Instant Noodles Market in India

Noodles are a commodity which is consumed by everyone, right from kids and teenagers to retirees. Infact, India consumes a little less than 90,000 tonnes of noodles every year. A decade ago the word ‘noodles’ was synonymous with Nestlé’s ‘Maggi’. Two-and-a-half decades since its launch, ‘2 minute Maggi Noodles’ is the numero uno brand in the Indian market. Overall, the instant noodle market in India is worth over INR 1,300-crore (USD 260 million) and is growing at a phenomenal rate of over 17-20% per year, according to Datamonitor estimates. Inspired by the success of Maggi, a number of F&B manufacturers ventured into this market. Among the prominent names are Top Ramen Smoodles and Cup Noodles manufactured by Indo-Nissin Ltd, Ching's Instant Noodles, AA Nutritions's Yummy, and Wai-Wai, owned by the Chaudhary Group from Nepal and India.

In the early 80s, the conservative and typical food consumption era, the concept of ‘ready-to-cook’ food was alien to the Indian market. People were skeptical to experiment with food especially food meant for their children. Despite the unfavorable circumstances, Maggi took the challenge and launched itself in 1983. The brand’s appropriate realization of target segment, effective positioning and effective promotion and sales made Maggi the most-loved noodle brand in India. Maggi enjoys a market share of over 70% today, despite the presence of a number of other brands. In 2005, the Maggi brand was worth USD 3.7 billion in comparison to USD 1.7 billion recorded in 2003. In 2005, Maggi was the highest Indian spender in the Sales Promotion department in the Noodles Category.

For much time since its launch, Nestlé’s Maggi Noodles was the only kingspin in the noodle market. However, in the recent past two well-known FMCG players in the country – Hindustan Unilever (HUL) and GlaxoSmithKline (GSK) introduced their own brands of instant food noodles and have managed to put their foot into this segment. Today, Knorr from HUL and Foodles from GSK have become well identified noodle brands besides Maggi Noodles and Nissin’s Top Ramen. New investments by HUL and GSK are paying off now. Individually, they hold 5% and 2% respectively of the noodles market share. Interestingly, GSK plans to capture 10% of the organised noodles market within a year. The newest entrant in this sector, ITC, seems to be sending strong competitive vibes to HUL and GSK as well as Maggi. ITC plans to launch noodles under the ‘Sunfeast’ brand name. GSK, HUL and ITC’s entry into noodles will heat up the competition for Maggi, which is already facing traction from retailers’ private labels like Tasty Treat from Future Group and Feasters from Aditya Birla Retail. According to data provided by Nielson Co., Maggi’s share of instant noodles, on an all-India basis, across urban markets, has slipped consistently between December ’09 (90.7%) and July ’10 (86.5%).

Some of the Major Companies producing Noodles in India:

• Nestle (Maggi)
• Nissin (Top Ramen)
• Capital Foods Ltd (Ching’s Secret)
• Future Group (Tasty Treat)
• Aditya Birla Retail (Feasters)
• GlaxoSmithKline (Horlicks Foodles)
• Hindustan Unilever (Knorr)
• ITC (Sunfeast)

Investments

To cope with the increasing competition from the new entrants, Nestle India is investing INR 950 crore (USD 210.9 million) to set up two units to manufacture instant noodles and infant foods in Karnataka and Haryana. The unit in Karnataka will be up and running in the first quarter of next calendar year, while the Haryana unit is expected to commence its commercial production by the end of the next calendar year. With three other units based in Punjab, Uttarakhand and Goa, a fifth facility is expected to be set up in a yet undisclosed location to manufacture instant noodles; this will be put up for approval in the next two months. Nestle also announced plans to set up its first Research and Development Centre in India which will primarily focus on developing products specifically aimed at the domestic market. This R&D centre is valued at INR 230 crore (USD 51 million) and will be based in Manesar, Haryana.

With increasing competition in the Indian noodles market, it is very difficult to say whether Maggi can sustain its popularity over the coming years. The new entrants have launched their own brands of noodles which have already started hampering Maggi’s hold on the Indian market. It will be interesting to see how Maggi combats the competition with the big Indian conglomerates/new entrants earmarking ambitious plans and high commitments.