(Yicai Global) April 22 -- Danone and Nestlé have weathered the recent Covid-19 outbreaks in China well and the impact on their business was not significant, according to the food giants' first-quarter financial reports.

Nestlé’s China business logged a 7.6 percent jump in revenue in the three months ended March 31 from the same period last year to CHF1.4 billion (USD1.4 billion), according to the Swiss food conglomerate’s latest financial report released on April 20. Global revenue saw the same rate of increase to CHF22.2 billion (USD23.2 billion). Price-driven growth was -0.5 percent in China, equivalent to what the market refers to as ‘no price hikes.'

France’s Danone achieved double-digit growth in China’s infant formula market, according to the earnings report released on April 21. Its worldwide sales soared 7.1 percent in the first quarter year on year to EUR6.2 billion (USD6.7 billion). In China, price increases contributed 2.1 percent to overall growth and sales expansion 13.2 percent.

Large companies can offset the rising cost of ingredients caused by the pandemic through economy of scale buying and their wider network, food industry analyst Zhu Danpeng told Yicai Global. But this further squeezes smaller firms, which cannot easily absorb the price increases, and cements their dominance in the industry.

Many Chinese food producers have hiked their prices since the beginning of the year. The cost of flour and palm oil surged as much as 20 percent last year and this year raw material prices are expected to see similar increases, company insiders told Yicai Global.

Editor: Kim Taylor