The fight is on, for beer and noodles

What do China’s declining manufacturing sector and growing number of white collar workers have to do with the country’s largest instant noodle and beer makers?

They are changing the landscape of the country’s massive food and beverage sector by forcing key players to upgrade their product mix and improve their quality, or face being eliminated as customer expectations continue to rise in line with standards of living.

According to a report released last week by consulting firm Bain, with many manufacturing jobs moving to lower-cost Southeast Asia, Chinese brands in categories traditionally catering to blue-collar workers, such as instant noodles and value beer, are suffering.

That has partly translated into a 9.54 per cent year-on-year decline in revenue for the country’s biggest instant noodles maker Tingyi, whose share price more than halved over the past 12 months, while Tsingtao Brewery, Chinese number one low-end beer maker, plunged 42.97 per cent.

In 2015, Chinese people’s consumption volume of instant noodles slid 12.5 per cent, and by 3.6 per cent for beer, while the slow growth was fuelled by a shrinking workforce that resulted in more low-income retirees, the report said.

“As workers become richer and rate enjoying their quality of life, rather than saving for their family, as their priority, the customer base for instant noodles is only poised to become smaller,” said Zhu Danpeng, associate with China Branding Research Institute.

Since the reform and opening up in the late 1970s, China’s millions of migrant workers have accounted for the bulk of the consumption of instant noodles, commonly seen as a cheaper and faster option for the army of hard-working labourers.