SOARING nationwide food costs are now hitting instant-noodle makers. From Thursday, domestic manufacturers will raise prices of their cheap snacks by an average of 20 percent.
The cost of some instant noodles will rise by up to 40 percent, according to Meng Hesu, director of the Chinese branch of the World Instant Noodle Association. Most brands now cost about one yuan (13 US cents).
The pricing adjustments cover 10 major Chinese instant noodle makers, including Hebei-based Hualong Food Co, White Elephant Food Co in Henan Province and Jin Mailang Beverage (Beijing) Co Ltd.
Low-end instant noodles have a domestic market share of nearly 60 percent, Meng said.
"The whole industry is suffered from soaring ingredient costs," said Yao Lan, spokesperson from Hualong, yesterday. The company has seen its cost of raw materials rise 16.5 percent since last year.
"We have been consolidating our operation to stem losses, but sill failed to meet the balance," said Yao.
Analysts said costs across the whole food industry have increased by an average of 13 percent after prices of palm oil, an ingredient that makes up 18 percent of the cost of instant noodle production, nearly doubled. It now costs 8,000 yuan per ton but cost 4,200 yuan per ton last year.
Flour prices are 2.16 yuan per kilogram, a jump of 0.12 yuan from last year.
A handful of foreign investors such as Taiwan-based Uni-President Enterprises Corp and Ting Hsin International Group raised prices in June on their dearer products.
Wul I-Ting, president of Uni-President China's food business, said sales were not affected since it raised product prices by 20 percent, or 0.20 yuan.
"Low-end instant noodle makers are more cautious in rising prices as most of their consumers are more price conscious," said Duan Fugen, secretary general of the Shanghai Restaurants Association. "But they also suffer most with their low profit margins."
China makes 51 percent of the world's instant noodles, with more than 46 billion packets produced last year. Instant noodle sales totaled nearly 30 billion yuan last year.
Rocketing food costs have already prompted restaurants and fast food chains like KFC to rise the prices of some products.