The recent CCTV 3.15 party has left a lot of shadows on Chinese consumers who like to eat sauerkraut.
CCTV’s 3.15 party TV footage showed workers wearing slippers or stepping on sauerkraut with bare feet, and some even worked while smoking, throwing their cigarette butts directly on the sauerkraut. The relevant person in charge said: “The preservatives in the sauerkraut we make are exceeding the standard. In summer, the preservatives are generally 2-10 times higher than the standard.” Among the sauerkraut companies that were exposed, the flag-raising vegetable company in Huarong County, Hunan Province has received attention.
The official website of the flag-raising vegetable industry shows that it owns four major brands, namely “Flag”, “Hua Rong Dao”, “Qiao Ba Ling” and “Master Yan”, with sales in more than 20 provinces in China and overseas sales in Japan, South Korea, More than 10 countries including the United States and Australia, and Master Kong (00322-HK), Uni-President Enterprise (China) (00220-HK), KFC, McDonald’s (MCD-US) and other well-known enterprises to establish cooperation in product processing, raw material supply and other aspects.
After the program was broadcast, relevant companies responded promptly.
Uniform said: “Hunan Flagship has been in operation since December 2012, and it is no longer the company’s raw material supplier for sauerkraut buns.” Uniform has fully sealed the relevant sauerkraut bun products and conducted quality inspections with the participation of the Market Supervision Bureau.
This incident had the greatest impact on Master Kong. On the evening of March 15th, Master Kong issued a statement apologizing, saying that the flag-cooking vegetable industry is one of the suppliers of sauerkraut. Master Kong has immediately terminated the supplier qualification, cancelled all cooperation, sealed the sauerkraut bag products, and cooperated with the supervision department in the investigation.
For a long time, “Laotan Pickled Cabbage” has been the leader in the instant noodle market in China, the opposite of “Chicken Stewed Mushroom”. Food industry analyst Zhu Danpeng said that “Laotan Pickled Cabbage” has a market share of more than 20% in the instant noodle market.
The chaos of “Sauerkraut in Tukeng” caused many Weibo netizens to shout “give back my youth” and “destroy the entire student era”.
Negative sentiment is also present in the market. The stock prices of Master Kong and Uni-President in Hong Kong plummeted by more than 10% on March 16, and many supermarkets and e-commerce platforms simultaneously removed “Laotan Pickled Cabbage”-related foods.
Cheng Ye sauerkraut Bai Ye sauerkraut
In fact, Uni-President was the first to launch Laotan sauerkraut-flavored instant noodles in the mainland.
Compared with Master Kong’s smooth sailing in the mainland, the unification of entering the Chinese market earlier has always been uncertain regarding the tastes of consumers. It wasn’t until 2008 that the days of unifying work and hard work finally came to an end.
That year, Uni-President, which was losing money continuously, decided to list Laotan Pickled Cabbage Noodles, which is popular in Sichuan, as a national food. Uni-President also relied on Laotan Pickled Cabbage Noodles to return to the poker table, and its market share rose back to second.
Master Kong immediately caught up and took advantage of the channel to push its own brand of sauerkraut beef noodles to the whole of China. Judging from the speed of distribution at that time, Master Kong was three times that of Uniform. Seven days following the new product was launched, it would be available in more than 300,000 retail stores across the country.
Statistics show that in 2012, the sales of Tongji Laotan Pickled Cabbage Beef Noodles approachedRMB 5 billion yuan, the ratio of Master Kong and Uni-President in the pickled cabbage noodle market this year is regarding 47:53, the gap is not big. At the end of the same year, Master Kong also set two strategic goals for the coming year. The first is to complete the counterattack of the parent company, the Tingxin Group will surpass the Uni-President Group, and the second is to defeat the Uni-President Laotan Pickled Cabbage Noodles.
However, Master Kong smashed a good deck of cards in his hand, and the watershed was the food safety incident.
In September 2014, Master Kong used low-quality lard raw materials such as “gutter oil” in Taiwan, which was criticized by all walks of life. However, Master Kong issued an announcement claiming that all instant noodles manufactured and sold in the mainland did not involve low-quality lard in Taiwan.
In January 2017, Ting Hsin Group, the parent company of Master Kong, announced that “it will no longer produce and sell instant noodle products to Taiwan, and will focus all its efforts on China.” Taiwan’s Master Kong was disbanded, but in the mainland market at that time, Master Kong had already received mixed reviews, and its stock price was mixed. And the market value fell sharply. This turmoil also spread to unification.
And this “Tukeng Sauerkraut” incident, both for Master Kong and for Uniform, caused a huge loss of brand and sales.
Zhu Danpeng said that the food safety incident has severely damaged consumer trust, which also reminds enterprises that the tentacles of food safety supervision should be moved forward.
Food safety maintenance in the modern sense is a systematic project. Problems in upstream processing plants also involve the responsibility of downstream brands, especially big brands. There should be a set of strict standards and systems for supplier selection and product quality control of heavyweight enterprises.
What consumers should ask is, how can a manufacturer such as the flag-fed vegetable industry that does not even have data on hygiene indicators enter the purchasing list of “Master Kong”? This involves more internal management issues within the company, and judging from the current downturn in the instant noodle market, this incident has hit the entire industry even harder.
Increase revenue but not profit Self-help with price hikes
For a long time in the past, Master Kong and Uni-President have almost accompanied the green train and witnessed the rapid growth of China’s economy.
Until 2014, the sales of instant noodle market in China began to show a downward trend.
Industry insiders generally believe that the mobile Internet drives delivery platforms and squeezes the space for the instant noodle market. Data show that from 2014 to 2017, the number of delivery orders in China surged from 300 million to 5.5 billion, but the sales of instant noodles dropped from 35.1 billion packs to 29.5 billion packs.
At such a moment, Master Kong and Uni-President hope to tear off the “unhealthy” label, embrace “consumption upgrade”, and exchange for more profits through “gentrification” and “food price increase”. Unified Tang Daren and Master Kong Soda Noodle House are all products of this period, and the profit-enhancing effect is also immediate.
However, following the time series entered 2021, the crisis in the instant noodle industry further deteriorated.
The data shows that the production of instant noodles has experienced a “cliff-like decline”, from 11.032 million tons in 2017 to 6.995 million tons in 2018, and further to 5.733 million tons in 2019. In 2020, driven by the epidemic, the instant noodle market in China once recovered, but it will drop once more in 2021.
Uni-President (China) took the lead in releasing last year’s financial report on March 7. Revenue increased by 10.8% to 25.231 billion yuan, a record high, but gross profit margin fell by 2.8 percentage points to 32.6%, and net profit decreased by 7.7% to 1.501 billion yuan.
The data shows that last year’s beverage business revenue was 14.738 billion yuan, an annual increase of 17.3%, and the performance of tea beverages and milk tea food grew steadily, but the sales revenue of instant noodles category was 9.007 billion yuan, a decrease of 47.8 million yuan compared with 2020.
Master Kong’s situation doesn’t look good either. In the first half of last year, Master Kong’s revenue increased by 7.47% year-on-year, but the gross profit margin fell by 2.38 percentage points, and the net profit dropped sharply by 14.50%. This means that both Uni-President and Master Kong are facing the dilemma of “increasing revenue without increasing profits”.
A common saying is that instant noodle businesses represented by Master Kong and Uni-President are once once more facing a “cross-dimensional attack”. For fast food lovers in the new era, instant noodles are no longer the only choice. Self-heating food and pre-made dishes are favored by consumers. At the same time, Baijia Foods “out of the circle” through red oil noodles, Sichuan rice noodles and other foods (meaning that a certain food sells more than basic dishes and is known by more consumers outside the circle), Hangzhou Weinian’s snail noodles , also became a hit under the brand blessing of Li Ziqi.
In the short term, the instant noodle industry will not withdraw from the stage of history, but the slowdown in growth rate is a fact that must be faced, and under the presence of strong enemies, there is almost no room for traditional instant noodles to increase in price, which means that instant noodle operators want to To maintain a certain market share, we must achieve real food innovation and brand upgrade.
At present, whether it is Master Kong, Uni-President, or other brands, the focus of future competition is still health, deliciousness and cost-effectiveness, of which food safety is particularly critical.
