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Home  /  Enterprise  /  Regional Brand  / Noodle ninja | JUN 26 , 2015

Vishal Koul

Regional Brand

Noodle ninja
Wai Wai has long conquered the northeast market and is now eyeing the rest of the country

Himanshu Kakkar

"With its success in Nepal and the northeast, it became clear that Wai Wai has the potential to go global" Binod Chaudhary, chairman, CG Group

Acute little boy is seen clutching on to a big yellow noodle pack in Nepal, amid devastation by a powerful earthquake. “Boy holding WaiWai Quake reliefpack; he felt his prayers answered & held packet tight with BigSmile @devastated Dhading” went the tweet along with the photograph. It was posted by Nepal’s richest man, Binod Chaudhary, who owns the noodle brand (Wai Wai).

Chaudhary, who runs his empire under the name of Chaudhary Group (CG), considers himself extremely lucky. While the quake did damage his headquarters in Kathmandu, his six production plants have remained intact. Now, he is spending his time trying to help those less fortunate than himself by distributing over 500,000 packets of noodles.

The 60-year-old isn’t just a slick marketeer; Wai Wai indeed lives up to its name. The noodle brand sells 2 billion packets across 30 countries, raking in a handsome $300 million each year. “We have a 2% market share globally,” he says. That puts the world market for instant noodles at 100 billion packs a year, with China consuming half of these, and India finishing at a distant fifth, according to the world instant noodles association (WINA). 

And there is more to Chaudhary than Wai Wai. He is ranked as one of the richest people in Asia, and is also the richest man in Nepal, thanks to CG — which comprises 80 companies and is the only MNC in the country. Chaudhary adds one more reason to celebrate his brand: “Wai Wai isn’t just the largest noodle brand in Nepal, but it is the largest brand, across all categories.” 

Love thy neighbour

So, why should the laurels earned by someone in Nepal — a country smaller than most Indian states — impress us? At the outset, Chaudhary displays a great affinity for India. He traces his origin to Rajasthan, which has been deserted by many Marwari families to make it big in foreign lands. Chaudhary belongs to the fourth generation of one such family. In his own words, he has been a “Nepali for the past 140 years”, but he can’t afford to forget his roots. In India’s northeast, Wai Wai is the dominant player in instant noodles. “We have a 65% market share in northeast India,” says Chaudhary.

The lion’s share

Maggi is still the favourite in the

Indian instant noodles market

Having made big strides in the seven sisters, the noodle man is counting on the brand’s charisma to work beyond the region as well. Chaudhary says, “We always wanted a pan-India presence and to be a global player. With its success in Nepal and the northeast, it became clear that the product has the potential to become global. We always knew about our potential, but when, seven years ago, the Maoist situation disrupted our supply chain in Nepal, we established our plant in Uttaranchal, and have seen a lot of growth since then.” 

While this isn’t a new idea, he is pressing the accelerator now. India is a market where the per capita noodle consumption is still very low, 1/8th that of Nepal. “I see the Indian market growing at a big pace. Today, it is barely a ₹2,100-crore industry, but it will reach ₹20,000 crore in 10 years,” he says. His outlook isn’t idealistic.

Euromonitor’s March 2015 report Noodles in India attributes this estimated potential to factors such as working couples, time poverty, increasing disposable income and a desire of the younger generation to try something different. “We can see manufacturers targeting rural consumers with smaller pack variants and also urban consumers with health offerings such as wholegrain, atta (wheat), vegetables and recent ones like oats noodles,” states the Euromonitor report.  

Changing tastes

Despite the current regulatory air pocket, India’s noodle bowl rests with Maggi. So, for a portion of that bowl, any other player must take on the iconic yellow packet. Harsh Mehta, an analyst with HDFC securities who covers Nestle, says, “On the face of it, Maggi appears unbeatable.” But digging deeper, one finds that Maggi has lost ground in the past four years. “There is a belief that Maggi lost to ITC’s Yippee, which has a market share of 10-11%, more or less gained from Maggi,” he adds. Maggi enjoyed over 90% market share five years ago, but it is estimated to be between 60% and 70% now. 

That may have been easy for ITC, with its deep pockets for marketing and a terribly wide reach. What is Chaudhary going to do to grab his share? His strategy is to ramp up production and distribution. “This is a business where an efficient supply chain is critical and that’s what we have created. Our seventh plant has just gone mainstream in Purnia, Bihar. We have even expanded our production to Andhra Pradesh to cater to the south Indian market and are looking at Madhya Pradesh,” he says. Chaudhary is adding one plant each year, but his future plans are even more aggressive. “From next year, we will add three plants each year,” he adds. Putting up a plant takes an investment of ₹30 crore-₹50 crore and about nine months to be operational. So, he has planned his expansion in such a way that production lines can be added to existing plants in just six months, if there is an urgent demand.

Of course, production muscle by itself is no guarantee to success. In this trade, marketing is what can make or break the deal. ITC has sustained the long and costly campaign for Yippee for four years to make a dent in the market. 

Here’s where Chaudhary has an advantage. “Our brand is well known even without advertising, and that speaks for the quality and 30 years of effort. Another advantage is the consumer — the generation that has grown up with Wai Wai will carry forward the good word,” he says. His plan is to start advertising only when he has surplus production and able distribution in place. 

The question is whether this a good idea. “Classical marketing will tell you what they are saying is rubbish, but there is some truth to it. In the northeast, CG has not spent a rupee on advertising. Of course, there is already some familiarity to their product, which is often called the brown noodle,” says Ajay Gupta, MD, Capital Foods. Gupta’s is a Chinese food company offering Ching’s sauces and soups and Smith & Jones noodles. He has his doubts about Wai Wai making inroads into regions outside the northeast. “I don’t know about the rest of the country… it’s going to be a huge challenge. They have tried this in Mumbai and Pune but have not been successful. They will have to put a lot of money on the table for marketing, if they want to really scale up,” says Gupta.

Ajay Gupta, Capital FoodsThere is hope, though, because the same approach may not work for every company when it comes to brand building. Pinaki Ranjan Mishra of EY says, “Brand building is crucial but we have successful examples without any advertising.” 

Balaji, for instance, which doesn’t do any advertising, is the most successful snack brand with a ₹1,000-crore-plus turnover in just two states, and better margins than Pepsi. What has worked for it is its value proposition, as for  the same price, it offers 10% to 20% extra chips. “Because they [Wai Wai] have a differentiated value proposition, not advertising could save 10% to 15% of sales. That’s a huge saving,” says Mishra. But he also feels that the company might change its strategy if they eye mass scale in the future. 

Chaudhary believes that Wai Wai is the fastest growing noodles brand in India, and he has numbers to back his claim. Of India’s ₹2,100-crore instant noodles market, Wai Wai claims to have ₹350-crore. That puts them at a 6% market share. However, there is no authentic source to verify market share as the others don’t release sales data. Market share estimates are based on samples, and Euromonitor barely allocates 1.5% market share to Wai Wai.

Yellow giant

Both Chaudhary and Gupta have adopted one strategy — steer clear of Maggi. If Gupta calls his company a Chinese food company (instead of a noodles company) selling Smith and Jones noodles (non-masala) at a premium, Chaudhary, too, has his own case. “We have no competition as such with Maggi. Can you eat Maggi straight out of the packet? No. That’s your answer.” Wai Wai may be thought of as the Maggi of the northeast, but what sets it apart is that it can be eaten dry, after boiling in water, or even as soup. In addition to its multiple seasonings, Wai Wai also comes with a little packet of oil, to add a distinct flavour. 

Pinaki Ranjan Mishra, Ernst & Young That Wai Wai is a differentiated product is undisputed. Says an FMCG analyst, “If you look at the products today, you can swap a Nestle with an ITC or an HUL. The core products are more or less the same. But if you start liking Wai Wai or Ching’s, you are going to ask the retailer specifically for that.” 

Taking Maggi on with big marketing budgets suited ITC. “It wanted to be a national player. So, speed and advertising make sense. Wai Wai wants to target specific areas, build the brand and then move slowly,” says Mishra. Doesn’t this approach come with the danger of becoming a niche — and so, smaller — player? Gupta and Mishra feel that in today’s market, being a strong and profitable niche can be great. In the Indian noodles world, there have been several failures. “But Wai Wai’s timing is right,” says Mishra. Unni Krishnan, founder, LongBrand India, agrees. “Wai Wai has been systematically building a brand. It is a great myth that brand building is a byword for communication blitz. ITC and other FMCG firms will do well to take a few pages from the Wai Wai approach.” 

Clearly, a smaller market share is no reason to fret. “What is the size of this industry? Nothing. One type of cheese in US is a billion dollars. We don’t have anything in food like that. The size of the market is going to increase. There will be other players who will evolve the market,” says a charged Gupta. Whatever he says bodes well for Wai Wai (See: Sizzling hot).

Sizzling hot

The domestic instant noodles market has grown

even as newer entrants found their niche

Chaudhary keeps repeating that the product is king. “No matter how smart you are in packaging or branding, it can only work if the product is right,” he says. Previously, there have been eight or nine players who entered the noodles market without success, but that doesn’t discourage Chaudhary. “This was also the case in Nepal. There were ten companies, but only three have survived. There is always a big player, then a second player, and then there are the rest,” he adds.

In this business, what matters most is a distinct and consistent taste, along with variation. Thanks to decades of Maggi domination, masala remains the predominant flavour, clocking the highest sales. Chaudhary says Wai Wai comes from a noodle-evolved market. “In Nepal, we have 50 different noodles. We will get them here when the time comes,” he says. Wai Wai is targeting A and B towns for now, though in the northeast they are present in C towns as well. Chaudhary feels the demand is great, but they have limitations of distribution, reach and supply, which is taking a little time to build. 

Wai Wai has worked for the Nepalese and northeastern palate. It remains to be seen if it will win over the varied tastes of the country. “When you go to an alien market like the south, the challenge is to reach out to the consumer and conduct a trial. We have been selling in Bengaluru in a limited way to achieve that,” says Chaudhary.

The good news is that people are warming up to Wai Wai. Chaudhary tells us about how superstar Shahrukh Khan wanted to know what was behind its distinct taste. Coming from an actor who’s paid to promote brands, Chaudhary couldn’t have asked for more.  

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