In the childhood memories of most people, there is a highly recognizable snack - spicy strips. The professional name for spicy strips is flavored noodle products, which are made primarily from flour, mixed with water, salt, sugar, natural pigments, and other ingredients to form dough. They are then extruded at high temperatures using an extruder, followed by seasoning with oil, chili peppers, Sichuan peppercorns, preservatives, and other additives and food enhancers. Spicy strips are a childhood memory for many born in the 80s and 90s. In the current era when consumers pursue a "healthy and nutritious" diet culture, leading spicy strip companies are also actively reforming their products, and the industry as a whole is developing in a healthier direction.
Development History of Condimented Noodles
The main production areas of flavored pasta products are Henan and Hunan. Although the industry started relatively late, it has developed rapidly. In the increasingly competitive environment, government supervision has been continuously strengthened, and consumers' requirements for leisure food have risen. Flavored pasta products have been continuously evolving and innovating to meet consumer needs. Today, flavored pasta products have developed into an industry with a complete industrial chain. The market has been growing over the past decade, and the development space of the industry will continue to expand in the future.
Source: Compiled by Frost & Sullivan
Before the new national standard was promulgated at the end of 2019, there was no fully unified standard for the food classification of 'chili strips' across the country. In 'NY/T2988-2016 Green Food Xiang-style Extruded Pastries', 'DBS43 002-2017 Hunan Province Local Standard for Food Safety Extruded Pastries', and 'T/CGCC21-2018 Group Standard for Extruded Pastries', chili strips are classified as extruded pastries. In the notice No. 57 [2015] of the Food and Drug Administration, 'DB41/T 515-2007 Henan Province Local Standard for Seasoned Noodles', and 'DBS50/028-2017 Chongqing Municipality Local Standard for Seasoned Noodle Products', chili strips are classified as seasoned noodle products.
To further strengthen the supervision of the quality and safety of flavored pasta products (including commonly known as 'chili strips'), and to maintain and promote public health, the State Administration for Market Regulation issued the 'Announcement on Strengthening the Supervision of the Quality and Safety of Flavored Pasta Products' on December 10, 2019. This announcement unified the classification of 'chili strips' and required market supervision departments across the country to manage 'chili strips' uniformly under the category of 'convenience foods (flavored pasta products)'.
China's leisure food market scale
Condimented pasta products are a type of snack food, and China is one of the largest snack food markets in the world. In 2021, calculated by retail sales, the market size of China's snack food industry was 825.1 billion yuan, with a compound annual growth rate of 6.1% from 2016 to 2021. It is expected that the market size will reach 1147.2 billion yuan by 2026, corresponding to a compound annual growth rate of about 6.8% from 2021 to 2026.
Driven by factors such as the growth of disposable income among residents, per capita food expenditure, accelerating urbanization, increasingly rich consumption scenarios, continuous emergence of innovative products, and continuous improvement of retail channels, the leisure food market in China will continue to grow.
Source: Compiled by Frost & Sullivan
According to taste, snack foods can be divided into two main categories: spicy snack foods and non-spicy snack foods. Spicy snack foods refer to those that contain one or more spicy seasonings in their raw materials, while non-spicy snack foods refer to those that do not contain spicy seasonings in their raw materials.
Spicy flavors have a long history in Chinese dietary habits. With the development of the spicy snack food industry in recent years, many food manufacturers have continuously developed new types of spicy snacks to adapt to the changing preferences of consumers, driving the development of this industry.
In 2021, the retail sales of spicy snacks in China reached 172 billion yuan, with a compound annual growth rate of 8.7% from 2016 to 2021, which is higher than the industry's average annual compound growth rate during the same period. In terms of retail sales, the share of spicy snacks in the overall snack industry expanded from 18.6% in 2016 to 21.0% in 2021. It is expected that the compound annual growth rate (CAGR) from 2021 to 2026 will reach 9.6%, with the retail sales of spicy foods reaching 273 billion yuan in 2026, further increasing their share to 23.9%.
Market scale of Chinese seasoning noodle products
There are many sub-sectors within the spicy snack food market, which can be divided into spicy snacks made from meat and aquatic animals, flavored pasta products, spicy snacks made from vegetables, etc.
Condimented pasta products are a popular traditional Chinese delicacy, and in recent years, their popularity among young consumers has further increased. Condimented pasta products have become one of the favorite leisure foods among young consumers. Calculated by retail sales, the market size of Chinese condimented pasta products was 455 billion yuan in 2021, with a compound annual growth rate of 9.4% from 2016 to 2021. It is expected that the annual compound growth rate will reach 8.9%, and the market size will reach 697 billion yuan by 2026.
Source: Compiled by Frost & Sullivan
Sales channels for spicy snack foods
In the Chinese spicy snack market, traditional and modern channels account for the vast majority of the market share. In terms of retail sales, in 2021, traditional and modern channels accounted for 43.1% and 31.3% of the spicy snack market share respectively. The e-commerce channel has grown rapidly, with an overall market share of 12.4% in 2021. With the continuous popularization of online shopping demand and the rising online shopping needs of young consumers, it is expected that the annual compound growth rate of the e-commerce channel will reach 15.4% from 2021 to 2026.
By city, low-tier cities account for the highest share of the overall spicy snack market. Calculated by retail sales, in 2021, the sales of spicy snacks in low-tier cities accounted for 63.6% of the overall market. From 2016 to 2021, the annual compound growth rate of the spicy snack market in low-tier cities was 9.6%. It is expected that the annual compound growth rate from 2021 to 2026 will further increase to 11.0%, higher than the growth rates of spicy snacks in first-tier and second-tier cities.
Source: Compiled by Frost & Sullivan
Market pattern of flavored pasta products
The market structure of Chinese seasoning noodle products is relatively fragmented, but it is still higher than the overall snack and spicy snack industry. Calculated by retail sales, the market share of China's top five seasoning noodle product companies in 2021 was 19.3%.
Source: Compiled by Frost & Sullivan
Market drivers of flavored pasta products
Although the seasoning pasta industry started relatively late, its development has been very rapid. In recent years, the transformation and upgrading of the seasoning pasta market image, the improvement in product quality by production enterprises, the upgrading of production technology and equipment, as well as the government's increased efforts in market supervision, have collectively promoted the progress of China's seasoning pasta industry.
In the future, the consumer base for flavored pasta products will gradually expand, and the product structure will also change. Flavored pasta products will gradually develop towards higher-end and more diversified offerings. The automation level of production enterprises for flavored pasta products will continue to improve, and marketing and promotion methods will also become increasingly diverse.
Driven by many favorable factors, the development prospects of Chinese seasoning noodle products are broad, and the market scale will further grow. The main driving factors for the industry in the future include:
Nutritional health is the direction of future food development, which has become an industry consensus against the backdrop of 'Healthy China'. The 'three reductions' that seasoning noodle product manufacturers are currently working on align with health needs. How to reduce sugar, oil, and salt in products while improving quality and maintaining taste is a long-term task.
Researcher Tan Bin from the Grain Science Research Institute of the National Food Administration believes that the production automation of seasoning noodle products manufacturing enterprises is increasing day by day, new products are constantly being launched, and the usage of food additives is also decreasing. As enterprises continue to increase their R&D efforts, technical bottlenecks in the industry's development will be gradually resolved, and the development of seasoning noodle products will become more standardized.
In recent years, with the increase in disposable income among Chinese residents, consumption upgrading has brought new development opportunities to the seasoning noodle products industry. With the transformation and upgrading of the industry in recent years, seasoning noodles have grown into snack hits and gradually show a trend towards high-end development. The low-price spicy strips in the market have decreased from over 80% in 2010 to less than 10% in 2019, and the product structure and main consumer groups of the seasoning noodle products industry are gradually changing.
On the other hand, targeting the younger consumer group, high-end and fashionable marketing copywriting has also helped the spicy strip brand gain a large number of loyal fans. For example, Weilong has borrowed from Apple's minimalist copywriting, spicy strip marketing memes, and cross-border collaborations with Boao Comics, all catering to the consumption preferences of the new generation of consumers.
In the past, seasoning pasta products were mostly produced by small family workshops, resulting in low production efficiency and concerns about food quality and safety. The production process technology was entirely manual. By 2009, semi-finished product process machinery began to take shape, and from 2015 to 2016, there was a leap forward. The industry's semi-finished product process adopted computer programming control, introduced automation and semi-automation equipment, and basically formed semi-automation or fully automated production in the industry.
The automated and standardized production of flavored pasta products not only improves output and quality but also reduces labor costs, thereby reducing secondary pollution. In addition to well-known companies such as Weilong, most enterprises still adopt semi-automated production, mainly focusing on the packaging stage, with other stages overly dependent on manual operations.
