Two of Japan’s major food makers have reached an agreement to set up instant noodle joint-ventures in India and Nigeria to meet growing demand from these markets.
According to a statement, Ajinomoto and Toyo Suisan Kaisha agreed terms last week. Ajinomoto is Japan’s leading food additive and seasoning maker, while Toyo Suisan is the maker of the Maruchan noodle brand.
“By combining the sales infrastructure and marketing capability of Ajinomoto Co. with the strengths of Toyo Suisan in instant noodle development and production technology, the companies will achieve speedy business expansion into emerging markets with notable growth as equal partners,” the statement said.
500 million servings
The two companies plan to start marketing instant noodles under a new brand in India in fiscal 2016. In the Indian joint-venture, Toyo Suisan Group will own 51% while the Ajinomoto Group will own 49%.
The company will be located in the southern city of Chennai, and the food makers will invest around ¥1bn (US$9.6m) in to set up factories and other facilities under the joint venture.
The companies said that they are hoping to rapidly expand in India, where the market is backed by rising middle-class purchasing power and increasing population—India is the fifth largest in the world for instant noodles, with its current 4.4bn servings each year growing at a rate of 22%, according to the World Instant Noodles Association.
Toyo Suisan will develop and produce the noodles, which will be sold using Ajinomoto’s marketing channels. The two companies said they are aiming to sell 500m servings a year in India.
Not an easy play
Kartik Dwivedi, partner at Mumbai-based Dassler Business Intelligence, told FoodNavigator-Asia that the instant noodle market in India is growing thanks to rapid urbanisation, rise in the 18-35 population segment and time poverty in urban India.
“The average office-going Indian has no time to come home and cook meals. That is a primary factor behind the growth in the ready-to-eat and quick-heating food segment,” said Dwivedi. “It’s a market that will grow as the Indian economy grows.”
“Having said that, this new brand will have its challenges. For one, it is a market with entrenched players like Maggi [a Nestle brand that dominates the Indian market], Top Ramen [an Indi-Nissin brand] and a couple of multinationals.
“Secondly, the urban Indian is getting more and more health conscious, so he is going after healthier foods. Noodles are not high up in the healthy rankings and that is why we are seeing multinationals and even Maggi offering healthy variants,” he added.