South Korea’s “Asian Daily” reported on May 16 that according to data from the Korean Financial Supervisory Service, the first quarter results of the three major Korean instant noodle giants Nongshim, Tumbler, and Samyang Foods ushered in a good start.
Specifically, Nongshim’s sales were 860.4 billion won (about 4.48 billion yuan), a year-on-year increase of 16.9%, and operating profit was 63.8 billion won, a year-on-year increase of 85.5%. The company has gained a firm foothold in the U.S. market, with sales at Sam’s Club and Costco, a large U.S. supermarket chain, up 117% and 57% year-on-year, respectively. Considering the recent sales growth momentum, Nongshim plans to build a third factory in the United States.
The overall sales of Samyang Foods in the first quarter were 245.5 billion won, a year-on-year increase of 18.9%, of which overseas sales were 157.9 billion won, a year-on-year increase of 21.5%. The United States, Japan and China have driven a substantial increase in overseas sales. In the first quarter, the sales of Samyang Foods’ Japanese subsidiary increased by 81% year-on-year, and the sales of the company’s Chinese subsidiary reached 170 million yuan during the same period. In the first quarter, Samyang Foods, which is listed in Wal-Mart, a large U.S. supermarket chain, achieved US$18.2 million in sales in the U.S., a 91% year-on-year increase. Samyang Foods will also enter Costco in the near future, and it is expected to continue the sales growth momentum in the short term.
The operating profit of tumbler in the first quarter was 65.3712 billion won, a year-on-year increase of 10.7%, and the sales scale was 856.78448 billion won, a year-on-year increase of 15.4%.
The Yonhap News Agency article pointed out that the hot sales of instant noodles are mainly due to the prosperity of the “stay-at-home economy” under the new crown epidemic. Instant noodles made in South Korea have also served as emergency food after the coronavirus outbreak forced people to stay home, according to market watchers. The industry predicts that in the first quarter of this year, the overall export value of Korean instant noodles is expected to reach 280 million US dollars, setting a record in the first quarter of the year.
In addition, according to the “Korean Herald” previously stated, the market demand for Korean brand instant noodles in recent years has also benefited from the influence of the “Korean Wave”. The “Korean wave” in a broad sense refers to the regional influence of Korean film and television works, music, clothing and catering. The growing influence of Hallyu has made Korean food popular with consumers from all over the world.
For example, overseas fans are very interested in a noodle dish that appeared in the Oscar-winning film “Parasite”, which mixes jajang instant noodles with spicy udon-like instant noodles. After the popular tumbler product “Golden Ramen” adopted BTS member JIN (Jin Seokjin) as the image spokesperson, overseas sales have skyrocketed.
Throughout 2022, South Korea’s instant noodle exports will increase by 12% to $862 million, surpassing the record set in 2021. South Korea was the world’s second-largest exporter of instant noodles last year, after China, which exported 460,000 tons of instant noodles last year. In terms of export destinations, China is the largest overseas market for Korean instant noodles, with an export value of 191 million U.S. dollars, followed by the United States (120 million U.S. dollars) and Japan (68 million U.S. dollars).
In addition, because food companies such as Nongshim and Paldo set up factories overseas to sell locally, the actual overseas sales of Korean instant noodles may be far greater than the export value. As the first brand to enter the Chinese market, Nongshim currently has two local chemical plants in Shanghai and Shenyang. More than 80% of the products sold domestically are produced in local factories. In 2020, the sales of instant noodles of Nongshim China Shanghai subsidiary increased by 28.2% to 218.3 billion won (approximately RMB 1.16 billion).
It is worth noting that as the cost of raw materials continues to rise, coupled with the increase in transportation costs and labor costs, Korean instant noodle companies have begun to increase prices. From August 1, 2021, the prices of multiple products of Kim Ramen, one of the most representative instant noodles in Korea, will be raised, with an average increase of about 12%. This is the first time the brand has raised prices in 13 years. Subsequently, many well-known instant noodles such as Shin Ramen also raised their prices by about 7%. The brands with this round of price increases accounted for more than 70% of the instant noodle market in South Korea.
However, South Korea’s per capita instant noodle consumption “number one” may not be guaranteed. According to previous statistics, Vietnam will be the country with the largest per capita consumption of instant noodles in 2021. According to the survey, in Vietnam in 2021, 87 packs (barrels) of instant noodles will be eaten per capita. South Korea ranks second with 73 bags (barrel) per capita, followed by Nepal with 55 bags (barrel).