Instant noodles are cheap, delicious, and a key to ending destruction of much of the world’s last remaining rainforests. From the college student’s humble bowl of ramen to a midafternoon workplace snack to a young family’s fast and easy dinner, instant noodles are made with more palm oil by weight than any other product on the shelves.
Too often, ramen sold in the United States is made with palm oil grown by cutting down tropical rainforests – adversely impacting communities, destroying ecosystems, unleashing climate pollution and pushing animals like orangutans and Sumatran tigers to the brink of extinction. It doesn’t have to be that way.
There are four big companies that together dominate the U.S. instant noodle market: Toyo Suisan, Nissin, Nongshim, and Sanyo Foods. All four companies now have unprecedented access to rainforest-safe, responsibly sourced palm oil – but not one has committed to ending the purchase of palm oil from deforestation, carbon-rich peatland destruction or community exploitation.
American instant noodle lovers should demand better. If we can convince these four companies to do their part to end rainforest destruction, for the products they sell in the U.S. and around the world, we can drive change on a global level. Americans deserve Rainforest-Safe Ramen.
The United States is one of the biggest markets for instant noodles outside of Asia, and its ownership and production is highly concentrated. Toyo Suisan, Nissin, Nongshim, and Sanyo Foods together control 85 percent of the market. The next largest competitor holds no more than 2 percent market share and mostly sells noodles as imported finished products. These same four companies are also key players in more than 80 countries and control more than a quarter of the global market, and at least 22.5 percent of the influential Asian market.1
In fact, in the United States these four companies are so dominant that many of the brands with big presences around the world either aren’t even on shelves here, or are only sold in specialty stories catering to a specific cultural demographic. These include brands such as Tingyi (China), Nestlé’s Maggi brand (popular in the UK, India, Australia, Malaysia, and Singapore), Unilever’s Pot brand noodles (popular in the UK and Ireland), and Indofood’s Indomie brand (popular in Asia, Africa, Australia, New Zealand, Europe, and the Middle East).
Toyo Suisan Kaisha Ltd, with its flagship brand Maruchan, sells roughly half of all U.S. purchased instant noodle packets and is the largest player in the market. The company is estimated to control 5 percent of the Asian market and no less than 11 percent of the global market for instant noodles. In 1972, Toyo Suisan entered the U.S. market with Maruchan USA, and in 1977, Maruchan established a manufacturing plant in Irvine, CA. Today Maruchan has manufacturing plants in Richmond, VA, San Antonio, TX, and facilities in Mexico. In June 2015, in response to activist pressure, Toyo Suisan’s Maruchan released a vaguely worded Palm Oil Procurement Policy relevant only to its U.S. operations, and then formally joined the industry-led Roundtable on Sustainable Palm Oil (RSPO) in September of that year. However, the company has not signed up to a corporate No Deforestation, No Peat, No Exploitation (NDPE) commitment.
Nissin accounts for about 25 percent of the U.S. market, controls 13.2 percent of the Asian market and no less than 11.2 percent of the global market for instant noodles. Nissin Foods Holdings Co., Ltd. provides cross-organizational support to four overseas business regions and six operating companies in Japan, including Nissin Food Products, which generates up 50 percent of the company’s net sales. The company’s brands in the U.S. include Nissin, Top Ramen, and Myojo instant noodles. Nissin’s U.S. operations are one part of a business region that also includes Mexico, Brazil, and Colombia, and includes both Nissin Foods USA and Myojo USA Inc.2 Nissin’s U.S. operation has production plants in Gardena, CA, Chico, CA and Lancaster, PA. Mitsubishi also has a close relationship with Nissin, particularly in Asia: In February 2015, Nissin and Mitsubishi became strategic partners in India, Singapore, Thailand, and Vietnam.3 Nissin named Mitsubishi as a major customer in their 2014 annual report, and listed sales income from Mitsubishi Corp for the year ended March 31, 2014 of approximately US$1.43 billion.4 In addition, a representative from Mitsubishi serves as an “Outside Director” on the Nissin Foods Board of Directors.5 Nissin joined RSPO in October 2013, but has not issued an NDPE commitment.
The company with the third largest U.S. market share is South Korean company Nongshim Co., Ltd., a food and beverage company headquartered in Seoul, South Korea. The company was founded in 1965 under the name Lotte Food Industry Company and changed its name to Nongshim in 1978. In the 1990s, Nongshim began to expand globally building factories in Shanghai, Qingdao, Shenyang and Yanbian, China. In 2005, a factory was built in Los Angeles, CA. Today, Nongshim is the largest instant noodle and snack company in South Korea producing 40 brands of instant noodles, including South Korea’s most beloved ramyun brand, Shin Ramyun. Nongshim has sales distribution offices in South Korea, Australia, Japan, China, and the U.S. Nongshim joined RSPO in August 2015, but has not issued an NDPE commitment.
Number four in the U.S. market is Sanyo Foods of America, maker of the popular U.S. brand Sapporo Ichiban in Garden Grove (Los Angeles), California. Sanyo Foods of America is owned by Japan-based Sanyo Foods Co., Ltd.6 Sanyo Foods Co., Ltd. (Japan) has seven Business Groups, and their Living Essentials Group owns three instant noodle companies: Sanyo Foods Japan, AceCook Vietnam, and Sanyo Foods America. When combined, these three noodle companies put Sanyo Foods in the top five of global instant noodle producers. Overall, Sanyo Foods has 3.5 percent of the Asian market for instant noodles and controls 2.9 percent of the global market. Sanyo Foods also has close relationships with a number of other noodle producers, including Olam Foods7and Asian noodle giant Tingyi (Master Kong / Kang-shi-fu brand). Tingyi is roughly one-third owned by the Taiwanese Tingyi (Cayman Islands) Holding Corporation (whose parent company is the Ting Hsin International Group / Ting Hsin Fats and Oils), one-third owned by Sanyo Foods, and the remainder as publicly-traded shares.8 Sanyo does not participate in the RSPO.
All four leading U.S. instant noodle companies have major manufacturing facilities in California. An estimated 15 percent of all palm oil imported into California goes into instant noodles, and most if not all of that comes from Indonesia or Malaysia. Palm oil imports into the U.S. are almost exclusively in the form of refined bleached deodorized (RBD) palm oil, with crude palm oil imports accounting for a fraction of one percent.
Instant noodle production accounts for an estimated 3 to 5 percent9 of all palm oil used in the U.S. – a major chunk for a commodity in an estimated half of all products on shelves. Tracing palm oil from growers to processors to traders to products tends to be difficult – on purpose – involving many transactions and little transparency. However, when attempting to determine the suppliers for the various instant noodle producers in the U.S., it is possible to compare palm oil imports with noodle production locations. Since palm oil is heavy, and therefore expensive to ship over land, it is most likely that palm oil imported from Indonesia or Malaysia to locations along the U.S. eastern seaboard would be for used by nearby manufacturers. Similarly, palm oil imported into California would be for producers in the West.
Map showing location of instant noodle factories owned by the top four producers. Arrows indicate the main port areas that received palm oil from Indonesia and Malaysia in 2015, and the respective import amounts (rounded to nearest 10,000 metric tons). Given the expense, palm oil is not likely shipped overland across the country, but would be sent to users in relatively closer proximity.10
Instant noodle companies operating in the U.S. want to escape the cycle of price competition that puts continued downward pressure on profits – and one way they are responding is through retail distribution deals. While this trend may eventually tilt in favor of larger supermarkets, today the U.S. market is skewed towards independent small grocers to a greater degree than it is for other categories of packaged food.11 Specialty and ethnic grocery stores remain a significant part of the market, even for the top companies. For example, even though Nongshim recently established direct distribution deals with Costco, Walmart, and Sam’s Club, they also maintain arrangements with independent specialty Korean-American and Asian grocery stores.12
Because instant noodles are light to ship and have a long shelf-life – combined with both a healthy college-aged demographic and the growth of online grocery sales in recent years –companies without supply agreements, even without shelf space in the U.S., can appear in the marketplace via Amazon and other online shopping networks.13 A forecast done by Business Insider Intelligence projects that online grocery sales will increase at a compound annual growth rate (CAGR) of 21.1 percent between 2013 and 2018, compared with a CAGR of merely 3.1 percent for offline grocery sales during the same period.
Looking forward, it is likely that the demographics for instant noodles in the U.S. will expand to include higher income brackets in the next few years. Over the past decade, and particularly just since 2014, ramen restaurants have become part of a burgeoning food trend in U.S. urban areas.14 While restaurants typically use fresh noodles, the expanding popularity of ramen among a new demographic could provide a lead-in to higher-end packaged products.
Three of the Big Four are members of the Roundtable on Sustainable Palm Oil (RSPO), with Sanyo Foods the only exception. While joining the RSPO is a responsible step for any company that uses as much palm oil as the instant noodle sector, it falls far short of the socially responsible procurement norms emerging across the spectrum of companies involved with palm oil.
The RSPO is an industry-led initiative composed of palm oil producers, processors and traders, manufacturers (such as instant noodle companies), retailers, investors, and NGOs. It was established in 2004, at a time when the environmental and social consequences of palm oil expansion in Southeast Asia were just coming to light. Today, over 2,000 members from more than 75 countries have joined the RSPO, including the largest producers and traders in the sector. In 2016, there are 3.51 million hectares of RSPO-certified palm oil plantations producing 13.18 million tons of palm oil, accounting for approximately 21 percent of global palm oil production.15
As with other industry-led initiatives, a common critique of the system is that the process is slow and cumbersome and that outcomes tend to be a “lowest common denominator.” Critics complain that standards are too weak, there is insufficient training for the bodies conducting field certifications and there is too little capacity to monitor and enforce standards. That leaves the credibility of the system too reliant upon watchdog NGOs to enforce standards through filling formal complaints. Additionally, critics complain that social criteria are self-evident general principles, and in practice farmers and indigenous people have been displaced from their lands, threatened, and even arrested if they resist. While the RSPO does not forbid the clearing of forests it does put primary and High Conservation Value (HCV) forests off-limits.
Transformative change takes time, and proponents of the RSPO argue that the system is improving and point to the fact that producers are obligated to have a time-bound plan to certify all operations they manage once their first mill is certified. Unfortunately, there is yet no corresponding time-bind requirement for manufacturers that purchase palm oil – like the Big Four. In fact, technically they are not required to purchase even a minimum amount. For manufacturers, membership means little more than an implicit statement of support.
The fact is that deforestation-based palm oil is still a big part of the U.S. ramen supply chain. If American consumers want Rainforest-Safe Ramen, then the manufacturers of instant noodles must join the zero deforestation revolution.
All four leading U.S. instant noodle companies manufacture their North American products domestically, and they all import palm oil from Southeast Asia via the California Oils Corporation. The California-based palm oil trader sells more than 120,000 metric tons of palm oil annually. In 2015, California Oils was the second-largest importer of palm oil into California (after Wilmar International), accounting for nearly 40 percent of all palm oil imports into the state.1 The company advertises its role as a key supplier for instant noodle manufacturers.2
California Oils has been by far the largest U.S. importer of palm oil from Kuala Lumpur Kepong Berhad (KLK), which is a company historically linked to controversies over land grabbing, forced labor, and deforestation. In fact, over 80 percent of KLK’s palm oil shipments to the U.S. go to California Oils, accounting for 44 percent of that company’s total imports.3 Environmental groups such as the Rainforest Action Network have documented ongoing tropical deforestation and labor abuses by KLK in Indonesia and other countries.4
|Customers who suspended contracts with IOI due to IOI’s RSPO suspension:5
California Oil’s second largest supplier is IOI Corporation (IOI), one of the most controversial companies in the palm oil sector that has been accused of clearing forests, draining peatlands, operating without proper licenses and failing to prevent fires in its palm oil plantation in the province of West Kalimantan in Indonesia.6 IOI has recently been the focus of significant controversy and remains a primary concern for the environmental group Greenpeace.7 The company was suspended from the Roundtable on Sustainable Palm Oil (RSPO) in March of 2016. The environmental organization AidEnviornment found that some 66 percent of IOI subsidiary PT BSS’ land bank burned at least once in 2014 and 2015, with fires affecting at least 5,500 hectares of two of the company’s subsidiaries in 2015 alone. By October 2015, a vast area of at least 60,000 ha inside and in the vicinity of IOI’s concessions had burnt. As a direct result, the company was dropped as a supplier to major brands with zero deforestation policies such as Nestle, Unilever, Hershey’s, and Colgate-Palmolive.8 Overall, 26 customers suspended their contracts with IOI, resulting in a potential loss of US $23 million in revenue for the company. On August 8, 2016 the RSPO re-admitted IOI as a member as a result of a new company action plan, but it is uncertain how the 26 customers who severed ties with the company will react.
In short, much of the palm oil in U.S. ramen noodles comes from laggard companies KLK and IOI, via California Oils, which in turn supplies to Toyo Suisan, Nissin, Nongshim, and Sanyo Foods for their North American instant noodle manufacturing. If the world can convince just these four instant noodle companies to adopt global zero deforestation palm oil policies, it could force a zero deforestation policy from their commodity traders, impact some of the last remaining laggard producers and traders in Southeast Asia, and send a strong signal to emerging palm oil production regions in Africa and Latin America.
Until very recently, California Oils’ parent company Japanese conglomerate Mitsubishi. However, on July 15, 2016, AAK (STO:AAK), a leading producer of value added vegetable oils headquartered in Sweden, announced its entry into an agreement to acquire California Oils. AAK products are used in a wide variety of applications in the food, confectionery, pharmaceutical, cosmetic and animal feed industries. The transaction was completed on August 31, 2016.
AAK is a founding member of RSPO. According to their Group sustainable palm oil policy, the company recognizes RSPO certification as the only established and stable organization and standard but states the system is “not perfect.”9 Accordingly, AAK policy commits the company to go beyond RSPO certification requirements obligating the company to source palm oil that has been produced without deforestation, destruction of peatland, and where plantation development only takes place with the free, prior and informed consent (FPIC). As California Oils is now a 100% owned subsidiary of AAK their future sourcing will fall under AAK policy requirements.
On November 9, 2016 AAK released a statement to Forest Heroes saying: “No Deforestation, No Peat, No Exploitation is core to the palm sustainability policy of AAK. Following AAK’s acquisition of California Oils Corporation the acquired company will adopt and implement the group policies of AAK, including the policy relating to sustainable palm oil sourcing. This will enable current and future customers of California Oils who have not already done so to adopt similar sustainability policies and/or progress on their implementation.”
For the first time, the top supplier of Toyo Suisan, Nissin, Nongshim and Sanyo Foods is going to be a ready supplier of responsibly-sourced palm oil. That makes right now a moment when transformational change is possible, up and down the supply chain. This is the moment for Americans to demand Rainforest-Safe Ramen.
In 1958, Nissin Foods founder Momofuku Ando dried wheat noodles by flash-frying them in oil and thus created instant noodles. Originally considered a luxury item priced six times more than traditional udon and soba noodles, Nissin began pioneering the basic industrial manufacturing process that would become a global phenomenon: a long-lasting product that can be ready to eat in just two minutes by simply adding boiling water. Since then, the product has become a global sensation and spread across the world – and even into outer space.1 In 2015, over 97 billion servings of instant noodles were consumed worldwide.2
Instant noodles are lightweight and have a long shelf life (four months to a year), traits that have opened a side market as post-disaster emergency foods. In North America, these features make them a popular product for online shopping. Most of the time, instant noodles are made from flour and a salt solution, dried by flash-frying in oil or by using hot air, and often served in a cup or bowl that functions as an all-in-one delivery, cooking and eating container. The vast majority of instant noodles on the market use the fry method, because they dry more consistently which gives them a more pleasing final texture.3 Fried noodles contain roughly 15 to 20 percent oil, compared to about 3 percent in hot air varieties.4
It would be a significant endeavor for a company to shift from oil-fried noodles to air-dried noodles. Air-dried noodles require a different production line, and, given their longer cooking requirements, do not work in the higher-value quick-cooking cup and bowl style products. While it would be relatively easy to change the type of oil used in production, it could impact factors such as cost, texture, flavor and the amount of trans fats. For the foreseeable future, it is very likely that instant noodles will be made with palm oil. The only question is whether our future purchases of instant noodles packets will continue to drive forest destruction.
The Big Four U.S. companies are in more than 80 countries worldwide, including the UK, Australia, Canada, Russia, Mexico, and the emerging markets of sub-Saharan Africa (especially Kenya, Nigeria, and South Africa), the Middle East (especially Turkey) and India.
We know that Asia accounts for about 85 percent of the global noodle market.5 We also know the market share of Toyo Suisan, Nissin, Nongshim, and Sanyo Foods in Asia,6 and can therefore translate these figures into a minimum global market share of 22.5 percent for the four companies. These companies together account for 85 percent of the US market share, which is 4.2 percent of the global market.7 Therefore, combining only the US and Asian market shares for these four companies gives them at least 26 percent of the global instant noodle market.
In 2013, global demand for instant noodles increased to over 105 billion packets, up 4.1 percent from 2012.8 The Asian market is the clear frontrunner in global instant noodle consumption, accounting for 86.5 percent (91.32 billion servings) of this demand.9 Although China is way ahead in terms of the total number of packages of noodles consumed in a year, South Korea, Vietnam, and Indonesia lead the way in per capita noodle consumption. As a result, the largest instant noodle producers in Asia tend to also be the largest in the world.
Per capita instant noodle consumption, top-20 countries, 2014 (number of servings)10
The next big projected growth markets regions in Latin America, Africa and the Middle East, and the Big Four are active there.11 Sanyo Foods has entered a joint venture with Olam in Nigeria,12 and has agreed to acquire a 25.5 percent stake in Olam’s instant noodles business there for US$20 million; both partners will seek to expand together into sub-Saharan Africa. Nissin is marketing “Nissin Patilliko” in Morocco, Algeria and Tunisia, through the establishment of a local subsidiary, Nissin Maghreb Sarlau;13 and the company is buying out its joint venture partner Ajinomoto from what had been 50:50 ownership of Nissin-Ajinotomoto (NA) in Brazil.14In the next three to five years, China is likely to remain the key global market for instant noodles – although at a lower market share due to new markets coming online. Palm oil fry-dried noodles will continue to dominate the global manufacturing process, although perhaps at a slightly decreased percentage as fat-free and gluten-free products gain more traction in Asia, North America and Europe.
While global consumption of instant noodles is fairly steady, the sector is at a crossroads and poised for a period of both innovation and global expansion. While the Asian market will remain by far the largest in the world, it is saturated and has little room for continued growth. It’s not clear if the same is true in the U.S. and Europe15, but it may be. As a result, manufacturers are attempting to expand their traditional markets through premiumization – targeting specific demographics through product innovation, healthier choices, and specialty packaging. For example, Nongshim opted for creating vegan options, Korean flavors, and a U.S. adaptation of their premium styles,16 while Nissin has marketed a lower calorie product.17 Additionally, the increasing popularity of Asian cuisine globally has meant a steady rise in instant noodle consumption18 in new markets such as Africa, India, Latin America and the Middle East.
Two examples of healthier choice marketing for consumers in Asia
Two examples of product premiumization
In many instances, major producers have been able to first gain footholds in promising new markets through exports and local distribution to create brand recognition. For example, Indofood first established its Indomie brand in Nigeria with exports, and then built a production plant.19 Nissin Foods actually donated noodle meals to poor families in Kenya through schools programs before moving into production in the region.20
Another common expansion strategy is for companies to form joint ventures with producers or vendors who are already established in the target market.
To capitalize on either growth strategy requires significant additional cost to the manufacturer. With the low average price of the product, economies of scale are increasingly critical to competitiveness. That means running high-capacity production lines, and having the clout to negotiate low prices for consistent quality wheat flour and palm oil.21 Trends favor larger and more vertically integrated companies, further fueling market monopolization.
There is no single, global demographic for the product. In China, Hong Kong and Taiwan the key demographics are white-collar workers and youth with expendable income.22 On the other hand in North America23 and some new markets, such as Kenya,24 the demographic leans more toward people in lower income brackets and youth, especially students – and competition in the U.S. has traditionally revolved around price.25 In most instances, instant noodles are customized for different market regions, so that noodles made in Japan or China do not necessarily taste the same as those made by the same company in the U.S.26
Rainforest-Safe Ramen is a project of Forest Heroes — a global effort to protect the Earth’s forests and climate, as well as the wildlife and human communities that rely upon them. We are building a powerful global movement to break the link between agriculture and deforestation to ensure a living future for the world’s forests.