International Markets Bureau

MARKET INDICATOR REPORT | JUNE 2010

Consumer Trends Noodles in Japan

Source: Mintel

Consumer Trends Noodles in Japan

EXECUTIVE SUMMARY
Japanese retail sales of noodles were US $10.9 billion in 2009, a decline of 5.6% from 2008, and the smallest retail sales figure since 2004. This decline was the result of two contributing factors. First, in early 2008, a number of noodle manufacturers, including Nissin Food Products, Toyo Suisan Kaisha Ltd., and Sanyo Foods Co. Ltd., raised the price of noodles; this had not been done in the preceding 17 years. The price increase was necessary, as the price of wheat rose and packaging costs increased. Fortunately, most wheat prices returned to pre-2008 levels by the end of 2009, which returned noodle prices to normal and brought sales figures back to pre-2008 levels. Secondly, the noodle industry also suffered briefly at the end of 2008 as a result of a contamination issue involving Nissin Food Products. Nissin recalled half a million instant Cup Noodles, the manufacturers leading brand, over fears of insecticide contamination. Both of these issues appear to have been resolved, so retail sales should return to normal levels in 2010. The noodle market is made-up of a combination of instant, plain, chilled, frozen, and snack noodles. Instant noodles accounted for 58% of total value sales of noodles in 2009, with the category divided into pouch, brick noodles and cup/bowl noodles. Pouch and brick noodles declined as consumers selected other convenient alternatives, such as ready-meals and other microwavable choices. Product innovations in cup/bowl instant noodles were once again quite interesting, with new products described as light, hearty, and made with hot milk. The top flavours remained the same as previous years, with soy sauce maintaining the top position. Chilled, plain, frozen and snack noodles accounted for the remaining 42% of sales in the noodle market, in that order. Frozen and chilled noodle sales grew in volume during 2009, as consumers perceived them to be a more complete meal than instant noodles. Although volume sales are expected to grow in the future, it is unlikely that value sales will grow because the demand for lower manufacturing prices will drive the selling price down. Furthermore, it is anticipated that the number of manufacturers will dwindle, as mergers and acquisitions occur, allowing manufacturers to grow in size to be more competitive.

INSIDE THIS ISSUE

Consumer Trends Retail Trends Japanese Manufacturers Japanese Brands Instant Noodles Individual Sectors New Products 3 4 5 5 6 7 8

DID YOU KNOW?

Cup noodles were introduced
by Nissin Food Products in 1971 and revolutionized the instant noodle market.

Noodle manufacturers are now

looking to expand into the instant soup market.

Source: Mintel, 2009.

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CONSUMER TRENDS
Noodles are a staple of the Japanese diet and can be consumed hot or cold. Traditional Japanese Consumption of traditional Japanese food is decreasing, as food patterns shift to include more Westernized products.
Noodles are being consumed less as consumers choose to experiment with more ethnic meals, including risotto and pasta. meals usually consist of noodles or rice, with a soup and a side-dish of fish, meat or vegetables, to mix in with the noodles or rice.

Although going out to eat is a popular social event in Japan, the recession has resulted in people reducing the number
of meals eaten out. As a result, instant, chilled and frozen noodles have seen success, as they have become cost-effective and time-saving alternatives to foodservice, particularly for lunch-time meals.

Ready-made meals are growing in popularity. With less time to spend at home preparing a meal, consumers look for
convenient meal options, especially with the size of families decreasing.

Despite new flavour introductions in 2008 and 2009 in the instant noodle category, the most popular flavours of noodles
in Japan remained soya sauce, salted, and miso, all of which are already well-established in Japan.

Consumers were interested in new dairy-based flavours of instant noodles, which were inspired by consumers adding
hot milk to regular instant noodles instead of hot water.

Organic foods are popular amongst consumers in Japan and Euromonitor forecasts growth of up to 30% by 2014 for
organic products.

Japanese Noodle Market Size 2004-2009 11600 11400 11200 11000

10800 10600 10400

Value in Millions of US Dollars

2004

2005

2006

2007

2008

2009

Year

Japanese Noodle Consumption, Average Over 2004 - 2009

Frozen noodles 10% Chilled noodles 16%

Snack noodles Plain noodles 1% 15%

Instant noodles 58%

Source: Euromonitor, 2009.

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RETAIL TRENDS
Supermarkets are the most popular distribution channel for noodles in Japan,
surpassing convenience stores, markets and Internet sales. Over 80% of the Japanese population lives in urban centers, which has enabled the success of supermarkets.

Local manufacturers continue to dominate the Japanese noodle market.

Nissin Food Products Co. Ltd. remains the leader in noodle sales in Japan.

Private label sales of noodles accounted for approximately 5% of noodle sales

in 2008. Private labels are most successful in the plain, chilled and frozen noodle categories, whereas their presence in the instant noodle market is limited. Private labels are most often found in retail outlets owned by Aeon Group and 7-Eleven.

Like other Japanese food sectors, the noodle market is highly segmented, as
manufacturers look to target specific consumers (e.g. students, businessmen, women) with their products. shelf for just three or four months before it is replaced by a new variety. Source: Mintel, 2009.

New varieties of instant noodles are introduced regularly, and, according to Japan Times, a new product is on the

Distribution Channels of Noodles in Japan 2009

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JAPANESE MANUFACTURERS
Percentage Market Share of Japanese Noodle Manufacturers 2004- 2008 Manufacturer Nissin Food Products Co Ltd Toyo Suisan Kaisha Ltd Sanyo Foods Co Ltd Ace Cook Co Ltd Katokichi Co Ltd Myojo Foods Co Ltd Shimadaya Co Ltd Hyougo-ken Tenobesomen Cooperative Oyatsu Foods Corp Nichirei Corp Meiraku Co Ltd House Foods Corp Hakubaku Co Ltd Hoshino Bussan Co Ltd Obinata Co Ltd Yamadai Co Ltd Shigeno Seimen Co Ltd Private Label Others Total
Source: Euromonitor, 2009.

2004 2005 2006 2007 2008 29.5 30 29.7 30.8 27.6 13.6 14 13.5 13 12.7 7.6 7.7 7.7 7.7 7.7 3.4 3.5 3.6 3.6 3.7 2.6 2.7 2.9 3.1 3.1 5 5 3.6 3.2 2.4 2.2 2.2 2.2 2.1 2.1 1.9 1.8 1.7 1.7 1.7 1.1 1.1 1.1 1.1 1.1 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.7 0.9 0.8 0.7 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 5.1 5 5 5.2 5.3 24.3 23.5 25.4 25.3 29.4 100 100 100 100 100

JAPANESE BRANDS
Japanese Noodle Brands and Their Companies 2009 Brand Nissin Maruchan Sapporo Ichiban Myojo Katokichi Shimadaya Super Cup Ibonoito Baby Star Nichirei Meiraku House Hakubaku Hoshino Obinata Yamadai Shigeno Seimen
Source: Euromonitor, 2009.
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Company Nissin Food Products Co Ltd Toyo Suisan Kaisha Ltd Sanyo Foods Co Ltd Myojo Foods Co Ltd Katokichi Co Ltd Shimadaya Co Ltd Ace Cook Co Ltd Hyougo-ken Tenobesomen Cooperative Oyatsu Foods Corp Nichirei Corp Meiraku Co Ltd House Foods Corp Hakubaku Co Ltd Hoshino Bussan Co Ltd Obinata Co Ltd Yamadai Co Ltd Shigeno Seimen Co Ltd

INSTANT NOODLES
Instant noodles accounted for 58% of sales in the noodle
market in 2009, and therefore had a significant effect on noodle sales as a whole, when sales decreased by 6% as a result of rising prices.

Cup/bowl instant noodles were the leader for product innovation in 2009. One
of the most successful product introductions was Cup Noodles Light which targets women looking for healthier meal options.

Sales of instant noodles suffered after Nissin experienced contamination

issues within the Cup Noodles Brand. Consumer confidence fell and all brands of instant noodles were negatively affected by the scare.

The instant noodle market is known to lack nutritional value, due to extensive
Source: Mintel processing, and so it is often promoted as an accompaniment to a meal, rather than a healthy meal in itself.

To address concerns of nutritional content, the instant noodle market is fortifying its products with vitamins and
minerals, to compete with fresh meal solutions. Furthermore, to address consumer concerns about high salt content and artificial additives, new product launches have emphasized product naturalness.

The premium market of instant noodles is focused in Asia, while the West is more economically focused. In 2009,
Nissin Food Products introduced Luxury Ramen Noodles, which was similar to other ramen noodle products, but featured a luxury soup base.

In late 2008 and early 2009, new product introductions for children included collagen-enriched noodles and noodles
made from mixed grains to improve nutritional content.

Leading Instant Noodle Flavours of New Products Introduced in Japan 2004-2009 Flavours Soy sauce Salted Miso Yakisoba Kitsune Tempura Seafood Pork Curry 2004 1 2 3 4 5 6 7 8 9 2005 1 2 3 4 5 6 7 8 9 2006 1 2 3 4 5 6 7 8 9 2007 1 2 3 4 5 6 7 8 9 2008 1 2 3 4 5 6 7 8 9 2009 1 2 3 4 5 6 7 8 9

Source: Euromonitor, 2009.

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PLAIN NOODLES
Plain noodles contain the following product types: cellophane noodles, egg noodles, rice noodles,
harusame, ramen, and soba. Plain noodles are an important component of traditional Japanese dishes and noodle specialties vary regionally.

Private labels have a strong presence in the plain noodles category, with the majority of manufacturers being local,
small and medium-sized businesses.

Volume sales of plain noodles are expected to decrease by 6.1% between 2009 and 2014, while their retail value sales
should decline by 10.2% over the same period.

FROZEN AND CHILLED NOODLES

Both chilled and frozen noodles experienced slight volume growth in 2009 but, due to pricing fluctuations, value growth
decreased.

Chilled noodles that contained all the components of a full meal and were sold in packs, reported high sales in 2009.
This was due to consumers looking for alternatives to eating out, while wanting something with more sustenance than instant noodle cups.

Frozen noodles were popular in 2009 as many consumers preferred the taste of frozen noodles to that of prepared
instant noodles and found frozen noodles equally convenient to store as instant noodles.

SNACK NOODLES
Snack noodles are distinguished by their ready-to-eat nature, not requiring preparation or cooking prior to consumption. Snack noodles experienced the smallest decline of all noodles in 2009, with value losses of -3.5%. This was due, in
part, to the continued interest in snack foods and new snack products in Japan.

Snack noodles are forecast to grow in volume by 2.6% between 2009 and 2014, however, retail value sales growth is
anticipated to decline by 5.6% over the same period.

Snack noodles in mini-sized portions were introduced for childrens lunch boxes in early 2009.

Sales of Noodles in Japan by Sub-sector in Millions of US Dollars 2004 Japan Noodles Plain noodles Instant noodles Chilled noodles Frozen noodles Snack noodles
Source: Euromonitor, 2009.
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2005

2006

2007

2008

2009

10,887.6 10,883.9 10,862.0 10,999.7 11,492.4 10,853.2 1,717.2 1,648.5 1,607.3 1,583.2 1,649.7 1,547.1 6,151.9 6,220.9 6,266.7 6,409.8 6,659.7 6,260.4 1,806.9 1,774.3 1,721.1 1,718.4 1,834.2 1,747.7 1,090.6 1,117.9 1,143.6 1,164.2 1,219.3 1,172.9 120.9 122.3 123.2 124.1 129.6 125.0

NEW PRODUCTS
The following is a small sample of new products introduced in the Japanese marketplace in 2009.

Rich Kyoto Chinese Noodles These instant noodles are a combination of flavours designed to imitate the dishes at the Kyoto noodle bar. This product is made with cloudy tonkotsu and chicken soup, medium-thick noodles, and toppings include roast pork, Welsh onions and sungan. Company: Circle K Sunkus.

Source: Mintel, 2009. Dip-In Noodles with Japanese-Style Chicken and Salt Sauce This noodle variety was a new introduction to the Tsukemen No Tatsujin dip-in noodles range in Japan. It offers extra thick noodles and a chicken marrow and seafood rich dip-in sauce. The product also contains a separate pack of fish powder to enhance the bonito flavour. Company: Nissin Chilled Foods. Source: Mintel, 2009. Easy Cook Buckwheat Noodles The Topvalu brand has introduced Easy-Cook Buckwheat Noodles under the Tegaru Ni Chori series. This product contains pre-cooked ingredients and pre-cut vegetables in order to minimize the amount of preparation time required. Company: Aeon. Source: Mintel, 2009. Udon Noodles Udon Noodles are a new product by Best Price. This product does not contain paper tapes, in order to reduce the cost of the noodles. As Aeons private label, Topvalue provides consumers with safe and quality products, like Udon Noodles. Company: Aeon. Source: Mintel, 2009. Milk Seafood Noodles This product has been reformulated and reintroduced. A member of the Cup Noodle instant noodle range, it contains: squid, scrambled eggs, cabbage, Welsh onions and artificial crab toppings. Company: Nissin Food Products.

Source: Mintel, 2009.

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The Government of Canada has prepared this report based on primary and secondary sources of information. Although every effort has been made to ensure that the information is accurate, Agriculture and Agri-Food Canada assumes no liability for any actions taken based on the information contained herein.

Consumer Trends: Noodles in Japan Her Majesty the Queen in Right of Canada, 2010 ISSN 1920-6615 Market Indicator Report AAFC No. 10650E Photo Credits All Photographs reproduced in this publication are used by permission of the rights holders. All images, unless otherwise noted, are copyright Her Majesty the Queen in Right of Canada. For additional copies of this publication or to request an alternate format, please contact: Agriculture and Agri-Food Canada 1341 Baseline Road, Tower 5, 4th floor Ottawa, ON Canada K1A 0C5 E-mail: infoservice@agr.gc.ca Aussi disponible en franais sous le titre : Tendances de consommation: Le march des nouilles au Japon