 55.13% of the group’s total revenue.
In 2021, in order to reverse the performance trend, Master Kang increased investment in beverages. According to the financial report, among the two main businesses of Master Kang, the revenue share of the beverage business has increased year by year, jumping to 60.48% in 2021, exceeding 60% for the first time, and has become the main source of income for Master Kang.
3、 “Drinking mineral springs”, what kind of imagination space is there?
The launch of “Drinking Mineral Spring” means that Master Kang wants to squeeze into the 2-yuan price band, the most competitive segment in the drinking water market.
From the perspective of Master Kang’s existing bottled water segmentation products, its mainstream products include Youyue with a price band of 1 yuan, “drinking boiled water” with a price band of 1.5 yuan, and the Conservation Spring with a price band of 2.5 yuan, with the exception of the absence of a price band of 2 yuan.
Master Kang’s layout in the bottled water market is not too late. In 2004, Master Kang attracted many dealers by reducing costs and introducing ultra-low priced 1 yuan bottled water.
At its zenith, Master Kang’s market share of bottled water once reached 25%.
However, in recent years, Master Kang’s development in the bottled water market has fallen behind, with its market share dropping from 7.2% to 3.2% in 2022. In recent years, the main venue of the bottled water market has been occupied by Nongfu Mountain Spring, Yibao, and Baisui Mountain.
In 2020, Master Kang also launched a new bottled water “drinking boiled water” and achieved good results. In 2021, among Master Kang’s drinks, the revenue of aquatic products was 4.5 billion yuan, an increase of 39% over the same period in 2020. “Drinking boiled water”, with its selling points such as ultra-high temperature sterilization, has to some extent promoted Master Kang’s bottled water business.
This is also a major reason why the outside world pays particular attention to “drinking mineral springs”. In other words, people expect Master Kang to create the next “drinking boiled water”.
However, water can become a huge challenge for “drinking mineral springs.”. In a report released last year, Yingminte pointed out that most consumers (71%) believe that “taking from high-quality water sources” best reflects the high-end image of bottled water, including mineral water.
At present, there are only two water sources for “drinking mineral spring”: Qinglong Spring in Changbai Mountain and Bishan Spring in Mount Huangshan Mountain. On the development of water sources, “drinking mineral springs” does not have advantages.
In the future, it will take some time to verify whether drinking mineral springs can further promote Master Kang’s bottled water business.

By orchioo

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