DISHING UP THE RAMEN : Los Angeles Is Now the Oriental Noodle-Making Capital of the U.S.

About four times a week, Ann Little empties a pouch of instant ramen noodles into a pot of boiling water. She adds a flavoring mix and tosses in a few pieces of shrimp. Lunch is served.

“It’s perfect,” said Little, 42, a former grocery worker who lives in Glendale. “In five minutes, you can have a full lunch.”

Fast, convenient and inexpensive, Oriental instant noodles--commonly known as ramen--have become one of the fastest growing products in the soup sections of American supermarkets. The growth enjoyed by established Asian noodle makers has attracted a host of low-priced newcomers, and soup giant Campbell Soup Co. plans to join the fray soon.

The Los Angeles area has become the Oriental noodle-making capital of the United States, with at least six companies located in the region. Industry pioneer Nissin Food Products of Japan makes its best-selling Top Ramen and Cup O’ Noodles brands in Gardena. Another Japanese foods company, Maruchan, employs about 200 at its plant in Irvine. Sanwa Foods of Singapore runs a plant in City of Industry. Union Foods in Costa Mesa is owned by Korean immigrants.

In less than 20 years, these noodle makers have come to dominate the dry soup market in the United States. Nissin boasts that it sold more packages of dry soup last year than Lipton, which has traditionally been the dry soup leader. (Lipton still leads the dry soup industry in total dollar sales, however, with $201 million in sales last year.)

Ramen noodle sales increased 6.8% to $184.1 million in 1987 from $172.35 million in 1986, according to Sami/Burke Inc., a marketing research firm that tracks food sales. “That’s where the action is,” said Sami/Burke spokesman Allen Miller of noodle sales. “In general, (packaged foods) have been running just about flat.”

American per capita consumption of Oriental noodles is only a fraction of what it is in Japan--leaving room for more growth, noodle makers say. “There is a lot of untapped potential,” said Steve Morton, product manager for Maruchan. “There is a whole market that is not familiar with (ramen) or does not eat it regularly”.

Usually made out of flour, salt and seasoning, the wire-thin Oriental noodles are dehydrated and then sold in palm-sized plastic pouches or in ready-to-serve Styrofoam cups. The noodles usually come with a packet of flavoring--beef and chicken are the most popular--and bits of dehydrated carrots and peas. By adding hot water, the noodles are usually ready to eat within three minutes.

Besides being fast, the noodles are cheap. Consumers can sometimes find packs of eight selling for $1.

Momofuko Ando, founder and chairman of Nissin, created the first instant Oriental noodle in 1958. Until then, the popular ramen noodle was sent to market fresh and could only be stored for two days before spoiling. Ando’s dehydrated noodle, in contrast, could be put on the shelf for months.

His company started exporting the product to the United States in 1970. And despite estimates that sales would never top $20 million, Nissin built the first U.S. instant Oriental noodle plant in 1972 in Gardena.

Grocers were not too impressed with the product at first. “It was quite difficult,” said Shigeo Nishihara, who heads Nissin’s U.S. operations. “People would ask: ‘What is this Styrofoam thing?’ when shown a case of Cup O’ Noodles.”

After finding its way into the Oriental foods sections of supermarkets, Nissin found that it had to break its product out of ethnic foods section and into the soups section to make its investment in a U.S. plant worthwhile. The big break came in early 1977 when the Alpha Beta supermarket chain in Southern California decided to include ramen products next to its other soups.

Second Nissin Plant

“Once we did that, we got to the mainstream of the American consumer,” said Jim Johns, Nissin’s marketing manager.

Since then, Nissin has opened a second noodle-making plant in Lancaster, Pa., to meet demand. Nissin expects sales of $85 million this year.

That success has attracted other players. Cheap imports from Indonesia and the Philippines have also intensified competition. As a result, prices have fallen for the past five year, as have profits.

“It’s a price war,” said Hy Freedman, marketing vice president for Sanwa Foods. Ramen products have become a cheap commodity instead of a high priced convenience food, says Freedman.

“It’s a penny business,” Freedman said of noodle profits. “You need tremendous volume.”

Thin profit margins leave little room for any large-scale advertising. Nissin spends more than other noodle makers--up to $2.5 million a year. But what is really needed, say Nissin executives, is a $4-million campaign. The additional expenditures, however, could easily erase company profits.

Campbell Readies Product

The lack of advertising may explain why some grocers give more shelf space to traditional dry soups--which account for only 30% of total sales--than to instant Oriental noodles. “Grocers are awed by the advertising and the power of such companies as Lipton and Campbell,” Freedman said.

Campbell Soup itself is about a month away from testing its own instant Oriental noodle product. “Our basic strategy is that we (have) to be in every aspect of the soup business,” Campbell spokesman David Hackney said. “We can’t write that off,” said Hackney of Oriental noodles, which account for up to 9% of the $2.2 billion in annual soup sales.

But the noodle makers are not afraid. “I don’t think there is an American company that would be able to compete on the same level as the (Asians),” Morton said. “They would not be able to produce as efficiently and maintain the low profit margins Asian companies are used to.”

Lipton introduced a ramen cup product in 1983 but withdrew it from shelves after an unsuccessful two-year market test. “It’s a different bean for them,” Johns said. “They never made it.”

In fact, the established Oriental noodle makers expect the advertising for Campbell’s product will boost sales for all the companies.

Products Aimed at Latinos

Meanwhile, the Asian noodle makers are trying to find ways to boost their own sales. Nissin, for example, is looking to acquire other companies in the food business, perhaps a pasta maker.

Sanwa foods has introduced instant macaroni and cheese in its own cup as well as products aimed at Latinos. “We have to diversify because of the competitive situation of the regular ramen product,” Freedman said. “There is just no real profit growth in the ramen business.”

Still, the companies are not about to abandon the instant noodle business. Sales are expected to increase at their current pace, and noodle makers are waiting for competitors to drop out--allowing prices and profits to increase.

“It’s definitely an American staple,” said Morton of ramen noodles. “We feel it’s as American as a hot dog.”