Unify instant noodles, the position of the penis is a little shaky

Wen| Zebra Consumption Chen Xiaojing

In 2024, the beverage business once again carries the banner of unified enterprise China, contributing more than 60% of the company’s revenue. However, the growth of the company’s instant noodle business has almost stalled, and it is always facing threats from behind it.

Overwhelmed by Master Kong, Tongyi can only always be ranked second in China’s instant noodles. In the past two years, the market structure of the instant noodle industry has been significantly rewritten. Among them, the biggest attraction is who can challenge unification.

The emergence of white elephants is the most powerful contender for this position. In 2023, the scale of White Elephant will not be much different from that of Unified Instant Noodle Business. In 2024, its growth rate will far exceed Unified.

If this trend continues, the position of Uni-President Instant Noodle as the second best in the millennium may really be a bit uncertain.

Beverage business becomes the backbone

In 2024, Uni-President Enterprise China (00220.HK)’s operating income will be 30.332 billion yuan, a year-on-year increase of 6.1%, and profit attributable to equity holders of the company will be 1.849 billion yuan, a year-on-year increase of 10.49%. Affected by factors such as increased production capacity and optimized product structure, the company’s gross profit margin increased by 2 percentage points year-on-year to 32.5%.

What will the company rely on to drive growth in the future? The biggest bargaining chip may be the drinks business.

In the 2024 full-year results disclosed after hours on March 5, the performance of the beverage business surpassed the instant noodle business. This scene inevitably makes people imagine that the company’s development focus may tilt here in the future.

In the performance report, the company did not hesitate in space and mentioned Haizhiyan, which developed brilliantly during the period. This electrolyte water recorded double-digit growth in revenue last year.

“Haizhiyan was introduced to the market in 2014 and has been tepid for many years. It coincided with the outbreak of the electrolyte water market last year and caught the fast train of development.

Electrolyte aquatic products have grown rapidly in recent years, fueled by companies such as Yuanqi Forest and Dongpeng Beverage (605499.SH), and have become an independent subdivision in the beverage sector. With the large number of people entering the game, the electrolyte water war is already full of smoke, and this year’s price war is likely to be red.

However, electrolyte water is only one segment of the juice business segment, which recorded revenue of 3.605 billion yuan last year, a year-on-year increase of 5.9%. In the same period, the company’s tea beverage business segment revenue was 8.575 billion yuan, and the milk tea business segment revenue was 6.404 billion yuan, year-on-year increases of 13.1% and 1.6% respectively.

From 2020 to 2024, the compound annual revenue growth rate of the company’s beverage business reached 11.3%, which was higher than the compound annual growth rate of 7.4% of total revenue during the same period.

The beverage business not only has a large revenue scale, but also has a strong profit contribution. Last year, the net profit margin of this business was 12.2%, while in the same period, the food business was only 2.7%.

In terms of products, unified green tea has a two-line layout of low-sugar and sugar-free, and Chaliwang sugar-free large single products have reappeared in the market and continue to amplify the special flavor. In addition, Haizhiyan has taken advantage of the momentum and unified Assam milk tea has further expanded the consumption scene, and many products have won terminal recognition.

A number of institutions have expressed optimism about Uni-President’s China’s performance. Lyon, UBS and BOC International have all maintained their buy ratings and have all raised their target share prices. Yesterday, the company’s share price fell first and then rose, closing up 2.31%, with a total market value of HK$38.183 billion.

Instant noodles, hanging

For a long time, the unified instant noodle business has been suppressed by Master Kong Holdings (00322.HK), and it can only be willing to be the second largest player in a thousand years.

In 2024, the company’s instant noodle business revenue recorded approximately 9.849 billion yuan, a year-on-year increase of 2.6%.

The overall market size of instant noodles is close to the ceiling. Since 2012, the rise and development of instant food, prepared dishes, takeout and instant retail have all affected lazy people.

Looking back in the past four years, special periods triggered hoarding and temporarily stimulated growth. Once it returned to normal, the instant noodle industry instantly revealed its true colors.

From 2020 to 2022, the unified instant noodle business revenue was 9.055 billion yuan, 9.007 billion yuan, and 10.620 billion yuan respectively, a year-on-year increase of 7.2%,-0.5% and 17.9% respectively. In 2023, the special alarm was lifted, and its instant noodle business revenue dropped to 9.594 billion yuan.

It is difficult for any company to find a universal antidote to the industry’s shrinkage.

National sales of instant noodles peaked at 46.22 billion in 2013, with an average of 34 packages per person per year, and then declined year by year.

In order to maintain growth, high-end modernization and product price increases have gradually become the industry consensus.

The Manchu and Han Feast and Tangdaren series were uniformly launched; Master Kong launched Suda Noodle Restaurant, Fresh Vegetable Noodle, etc. to the market; Jinmailang put Lao Fanjia Fast Food Noodle Restaurant on the shelves. The retail price of one piece is 5 yuan to 10 yuan, or even 20 yuan, and the value of instant noodles has doubled.

The high-end effect is immediate. From 2016 to 2020, the compound growth rate of mid-to-high-end instant noodles reached 17.1%, much higher than the 4% of low-end instant noodles.

In 2023, national sales of instant noodles will rebound to 42.21 billion, giving many manufacturers hope and the market structure will gradually change. Master Kong is firmly ranked first in the industry, with a market share of 45%. The second-largest industry with a market share of 16%, has to face directly threats from behind him.

Henan White Elephant rose against the trend in the 2022 cabbage incident. Later, due to the employment of disabled people and public welfare donations, which became popular throughout the Internet, and the development of many novel flavors, it ushered in a wave of wild consumption among young people. Overnight, the company, like Hongxing Erke, became the light of domestic products.

In 2023, Henan White Elephant’s market share will reach 12%, surpassing Jinmailang in one fell swoop and entering the top three in the industry. According to the list of top 100 private enterprises in Henan in 2024, the sales amount of Henan white elephants in 2023 will be 9.175 billion yuan.

In the first half of last year, White Elephant announced that its revenue growth rate exceeded 10%. If its growth can continue, the second position of unified instant noodles will really be a bit uncertain.