Instant noodles a lucrative market in Vietnam

Tuoi Tre news

Updated : 09/27/2014 10:14 GMT + 7 

Instant noodles have become fertile ground for small traders and producers alike in Vietnam, where nearly 4 billion packages of the product were consumed last year.

Small traders at markets across the country say instant noodle products never fail to find buyers, while businesses say it does not cost much to invest in an instant noodle production line.

Thu Hong, who runs a grocery store at Rach Ong market in Ho Chi Minh City’s District 8, said she cannot even remember how many types of instant noodle are available at her store.

“There are around 30 – 40 different types of products,” she said.

While the profit earned from each package of instant noodle is modest, vendors say their large sale volume make up for the small profit margin.

Do Van Truc, a trader from Hoc Mon District, said he only earns VND3,000 in profit from selling a 24-package carton of  Hao Hao instant noodle, produced by Acecook Vietnam JSC, which he sources at VND92,000 (US$4.33) per box.

The profit is a mere VND125 per package, he said.

However, Truc can sell as many as 12 boxes of Hao Hao instant noodles, or up to 50 packages of Omachi products, a day.

“So I earn at least VND1.23 million ($58) only from selling two types of instant noodle a month,” Truc said. “The earnings are far higher than from selling milk products.”

Instant noodles also dominate supermarket shelves, with distribution chains such as Co.op Mart, Big C, and Lotte Mart dedicating up to three rows just for the products.

Supermarket representatives said instant noodles have some of the most stable sales of any commodity.

The instant noodle market is so appealing that many businesses have jumped in to join production.

A salesperson of an instant noodle company, who wished not to be named, said producing instant noodles requires simple technology and inexpensive machinery.

“You can set up a medium-scale instant noodle production plant with less than VND20 billion ($941,354),” he revealed.

Nearly 4 billion packages a year

Instant noodles are the biggest commodity in the basket of FMCG goods of Vietnamese consumers, according to market research firm Kantar Worldpanel.

FMCG, or fast-moving consumer goods, are products that are sold quickly and at relatively low cost.

Some 430 million instant noodle packages were sold in Vietnam’s four major cities between July 2013 and June 2014, Kantar Worldpanel said in its Brand Footprint 2014 report.

The cities include Ho Chi Minh City and Can Tho in the south, Hanoi in the north, and Da Nang in the central region.

Each household in these cities consumed a package of instant noodles every two days, according to the report.

In rural areas, instant noodle consumption was far higher: 3.4 billion packages during the 12-month period ending in June 2014. Each rural household consumed four packages of instant noodles a week, according to the report.

Consumers in rural areas spent VND10.09 trillion ($474.91 million) in total just on instant noodles in the time period, Nguyen Huy Hoang, director of sales at Kantar Worldpanel Vietnam, said.

In the cities, the figure was only VND1.64 billion ($77,191), Hoang added.

“That’s why businesses repeatedly introduce new products,” a food expert said.

“But they only focus on the low segment, which accounts for 80 percent of the market share.”

(http://tuoitrenews.vn/business/22770/instant-noodles-a-lucrative-market-in-vietnam)