(Yicai Global) Feb. 17 -- Two Chinese instant noodle giants Uni-President China Holdings and Tingyi Cayman Islands Holding have told Yicai Global that they will not be raising their prices despite the surging cost of palm oil and flour and stiff competition from other instant food sectors.

Distributing channels have not yet been notified of a price increase, Yicai Global learned after visiting supermarkets in Beijing and Shanghai. Earlier rumors had been circulating of an imminent price hike.

The price of palm oil jumped 30 percent last year, and that of flour also gained, the head of a large food company told Yicai Global. Large companies can smooth out the price increases through long-term contracts but smaller firms will see ingredient costs climb by about 15 percent.

It will not be a surprise if prices are raised, several industry insiders said. Japan’s Nissin Foods Holdings and China’s Chen Ke Ming Food Manufacturing had earlier said they will increase the price of their noodles. The industry should upgrade their products to expand their footprint in the high-end market so as to improve profitability.

Takeaways, frozen foods, ready meals and self-heating food, which can be warmed up anytime, anywhere, are taking a growing slice of the instant food market. The self-heating market was worth CNY7.1 billion (USD1.1 billion) in 2020, and has a five-year compound growth rate of 97.3 percent.

The booming take-out industry in China is bound to squeeze instant noodles’ share of the market, Chen Chuanglian, professor at Guangzhou’s Jinan University, told Yicai Global. It is inevitable that pot noodle firms will see a decline in sales and profits. Hiking prices will help make up for the dwindling profits, he added.

Tianjin-based Tingyi’s profit from instant noodle sales tumbled 47.1 percent in the first half of last year from the same period the previous year to CNY900 million (USD142 million), while revenue fell 14.7 percent to CNY12.7 billion (USD2 billion). Uni-President’s instant noodle sales dropped 15.5 percent to CNY4.4 billion, and its gross profit margin for its food business, over 90 percent of which are instant noodles, slid to 26.6 percent from 32 percent.

Editor: Kim Taylor