Nepali Times
Oodles of noodles


If there is any sector in Nepal that can match up to the brewing and distilling business in the regularity with which new brands enter the market it has to be instant noodles. In the last three months alone two new brands came into the scene in which ten companies are fighting it out for a share. Now the healthiest segment in Nepal's manufacturing industry is taking its wars abroad.

Domestic compulsion has made this necessary, as has demand. The internal market is tight and competition is intense, and, most important, after the Nepal-India treaty of 1996, Nepal-made instant noodles have found a ready market in India. (The popular Wai Wai noodles now controls nearly 90 percent of the market in northeast India, and Bhutan.) With 10 companies in the field and some more expected to come up in the near future, observers agree that the two-decade-old industry has come of age, and had better go overseas. And that is what the makers of Wai Wai and the newly introduced Mayos are doing by training their sights on the billion-strong Indian market and beyond in Bangladesh and the Maldives.

Nepal's instant noodles production began in the early 1980s when Pokhara-based Gandaki Noodles stepped into a virgin market with Rara. This came at time when there was a growing demand for instant noodles in Kathmandu but the only ones available were the expensive Thai brands. Rara was an instant success and several other companies followed in its wake. Some survived and some closed shop, but it is the entry of big business houses like Choudhary (with Wai Wai) and Khetan (Mayos) that has changed the face of this Rs 1250 million market.

For years Wai Wai remained ahead despite a premium of Rs 11 per packet it charged, while the rest sold at lower prices. But with Mayos, the scenario has changed. For the first time, Wai Wai is facing a competitor that is confident of selling at the same price. Retaining control is a matter of pride for the Choudhary group, having dominated the market for so long with a 50 percent share. In fact, it is said that a large part of the Choudhary group's revenue comes from Wai Wai. The Khetan group, which burnt their fingers in the noodle soup earlier with Yum Yum, kicked off an aggressive ad campaign for Mayos. The Choudharys have reacted in kind with their own campaign for Wai Wai. The first shots have been fired in the Great Nepali Noodle War.

The stakes are high. According to Rajendra Khetan, group managing director of the Khetans, they hope to capture half the market share within three years of operation. "We'll apply the same strategy we used when we launched Tuborg beer," says Khetan.

It won't be easy going for them with the Wai Wai network in place around the country, built up and strengthened over the years. But Khetan is optimistic. "We've launched this product as there was a need in the market," says he.
The Choudhary group has plans to expand its sales throughout India to corner a 33 percent share of India's 13,000-tonne annual market. However, a new Indian rule requiring quality certification of each consignment has posed a problem for noodle exports. The Khetans too plan to enter India soon.

But not everyone can think of taking their stuff abroad. "Unless you are backed by a good promotion effort, it's very hard to sell the products there [in India]," says Anil Hada of Multi-Food Industries. His company has been sending its MinMin noodles to West Bengal, Assam and Sikkim since 1997. Now they are planning to enter central India through an Indore-based agent.

There is also strong competition in the lower-priced category-the snack (khaja) segment, following the success of Hits. Introduced by General Food Industries, the makers of Yum Yum, and priced at Rs 6, Hits is extremely popular among children and in the tarai. Struggling to keep up are Choudhary's Mimi and Wah Wah, Multi-Food's MinMin Khaja and Yes Papa, and Anupam Food's Jony.

Strategies too have had to change due to competition. Companies are now pulling rather than pushing-the days of trade schemes are nearly over and the focus is on brand positioning through powerful advertising. Budgets for the ad campaigns have increased substantially, although some pushing is still done on the side. Despite a 20 percent annual growth rate, the noodles industry still runs on credit. Wholesalers thus play an important role in the pushing business. "Those who can provide the maximum credit to the sellers have the big market," says Hada.
The intense competition has seen prices remain almost constant over the years despite heavy increases in the cost of raw material. It is now volume that sustains them. "Unless you have huge volumes, it is difficult to survive," says Manoj Loya, General Manager (Sales and Marketing) of the Choudhary Group.
With prices remaining the same, it is consumers who have benefitted from greater choice at the same price. And that certainly is no reason to complain.

(11 JAN 2013 - 17 JAN 2013)