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Taiwan's Master Kong leads in China's food and beverage industry

Instant noodles and beverages get ahead by playing up to local palates

Taiwan's Master Kong leads in China's food and beverage industry

Taiwan's leading instant noodle maker Master Kong is continuously winning the palates and wallets of Chinese consumers, Taiwan's top export promoter said on Tuesday.
According to a report commissioned by the Taiwan External Trade Development Council, Master Kong -- which started as a producer of edible oil -- has turned itself into a household name in China by producing products catering to local tastes.
It started selling instant noodles in China in 1992, and has since expanded into beverages and confectionery.
"Master Kong owes its success to a consistent brand message that resonates with consumers, coupled with innovative market segmentation. The Master Kong brand name was chosen to personify Master Kong's image as a health food professional, where chefs in China are referred to as 'masters' and 'Kong' is a Chinese surname that also means 'health,'" the Taitra report said.
"The cornerstone of Master Kong's success in China was its recognition of China as a conglomeration of geographic pockets with varying tastes for local flavors. On the national level, Master Kong communicates a consistent brand message with the slogan 'Just this taste!,' but on a regional level it never stops fine-tuning flavors of instant noodles sold in different sectors of China through research and development."
According to Taitra, Master Kong allocates one percent to 1.2 percent of its annual revenue on research and development. Its R&D team is comprised of 800 people whose sole job is to develop new flavors as well as control and maintain the company's product quality, said Michael Su, director of Taiwan's Ting Hsin International Group.
Ting Hsin founded and controls China-based Tingyi Holding Corp., which sells the Master Kong brand of food and beverages in China.
Four years ago, Master Kong started building a "culture of the Chinese taste" through research into regional distinctions in the Chinese palate, Su said.
Broths, for instance, are a staple in northeast China and Guangdong province, while southerners of Hunan and Sichuan provinces have a penchant for spicy food, yet within their commonalities lay variations in how broth is cooked and what spices are mixed.
Last year, Master Kong enjoyed massive growth in its beverage business. Sales generated by its ready-to-drink tea, bottled water and juice rose 56 percent compared with the seven percent growth in its instant noodle and five percent growth in its confectionery businesses.
Beverages accounted for 47 percent of Master Kong's revenue in 2006, exceeding instant noodles' 45 percent contribution to sales, the report added.
"Rather than compete heads on with soft drink giants like Pepsi and Coca-Cola, Master Kong has focused on ready-to-drink tea, juice, and water -- a far bigger market in China and many parts of Asia than soft drinks," it noted.
Based on Ting Hsin's experience in Taiwan, demand for beverages outstrip instant noodles by 4.5 times, Su said. In the next two to three years, Master Kong aims to grow its market share in beverages to the level enjoyed by its instant noodles, around 50 percent, he continued.
Master Kong has secured a 50 year supply of mineral water from Chang Bai Mountain in the northern province of Jilin. Chang Bai Mountain is one of China's most famous mountain ranges, and its volcano and mineral springs are preserved within a national geopark.
The company also continues to expand and refine its beverage offerings through strategic alliances with Japan's Asahi Breweries and tomato juice maker Kagome, Su said.
Master Kong's astonishing success is reflected in its brand value.
This year, Master Kong ranked fifth in the Taiwan Top Global Brands, an annual brand valuation study commissioned by Taitra and conducted by international branding consultancy Interbrand.
Master Kong's brand value increased 79 percent this year to US$726 billion from US$412 million in 2006, according to Interbrand.