June 2025SPARX Japan Asia Focus Strategy Instant noodles, lasting impact - Buldak's global journey reflects Asia's soft power.

The key feature of my strategy is to invest in both Japan and Asia-ex-Japan, which are traditionally separate in the investment world. Because of the close economic tie between Japan and the rest of Asia, many Japanese and Asian companies are close peers, competitors or at different parts of the same value chain. The insights we generate from studying Asia-ex-Japan help our judgement in investing in Japan, and vice versa. I utilize the insights across the whole region and pick the best investments within the whole of Asia.

At SPARX, we have teams in Tokyo, Seoul and Hong Kong covering different parts of Asia. I often conduct cross-platform research to connect the insights generated across our teams. My strategy, with the flexibility to invest across Asia including Japan, is best positioned to maximize the results from such cross-platform research. There is hardly a better example than instant noodle, a product first made popular in Japan, and there are now local instant noodle companies in many Asian countries.

Asia is home to many instant noodle manufacturers. Below are some of the more prominent publicly listed companies in the sector.

Instant noodles enjoy tailwinds under current environment. As a cheap food, it is well positioned under the higher inflation environment. For markets like the US, rising labor cost and the tipping culture make dining out or delivery prohibitively expensive. Instant noodles are very affordable and consumers tend to maintain or even increase consumption of instant noodles under economic weakness and high inflation. I like such resilience against both recession and inflation.

The bad news is that instant noodles overall are not growing fast. In most key markets which are mainly Asian countries, per capita consumption is already high. According to the World Instant Noodles Association, Vietnam consumed more than 8 billion servings in 2024, while the country has a population of about 100 million. In order to grow, companies need to expand to underpenetrated markets, or take market share from existing players[i]. If I could find a fast-growing instant noodle company with high returns on capital, it would be a combination of high growth and resistance to recession, a highly attractive proposition.

As a regular consumer of instant noodles, I started eating a Korean instant noodle brand called Buldak, the core brand of Samyang Foods, a few years ago. Interestingly, the company focuses a lot more on exports than the domestic Korean market, due to the strong position of Nongshim there and low pricing/profits in the domestic market. Someone residing outside South Korea probably could notice the rising popularity of Buldak faster than the domestic investors.

I believe there are several reasons for the popularity of Buldak:

• Distinct taste: Buldak has a distinct sweet and spicy taste. In fact, it sells the sauce as a separate product. The fact that it can separately sell the sauce shows how popular the taste is. I have not seen other instant noodle brands able to sell the flavoring separately. Global K-pop star Rosé (BlackPink) once showed she carried the little Buldak sauce in her bag such that she could add to food anywhere she goes.
• Attractive packaging: the package of Buldak shows a chicken blowing out fire, which creates a very identifiable image compared to other instant noodles. Nongshim Shin Ramen shows the "辛" word on the package. However, people who cannot read Chinese characters will not know what it means.
• Digital marketing strategy: Buldak first became viral on social media through the "fire noodle challenge" where netizens challenge themselves by finishing the whole serving of Buldak ramen. Similar to IP business when I wrote about Sanrio before, I believe every consumer company nowadays needs an effective digital strategy. Samyang is much more digital savvy than other instant noodle companies.
• K-Wave: Global interests in Korean culture have risen significantly over the years. I believe it was indeed a reason that drew initial interest in these Korean products. However, I think overemphasizing the K-Wave factor is missing the point. There are real merits and differentiation with the products.

While I have noticed the steadily rising popularity of Buldak across the region, I thought the original Buldak (the one with black color packaging) is too spicy for many countries outside Asia. Even within Asia, it is probably too spicy to consume often. I did not invest until I saw the trend of a new flavor Carbonara (the one with pink color packaging) succeeding globally. It was reported that the Carbonara flavor was inspired by observing netizens who put cream onto the original Buldak noodle to make it less spicy. The Carbonara flavor became a global hit. There was a viral video on TikTok last year where a little girl in Texas cried tears of joy after receiving a pink Carbonara Buldak as her birthday gift. Later, Samyang sent her 1-year worth of Carbonara Buldak as gift. Again, this shows the company knows how to make use of social media for marketing. The product merits and company's ability to utilize social media is helping it win mindshare among the younger generation of consumers across the world.

In addition to the 3 points mentioned above, there is an additional reason I believe Buldak Carbonara is succeeding globally: it is a fried, non-soup noodle while most instant noodles are soup noodles. While there is no exact data, I believe non-soup noodles are much more common in Western developed markets like the US or Europe. While Japanese instant noodle makers also have fried noodles products such as Yakisoba, the flavors are very Japanese and do not always fit the Western markets. On the other hand, "Carbonara" flavor of Buldak is a distinct taste by combining the creamy texture and Korean spicy flavor. In addition, fried non-soup noodle offers flexibility that soup noodle cannot offer. People can freely add toppings such as green onion, cheese, eggs, etc. on fried noodles and mix. For soup noodles, this is more challenging.

Can Samyang maintain the current advantages? I believe so.

First, the competition landscape in instant noodles is stable with only a handful of competitors. There are copycat products. However, it is impossible to create the same taste. Looking at the whole industry, I seldom saw a popular instant noodles product displaced by a copycat product. Even with a different flavor, it is difficult to displace the dominant product. A dominant product in a certain market tends to stay dominant. For example, despite Buldak's popularity, it does not seriously threaten Shin Ramen in the Korean market. In Hong Kong, Nissin's Demae Iccho (出前一丁) sesame oil flavor is still the most iconic and popular instant noodle product. I believe there is a taste stability among consumers that they tend to choose the same taste after they got "hooked". I believe Buldak is addressing demand from new consumers, especially those in the Western developed markets. If Buldak establish the mindshare among those new consumers, it can be a long-lasting advantage.

Second, Samyang has fast pace of product innovation. Buldak has many other flavors such as quattro cheese, curry, habanero lime. The pace of product innovation is almost unseen in other instant noodle companies. To capture the growth of overseas market, Samyang launched a new instant pasta brand called Tangle. The key differentiation is the pasta noodles are air-dried, not oil-fried, meaning lower calories. It also features high protein contents. I believe this can attract a completely different group of consumers and potentially become another driver in the longer term. With the company's ability to engage with customers through digital channels (Buldak has over 340 thousand followers on Instagram) and innovation strength, I believe that Samyang is in much better position to win global consumers vs the other instant noodle companies.

We are often asked where we generate investment ideas. I think the most common way is to know our market well. If we know our market or industry well, we can naturally see where the opportunities are. I think this is the safest way to generate investment ideas because we already have prior knowledge and context about the industry. People who understand entertainment will naturally know the popularity of Kuromi or K-pop. People who eat instant noodles simply cannot ignore the rise of Buldak. I continue to generate insights and ideas through bottom-up research and knowing deeply about our markets.

[i] https://instantnoodles.org/en/noodles/demand/table/

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