Tracking E-Commerce Prices and Sales in China’s Instant Noodle Market

As global eyes turn again to China to monitor its current economic situation, understanding what is happening at the micro level can provide insights into how consumers are reacting to the current economic situation and how manufacturers and suppliers can best position their products to compete in this unprecedented environment. Using stock keeping unit (SKU) data and data from Euromonitor’s new e-commerce system , we’ll dive into how prices for instant noodles performed in the first half of the year and discuss the significance of how these humble convenience products can serve as a broader understanding of the market dynamics.

Slowdown in online instant noodles sales for first half of 2023

Before looking at how prices have changed, we first need to understand how sales of instant noodles have performed of late in China. Sales online for instant noodles were very strong throughout 2022 as continued regional lockdowns in both high- and low-tier cities led to consumers looking to consume as well as stockpile the convenient and affordable food option. The first two quarters of 2023 tell a completely different story of how this category has cooled off with rising economic concerns.

Year-on-year sales of instant noodles online in Q1 were down -1% compared to 2022 and Q2 fared worse with sales down -6% compared to Q2 2022

_{Source: Euromonitor International}

Even this category is not immune to the economic challenges the country is facing with rising real estate and financial concerns on consumers’ minds. Examining prices in this space can shed light on the potential deflationary pressure the category is facing and how suppliers and retailers are adjusting.

Median prices declining in first half of the year

On the left-hand chart, we can see the average SKU price of instant noodles for a sample of 723 SKUs tracked across China’s three major e-commerce channels, Douyin (Chinese TikTok), JD and Tmall. While prices were relatively steady for the first three months of the year, April and May saw declines in prices before rebounding in June. One major concern with deflation is that when consumers see lowering prices, they are willing to hold off purchases, in anticipation of further discounts – especially for a shelf-stable product like instant noodles. However, average prices do not always tell the whole story of what consumers of different income levels are experiencing. Looking at prices from a 25th, 50th and 75th percentile (as seen in the chart on the right-hand side, above) can indicate how pricing changes impact consumers of different income levels, as these metrics represent lower, average and premium positioned products, respectively. Here, it is only the higher-priced instant noodles that showed any pricing increases in the first half of the year, with the 75th percentile prices increasing by 2%, but the median prices actually declining by -1% and the lower-priced products staying flat. So, median prices are a much better indicator of how consumers are seeing prices fall for this popular product.

Baixiang’s instant noodle products perform well online in first half of 2023

Brands’ pricing strategies are critical for attracting consumers during challenging economic times. Besides monitoring average prices, monitoring stability is important, as consumers are looking for pricing consistency in their favourite products when times are tough. The coefficient of variation of prices is a metric that looks at the stability of prices. In the chart above, we can see that Baixiang Food Group’s Baixiang instant noodle SKUs had the lowest variation of prices of the five largest brands of instant noodles online.

While Baixiang was the fourth largest brand in terms of sales in total retail (online and brick-and-mortar) in 2022, the brand has the highest online sales in the first half of 2023

^{Source: Euromonitor International}

As can be seen above, the average SKU for the brand is not only low priced, but also has the most stable prices compared to the leading players. Sales for the first half of 2023 were up by 8% from 2022, which was significantly higher than the performance of other leading brands which all saw sales decline compared to 2022. In order to win in competitive markets, monitoring stability and price positioning on the various SKUs in the market is paramount.

Douyin (TikTok) gaining share in e-commerce

And finally, with concerns of shrinking market sizes and deflationary concerns, the competitive landscape of retailers and their pricing behaviour must also be carefully monitored to gauge where consumers are migrating. For the three largest e-commerce retailers in China, pricing of instant noodles for the first half of 2023 was drastically different. While JD and Tmall saw higher average prices of products stocked online, Douyin managed to stock lower average priced products and saw relative stability of monthly prices for these products. Douyin’s dramatic rise in e-commerce sales is just as impressive in instant noodles, as the TikTok equivalent saw Q2 sales rise by 17% from Q1, whereas JD and Tmall saw sales decline in the category. Douyin’s engaging videos and creative partnerships with brands and creators have helped catapult sales in this staple foods category. In the face of prevailing challenges in the Chinese market and the looming concerns of deflation, effective pricing strategies and vigilant monitoring of their impact on e-commerce channels can serve as a guiding light, offering manufacturers and retailers a viable path forward.

Analysing the online performance of instant noodles provides invaluable insights into the dynamic world of e-commerce, where more and more consumers continue to migrate. Please see our E-Commerce page for more information on methodology and coverage, or download our on-demand webinar, Mastering E-Commerce Growth: How to Win Online Amid Uncertainty.

Note: Sample based on SKU prices found in Euromonitor International’s e-commerce tracking tool Via with data extracted in September 2023. Please note that due to ongoing improvements to the AI-led product matching of SKUs to categories, supplier, and brands, data and SKU counts can be revised based on system updates. SKU counts used for the instant noodles analysis include: Douyin (118), JD (291), Tmall (314).