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The Rs 1,300-crore instant noodles market in India is in a state of war, with three new players having thrown their hats in the ring over the last one year. Who will win the battle for the consumer's heart?

The year 2010 marked the end of the instant noodle market as we know it. For two decades, consumers had a single brand of noodles to dig into - Maggi - giving Nestle over 85 per cent share of the market. Players such as Indo-Nissin's Top Ramen, Capital Foods' Ching's Secret and Smith & Jones and CG Foods' Wai-Wai tried to make a dent but failed to take up more than 10-15 per cent of the Rs 1,300-crore market.

Now food companies seem to have woken up to the potential of the category growing at a consistent 20 per cent for the last few years. Three new entrants have thrown their hats into the ring over the last one year: Hindustan Unilever (HUL), GlaxoSmithKline (GSK) and ITC with Knorr Soupy Noodles, Horlicks Foodles and Sunfeast Yippee! respectively.

So is the appetite for instant noodles growing in India? How will the latest entrant Sunfeast Yippee! make its presence felt? First let's look at how each of these brands stacks up.

ITC's over Rs 2,500-crore food business (with blockbusters such as Bingo for finger snacks, Aashirvaad for staples and Sunfeast for packaged foods) has a supply chain beginning right at the farm, giving it cost and quality advantages. This, among other things, helped catapult it to the league of top companies in packaged foods - such as HUL and Nestle - in the country in less than a decade. It is not new to marketing offensive either, having shaken PepsiCo Frito-Lay's stranglehold on the packaged snack market with Bingo. In biscuits, ITC has claimed the third spot, with Sunfeast competing against the bestseller brands of Britannia and Parle that have been around for 30 to 40 years in the market.

HUL has extended its Knorr franchise to combine noodles with soup that is often seen as healthy. GSK is betting on its legacy of health to launch the multigrain Horlicks Foodles, pegged as a healthier alternative to maida noodles (the most popular Maggi variant). Nestle has reacted without delay with the launch of Maggi multigrain noodles. It also tied consumer anecdotes with a bevy of new flavours such as Curry and Capsicum.

Consumers seem to be warming up to the choices they are getting in their instant noodles. Ogilvy & Mather Group President (south India) Prateek Srivastava who headed the campaign for ITC's Sunfeast Yippee! says, "Instant noodles was a one-brand category so far and most consumers bought out of habit because there was hardly a choice. So, we had to make them stop and think about the purchase they made."

The new entrants claim market shares of 3-7 per cent in their first few months of launch in south India. Nestle Maggi's overall market share, meanwhile, has dipped from 90 per cent in 2009 to 85-86 per cent in 2010, according to analysts. Shirish Pardeshi, senior analyst at Anand Rathi Securities says, "The category penetration is low as well, 25 per cent of the population only. There is scope for these players to grow simultaneously."

ITC launched Sunfeast Yippee! instant noodles in December 2010, and differentiated it on product attributes. ITC Foods Divisional Chief Executive Chitranjan Dar says, "It has taken us a while to launch but we wanted to ensure we had a differentiated product.” ITC started working on instant noodles a couple of years back. Pasta preceded noodles as it gave the brand a head start with hardly any competition around. It continues to be a small section of the instant foods market as pasta is yet to establish itself as a mainstream food option in India.

Consumer research conducted by the company revealed a few traits as being high on the wish list of consumers of instant noodles, which the company has incorporated in its new product, informs Dar. Yippie comes in round stacks, as opposed to the usual rectangular ones to ensure longer noodles strands. Also it resists clumping when served. "We are not playing the taste card because we are confident the flavours will play out over time. Instead, we are giving consumers what they had been missing in existing products all this while," adds Dar.

Srivastava of O&M explains the nuances of the launch campaign for the product: "We have depicted a kid questioning conventions based on these product attributes so that people are compelled to rethink what instant noodles should be." ITC also went to large format stores and supermarkets with large scale sampling of the cooked noodles. For instance, it was showcased at Future Group's Big Bazaar, a petri dish for Maggi-challengers such as Future Group's private label Tasty Treat and Capital Foods' Ching's Secret and Smith & Jones. Dar claims 30-40 per cent of those who tried bought Yippee!.

While Knorr Soupy Noodles and Horlicks Foodles have opted for the colour green, ITC has differentiated Yippee! with a generous dollop of red mixed with yellow in its packaging. Yellow (used by Maggi) will instantly tie Yippee! with the category, the red will hopefully set it apart. "Red has been used in the communication as well as the packaging to communicate vibrancy to a young consumer as well as differentiate itself from the lead brand," says Srivastava.

Yippee! would need to evolve its communication further say brand experts. Brandscapes Worldwide Chairman & Managing Director Pranesh Misra points out, "Right now, it is in the stage of ‘Who am I', introducing the brand, its characteristics. Going forward, I expect it to evolve the campaign and lend a clear personality to the brand." His expectations ride on the success of Bingo which scripted its success story on irreverent advertising and innovative retail displays. Is ITC doing enough to carry Yippee! forward?

Experts point out that the Sunfeast branding on Yippee!'s packs need to be more prominent. Kotak institutional equities analyst (consumer division) Manoj Menon says, "In terms of brand names, both Horlicks and Sunfeast have a wide-ranging appeal because they have products that already have extensive recall. While Horlicks has years behind it, Sunfeast has the reach through its biscuits. But ITC needs to play up Sunfeast more in Yippee!'s packaging."

HUL, on the other hand, is not too worked up. HUL is betting on changing the manner in which noodles are consumed and thinks Knorr Soupy Noodles would end up popularising both its soups (which were usually bought in winter) and its instant noodles. Harpreet Singh Tibb, general manager, HUL packaged foods, says, "Presenting our equity in a novel format at the price of instant noodles will help us grow the soup category as a whole because it is a nasent category in India. We will concentrate on saturating our urban distribution." Prices of regular packs (60-100 gms) range from Rs 10 for maida noodles to Rs 12-15 for atta and multi-grain avatars for most brands. Top Ramen retails for Rs 9, while Knorr Soupy Noodles' variants other than its Mast Masala sell for Rs 12.

For now, the race for the consumer's shopping basket will be held in urban India. Menon points out, "The new players will go deeper into the country only after a couple of years. Right now, they will have to focus on creating the pull for their brands' repeat purchases. With food products’ finite shelf-life, companies can't push a lot of stock into the market to begin with."

The might of the three big players will show in how effectively they ramp up national distribution. After all, it is a category that is almost evenly spread across all the four zones in India and cannot depend on modern trade alone. Indo-Nissin's Top Ramen, which has been around since 1991 has been able to hold on to its share of 6-8 per cent because of its clutch of loyalists. However, it has failed to move beyond that because of distribution debacles - its tie-ups with the then Hindustan Levers Limited and later Marico failed. Interestingly, GSK sources its noodles from Indo-Nissin but banks on its own branding and distribution for Foodles. Menon of Kotak points out, "Till now, Nestle's Maggi has been the all-India player, the other brands were sparsely distributed and restricted to modern trade. The new entrants have the potential to spread out quickly."

GSK's Foodles has a strong footprint in the south and east of India, though it has gone national in the last couple of months, garnering 2.5 per cent of the market in these regions. HUL is rolling out Knorr Soupy Noodles in the rest of India now, having launched in the south in February of 2010. The company says it took time to crank up production to provide for unexpected demand in the south. But it is on track with its national rollout. "In the next couple of quarters we would have grown rapidly from the 2,00,000 outlets we have already reached," says Singh Tibb of HUL. For now, market experts put Knorr Soupy Noodles at less than 1 per cent share (it had 3.35 per cent in south India by September, 2010, as per Nielsen), while Horlicks Foodles is at 4.5 per cent in the overall market (6-7 per cent in south India).

For its part, ITC is targeting a total of 5 lakh outlets. While none of the new players have reached their full distribution strength, ITC would have to look out for HUL and Nestle's potential spread. HUL covers up to 6.5 million outlets out of a total 7.5 million outlets in India, according to analysts, while Nestle reaches 3 million. ITC's FMCG arm reaches 2.5 million. With Foodles, GSK reaches 2,00,000 outlets of its total 1 million. GSK Executive Vice-president (marketing) Shubhajit Sen says, "Our ambition of reaching 6 per cent of the market in the first year itself can be met by our current network. If we are six of the average yearly consumption of 24 packs by an urban household, we are home. We expect consumers to go for a mix of brands now that they have more choice."

The established players too are pulling up their socks. Indo Nissin recently signed on a new advertising agency (Dentsu) to refresh Top Ramen, while Nepal-based CG Foods, the makers of Wai-Wai, is ramping up production and distribution. CG Foods FMCG CEO Gajanan Prasad Sah says, "Wai-Wai brings us about Rs 150 crore in sale, and is strongest in the east. It will increase when our third Indian factory at Rudrapur becomes operational in February. We are extending beyond the 1,50,000 outlets. Over the last 2-3 years, we have gone to Punjab, Jammu & Kashmir and expanded in Delhi."

ITC has its task cut out. Menon reckons, "For the next six months, it has to get its flavour popular as it rolls out nationally. Even Nestle spent years perfecting Maggi's masala flavour so that it appeals to all the regions." Until as late as May 2010, Dar had maintained that ITC was still looking for that taste that would set its instant noodle brand apart. In fact, like its contemporaries, ITC is playing safe with two flavours of its noodles: Classic Masala and Magic Masala. Both Horlicks Foodles and Knorr Soupy Noodles have three flavours each, hedging against comparisons with Maggi Masala noodles and also India's diverse regional tastes. "The south, for example, prefers the curry flavour more," points out GSK's Sen. Indo Nissin has even launched a new flavour, Bengali Masala tailored for the eastern region.

Of course, incumbent Maggi is not sitting idle. In 2010, it reinforced its emotional connect with consumers through an interactive campaign and then went on to launch more variants of its noodles. Its previous attempts at healthier atta and rice noodles may not have found many repeat customers but the customer today is in a mood to experiment. The task for ITC, therefore, will not be limited to fighting competition. Satisfying the demand of the consumer who loves to experiment will be a much bigger challenge.