Instant noodle specialist Nissin Foods reported double-digit growth in revenue in Hong Kong and mainland China as people staying home during the coronavirus crisis stocked up on cheap, convenient foods.
The Hong Kong-based branch of the namesake Japanese food maker saw revenue climb 11.1 per cent to HK$358.4 million in the first quarter as people stripped supermarket shelves of dry, quick-to-prepare foods to ride out the pandemic, Nissin said in an exchange filing on Monday.
Revenue in China gained 10.3 per cent year on year to HK$526.2 million as sales of cup-noodles surged. The Hong Kong-listed company’s gross profit gained 7.9 per cent to HK$284.2 million from a year ago, with higher sales offsetting a fall in profit margin of 0.8 per cent as the costs of raw materials increased.
The company’s controlling shareholder, Nissin Foods Holdings (Nissin Japan), saw its operating profit surge 26.6 per cent while revenue crept up 3.9 per cent as sales volumes soared in mainland China and Hong Kong.
“In the wake of coronavirus disease (Covid-19), the stay-at-home economy during the period has seen higher demand for premium instant noodles,” Nissin Foods said in the exchange filing. “In this environment, sales increased year on year thanks to strong volume of cup-type noodles in mainland China and bag-type noodles in Hong Kong, mainly in the Cup Noodles brand and Demae Iccho brand.” Nissin enjoys more than 60 per cent of the instant noodle market in Hong Kong, and is the third most popular brand in several provinces in southern China, according to Sinolink Securities.
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It first entered mainland China in the early 1990s and has expanded its operations in the region in recent years. Last year it invested in a packaging company in Zhuhai city.
The instant food segment had been losing market share in recent years as consumers increasingly turned to food delivery companies as a more healthy alternative.
“Since 2017, the instant noodles industry has been recovering as subsidies and promotions of the food delivery operators has decreased,” Sinolink said in a report earlier this month.
But industry analysts have noted the growth of instant noodles during Covid-19 may well be temporary. A perceived lack of innovation and ability to adapt to consumers’ fast-changing needs could weigh on long-term growth.
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