Instant Noodles in Thai Market

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Instant Noodles in Thai Market

Preeyanuch Manomathaya

538 56237 29

M.A. in Labor Economics and Human Resource Management

Chulalongkorn University

July 2010



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July 2010

ABSTRACT

Instant noodles are one of the essential food products in Thai market. The food was consumed

by Thais from every socioeconomic level and become popular in both urban and rural area. The demand

for instant noodles has been at the high level ever since it was firstly launched over 30 years ago as well

as its sales which have consistently expanded through times. Instant noodles are also widely called in

Thai “MaMa” after the strongest brand in Thai market. Some people have even claimed that the product’s

sales record is a unique economic indicator of Thailand so called “MaMa Index”. The report aims to

demonstrate the picture of Thai instant noodles market in term of price, competition and marketing as

the same time analyze if the product can truly be one of the country’s economics indicators.

Keywords: Instant Noodles, Thailand economic indicator, Food products, Market competition


July 2010


Bangkok, Thailand



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July 2010

Abstract

Instant noodles are one of the essential food products in Thai market. The food was consumed

by Thais from every socioeconomic level and become popular in both urban and rural area. The demand

for instant noodles has been at the high level ever since it was firstly launched over 30 years ago as well

as its sales which have consistently expanded through times. Instant noodles are also widely called in

Thai “MaMa” after the strongest brand in Thai market. Some people have even claimed that the product’s

sales record is a unique economic indicator of Thailand so called “MaMa Index”. The report aims to

demonstrate the picture of Thai instant noodles market in term of price, competition and marketing as

the same time analyze if the product can truly be one of the country’s economics indicators.

I. Introduction

Many Thais claim that the sales record of instant noodles mirrors the economics situation in

Thailand as well as the Thais’ lifestyle. Some economists have paid high attention to the movement of the

products as well as the local reporters who publish many interviews and special columns on instant

noodles or so called by the given nickname “MaMa Index”, the index which seems to be a unique

economics indicator for Thai society.

My interest in the topic was stimulated by the observation that instant noodles have become

parts of Thais’ daily lives. In the middle of hamburger crisis, there was a report that the sales of instant

noodles in Thai market has expanded. During the FIFA World Cup period in May 2010 many journalists

expressed their interest on the sales of instant noodles which jumped 50% compares to the same period

last year.

1

With its cheap price, easiness to prepare and quantity that can satisfy the rambling stomach,instant noodles or so widely called in Thai “MaMa” can fulfill Thai consumers’ needs in every angle.

The paper will focus on instant noodles market situation, price, market competition and what the

leading companies do in order to increase their profits and contend against their competitors.

1 Saha Pathanapibul PLC’s executive interview, Komchadluek Newspaper ; Source

http://www.komchadluek.net/detail/20100618/63336/ มาม าขายกระฉดยอดพ งรั บเคอร ฟว - บอลโลก .html



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II. Literature Review

Instant noodles were industrially produced in Thailand in 1970, shortly after it was firstly

introduced to Japan market in 1958.2 Nowadays, instant noodles have become one of the most popular

food products which are consumed by Thai from all socioeconomic level in urban and rural area. The

product was also called “MaMa” after the MaMa instant noodles brand which is the biggest brand in the

market.

There are three leading brands; MaMa, WaiWai and YumYum plus few small brands like FF and

other import instant noodles from Korea, Indonesia and Japan competing fiercely in Thailand’s instant

noodles market which expected to value around Bt.11.2 billion in 20103.

Instant Noodles Market Share 2010

49%

21%

19%

11%

MaMa

(Producers: Thai President Foods

and Saha Pathanapibul PLC )WaiWai

(Producer: Thai Preserved Food

Factory)YumYum

(Producer: Ajinomoto)

others

Over the past decade local consumption of instant noodles has expanded by almost 50%. For

2010 the domestic consumption is expected to rise by 5-6% from the positive influences of the current

political crisis and the World Cup when consumers stocked up more of the product due to the curfew and

as to prepare for the late night football matches.4 Although the producers have regularly introduced new

flavors of instant noodles to the market, the most preferable flavors of all time for Thais are Tom Yum

(Spicy Soup) and Moo Sub (Minced pork soup) which share at least 60% of the market.

2 Assoc.Prof.Visith Chavasit & Denpong Phromyothi, The Role of Instant Noodles in Thailand, Institute of Nutrition,

Mahidol University, 2000

3 Instant Noodles, 2010: Focus on Valued Added Products and Export, Kasikorn Research Center; Source

http://www.kasikornresearch.com/EN/KEcon%20Analysis/Pages/ViewSummary.aspx?docid=249484 Thai Preserved Food Factory’s executive interview, Matichon Online; Source

http://www.matichon.co.th/news_detail.php?newsid=1277186923&catid=05

http://www.kasikornresearch.com/EN/KEcon%20Analysis/Pages/ViewSummary.aspx?docid=24948






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Thailand, not only produces instant noodles for domestic consumption, the country has exported

the growing amount of instant noodles each year, within the pass nine year export amount of instant

noodles increases by over 114%. From 2000, the country has exported over 198,099 tons of instant

noodles and with the implementing of ASEAN Free Trade Area (AFTA) earlier in 2009 together with the

faint signs of economic recovery in European and US markets, the export rate expanded to 29,321 tonsfrom the 2008 record of 26,817 tons. Kasikorn Research Center has expected the export amount of

instant noodles to neighboring countries in ASEAN such as Laos, Myanmar, Vietnam, and Cambodia to

increase by 23-25% this year.

Demestic Consumption and Export

2001‐2009

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

T o n s

Export

Domestic

Consumption

III. Prices

Due to the fact that instant noodle is one of the core consumer goods in Thai market, for a

decade its price has been controlled by Department of Internal Trade (DIT), Ministry of Commerce. The

bureau has set the maximum price of “pack” instant noodles at the maximum of Bt.8. At present instant

noodles’ prices flexibility are limited to be between Bt.5 to 8 per pack. In 2007 as the prices of raw

material for food manufacturing the global market had strongly fluctuated, instant noodles were

immediately put into the Priority Watch List (PWL) product which the DIT would need to closely monitor

the movement and check the prices every 2 weeks. 5 Although recently the product was moved down to

Watch List (WL) category, its price and promotion as well as production and distribution are still regularly

monitored.

5 MEAs Intelligence Unit, The Thailand Research Fund; Source

http://www.measwatch.org/autopage/show_page.php?t=20&s_id=451&d_id=449





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From 2000 to 2006, the average price of instant noodles in Thailand was no more than Bt.5 per

pack 6 until in 2007 the two main producers in the market; the producers of MaMa and YumYum brand

had submitted their requests for the government’s permission to increase the prices of pack instant

noodles by Bt.1 due to the jump of raw material prices such as wheat flour and palm oil.

The data collected by the Office of Industrial Economics shows that the increase of prices for the

first time in nearly ten years has no negative affect to the circulation of the products in the real market

since within 2007 since Thai consumers still consumed as high level of instant noodles as ever but the

decrease of domestic consumption in 2008 was caused by the heavily stock up on inventory of the

retailers at the end of 2007 when the news about the price increase had come out as to make higher

profit from the product. By the year 2009, we see an outstanding rebound of the domestic consumption

since the retailers’ inventories were at low level and in need of restocking.

2006 2007 2008 2009 Jan-April2010

Production Capacity 144,056.73 147,871.44 141,224.00 151,252.75 49,530.24

Domestic Consumption 119,778.15 125,144.23 113,649.73 122,580.18 39,056.19

Export 22,412.12 23,909.42 26,817.86 29,321.23 9,557.66

Unit: Tons

Source: The Office of Industrial Economics

During the peak of economics recession when Thai economy shrunk over 4%, the sales record of

instant noodles also fell. In February 2009, Thai President Foods PCL experienced the first fall in 38 years

of its MaMa instant noodles sales record. The producer has started the first price war in Thai instant

noodles market by launching its first budget saving instant noodles flavors (Egg Protein flavor and

Chicken Soup) at the price of Bt.5 or Bt.1 lower than the market price of Bt.6 with strong objective to

capture the lost of its sales during the economic crisis. At present the prices of instant noodles in Thai

market are between Bt.5 to Bt.8 for “pack” instant noodles and between Bt.10 to Bt.15 for “cup” noodles

as for the bowl instant noodles which are premium products, the prices are from Bt.20 to Bt.30.

6 Department of Internal Trade (DIT), Ministry of Commerce; Source

http://www.dit.go.th/Service/Pr/Gain/control/list_menu.asp





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IV. Competition

There are three giant players in Thai instant noodles market; MaMa, WaiWai and YumYum. Each

holds the market shares of 49%, 21-22% and 19-20% respectively7. Due to the fact that instant noodles

are a completely substitute product with price controlled by the government and only a handful of

dominant competitors in the market, each producer needs to diversify its products to make more profit

and expand its revenue.

With maximum price set by the government, the technique of price discrimination or charging

different groups of consumers at different prices cannot be used in Thai instant noodles market. The

producers, on the other hand, use “Product Differentiation” technique by diversifying their products to

attract different group of targeted consumers. The three main competitors are developed their instant

noodles to the high-end products for more specific group of consumers. Mama has created “Oriental

Kitchen”, Korean style instant noodles with bigger package then launched to the market at the price of

Bt.15 to keep up with Korean wave which has hit Thailand hard a few years ago while YumYum

introduced “YumYum Premium Bowl”; microwavable instant noodles with real minced pork, fish ball and

mushroom at the price of Bt.30 to capture the adult consumers with higher purchasing power. For

WaiWai, the company decided to attract different group of consumers by introducing “Serda”, instant

noodles that specially manufactured for Muslims by Halal standard under the inspection of “The Halal

Standard Institution of Thailand.

MaMa Oriental Kitchen YumYum Premium Bowl WaiWai Serda

To satisfy the demand from kid and teenager group, YumYum introduces its smaller pack of

instant noodles “YumYum Shangnoi” with a colorful package and elephant mascot, at the same time

promote its noodles as snack that can be consumed instantly without boiled water or cooking. WaiWai on

the other hand has done some re-branding and launched its “WaiWai Quick” into the market. The

producer redesigned the package, uses sassy looking girls as brand mascots and did a lot of

advertisement using some sexy female stars as the brand ambassadors while MaMa developed its “MaMa

7 Thai Preserved Food Factory’s executive interview, Matichon Online; Source






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White Noodles (V-Series)” with lesser in calories and fat to attract female consumers with weight

concerns.

YumYum Shangnoi WaiWai Quick

Although the demand for “pack” instant noodles in the Thai domestic market is always at the

high level but the market seems to reach its limit of expansion. With fixed price of “pack” instant noodles,

MaMa and YumYum, for several years, have continuously promoted their “cup noodles” which can be sold

at higher price (Bt.12-15) as a way to increase their revenues and substitute the profit lost from the

increasing prices of the raw materials.

Cup noodles are designed to response to the demand of middle class people and to the modern

lifestyle of white collar workers with higher income. Mr. Pipat Paniangvait, President of Thai President

Food, stated that the producers need to shift their focus from pack noodles to cup noodles since there is

still a large room for market expansion for cup noodles. The market share of cup noodles, in comparison

with the pack noodles, is only 6%. Thai President Food has expected that within the next 20 years, cup

noodles will share around 20% of Thailand’s instant noodles market. While Kasikorn Research Center has

forecasted that the shares of cup noodles in Thai instant noodles market will increase around 40% in

comparison to last year record to around Bt.896 million.8

Mama Paper Cup Noodles WaiWai Quick Cup YumYum Cup

The three producers have also regularly introduced new flavors as to cover as many target

groups of consumers as possible. Based on the research done by Kasikorn Research Center on 1,025

8 Instant Noodles, 2010: Focus on Valued Added Products and Exports Kasikorn Research Center; Source

http://www.kasikornresearch.com/EN/K ‐Econ%20Analysis/Pages/ViewSummary.aspx?docid=24948

http://www.kasikornresearch.com/EN/K-Econ%20Analysis/Pages/ViewSummary.aspx?docid=24948






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sample consumers in January 20099; 22.8% of sample consumers tend to switch brands and try new

flavors. The research shows that the loyalty of consumers to each brand is not very high. Thai consumers

tend to move around and try new flavor all the time. In response to this factor, the producers introduce

at least 1 new flavor each year to attract more consumers and at the same time, giving the new flavors

the market trial. Some survive the trial and become the classic flavors while some have very short life onshelf. The flavors of instant noodles in Thai market can be categorized into 2 groups; 1) Classic Flavor or

the favorite flavors of all time such as Tom Yum Kong (Spicy shrimp soup), Moo Sub (Minced pork soup)

and Tom Yum Moo Sub (Spicy minced pork soup) etc. 2) Neo Flavor or newly launched flavors such as

Sukiyaki, Kee Mao (Spicy stirred fried noodles) and BBQ Duck etc.

V.

Sales Promotion Activities

Apart from product differentiation, to compete with the competitors in Thai instant noodles

market, the producers also need to implement various marketing and sales promotion schemes. MaMa,

YumYum and WaiWai invest a large amount of money in marketing each year to keep their share in the

market and win further some shares for their rivals.

“Marketing Mix” is the important promotion technique that is widely used by the sated producers

in Thai market. The four elements of the technique are “The 4 Ps” which stands for Product, Price, Place

and Promotion. 10

9 Instant Noodles, 2010: Focus on Valued Added Products and Export, Kasikorn Research Center; Source


The Marketing Mix, Business Studies, BBC, Source

http://www.bbc.co.uk/schools/gcsebitesize/business/marketing/marketingmixrev1.shtml







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The first “P” is for Product, the producers as stated earlier have regularly differentiate their

products in form of size, packaging and flavor as to efficiently meet the consumers’ needs. Moreover the

producers have tried to end the criticism from the academicians that instant noodles are “Junk Food” with

high salt, fat and carbohydrate content by fortification with amino acids or addition of meat, egg and

vegetables to improve nutritive values.

The second “P” stands for Price; although price technique is not frequently used in the instant

noodles market. There is no direct increase or decrease in price of instant noodles in Thailand but the

producers often use the opportunity of launching new product with different packaging, sizes and

sometimes flavors to temporary increase the prices and boost their revenue.

The third “P” in the marketing mix is Place. Instant noodles producers in Thailand implement the

technique by increasing the distribution channels. The products were not sold only in hypermarket or

supermarket but in convenience stores and small retailers close to the consumer’s homes. According to

the survey done by Kasikorn Research Center on Instant noodles consumers’ behavior in January 2009,

38.9% of 1,025 samples choose to buy instant noodles from convenient store by buying less amount at

the time but more in frequency.

The last “P” is Promotion, three giant producers spend large amount of money in this section

each year. Above the line (ATL) marketing tactic or advertising through mass media such as Television

and Radio spots are heavily used as to create brand distinction and boost sales of freshly introduced

products. At the same time below the line (BTL) marketing is also used to reach more specific group of

consumers. The producers usually set some small booths in hypermarkets and superstores to generate

trials of newly launched products. The marketing technique which has been successfully used in Thai

instant noodles market for a long time is “sweepstakes” campaign. MaMa is well known of its gold

sweepstakes campaign which has been annually organized since 1998 while YumYum and WaiWai as well

regularly launched the sweepstake campaign with various types of winning prizes such as Cars, Vacation

package and cell phone.

Corporate Social Responsibility or CSR policy has been used as one of the marketing technique in

Thai instant noodles market. The producers used the tactic to build brand image as a trustable and social

responsible brand. The companies are taking part in education sponsorship as well as religious festival.MaMa has invested around Bt.300 million in 2008 in CSR campaign while WaiWai has recently announced

its latest CSR campaign worth over Bt.40 billion to support agricultural sectors.



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VI. Instant Noodles as Economic Indicator

Although instant noodles were claimed by many people as a unique economic indicator of Thai

economy or “MaMa Index”, the idea that the instant noodles which are the cheaper food will be

consumed more during the economic recession seems to be out of date.

Instant noodles can no longer be categorized as food for the “poor” or claimed to be sold very

well only during the economic crisis. With heavy promotion, long term brand building and product

development, instant noodles have become a part of Thais’ eating lifestyle. The products are consumed

by people from every class, gender and age. It has been among the top choices of food that consumer

will think about when they are hungry. Every household tends to have some instant noodles stocked in

the kitchen. Its popularity can be seen through the rocket high sales record of the products in some

important period such as recent world cup and during the political crisis and curfew earlier this year.

According to the market research done by Thai President Food, the biggest producers of the instantnoodles in Thailand, each Thai consumes 37 packs of instant noodles per year and within the next few

years the amount is expected to increase to 40 packs per person a year which will be very close to the

consumption record per capita of Japanese consumers where instant noodles were originated.

VII. Conclusion

Instant noodles have become an important part of Thai people’s lifestyle. The product is among

the top choice that people will think of when it comes to convenient food. The key to success of the

product is its affordable price, convenience, accessibility, wide variety of choices and acceptable flavor.

Although Thai instant noodles market cannot be counted as “perfectly competitive”, the government’s

price regulation policy and the fierce competition in the market which consists of a few competitors have

forced the producers to continuously develop their products, expand the distribution channels and come

up with a lot of promotion campaign which at the end beneficial for the consumers.



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References:

Assoc.Prof.Visith Chavasit Denpong Phromyothi, The Role of Instant Noodles in Thailand, Institute ofNutrition, Mahidol University, 2000

Saha Pathanapibul PLC’s executive interview, Komchadluek Newspaper;http://www.komchadluek.net/detail/20100618/63336/มามาขายกระฉดยอดพ งรับเคอรฟว-บอลโลก.html

Instant Noodles, 2010: Focus on Valued Added Products and Export, Kasikorn Research Center;http://www.kasikornresearch.com/EN/KEcon%20Analysis/Pages/ViewSummary.aspx?docid=24948

Thai Preserved Food Factory’s executive interview, Matichon Online;http://www.matichon.co.th/news_detail.php?newsid=1277186923&catid=05

MEAs Intelligence Unit, The Thailand Research Fund;


Department of Internal Trade (DIT), Ministry of Commerce;http://www.dit.go.th/Service/Pr/Gain/control/list_menu.asp

Instant Noodles, 2010: Focus on Valued Added Products and Export, Kasikorn Research Center;http://www.kasikornresearch.com/EN/KEcon%20Analysis/Pages/ViewSummary.aspx?docid=24948

The Marketing Mix, Business Studies, BBC;http://www.bbc.co.uk/schools/gcsebitesize/business/marketing/marketingmixrev1.shtml

http://www.komchadluek.net/detail/20100618/63336/%E0%B8%A1%E0%B8%B2%E0%B8%A1%E0%B9%88%E0%B8%B2%E0%B8%82%E0%B8%B2%E0%B8%A2%E0%B8%81%E0%B8%A3%E0%B8%B0%E0%B8%89%E0%B8%B9%E0%B8%94%E0%B8%A2%E0%B8%AD%E0%B8%94%E0%B8%9E%E0%B8%B8%E0%B9%88%E0%B8%87%E0%B8%A3%E0%B8%B1%E0%B8%9A%E0%B9%80%E0%B8%84%E0%B8%AD%E0%B8%A3%E0%B9%8C%E0%B8%9F%E0%B8%B4%E0%B8%A7-%E0%B8%9A%E0%B8%AD%E0%B8%A5%E0%B9%82%E0%B8%A5%E0%B8%81.html

























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Instant Noodles in Thai Market

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