Hubei snack food makers shrug off small impact

Major snack food retailers in Wuhan, Hubei province, the hardest-hit area in the COVID-19 epidemic in China, have come back to life. They said the impact of the epidemic on their sales is limited and they remain bullish on the long-term prospects of the industry.

Wuhan-headquartered Bestore Food Co Ltd, which generates most of its sales selling meat snacks, nuts, candies and pastries, saw its suppliers in Hubei resume production on March 23.

The snack maker has adopted the OEM, or original equipment manufacturer model, and it has more than 200 suppliers nationwide.

The firm makes vegetarian and meat products in Jingzhou, has rice wine production lines in Xiaogan and puffed food lines in Wuhan. Its plants outside Hubei have fully resumed production, and their capacity has exceeded 90 percent of the total, it said.

It posted 6,500 new job openings, which are equal to two-thirds of its current total employees. The company said it would not cut salaries or benefits for the new jobs compared with the pre-epidemic period.

The jobs include some high-end positions that aim to recruit top food researchers globally. The annual income of those jobs each will exceed 1 million yuan ($141,600).

"Currently, the R&D centers of most domestic food enterprises are located in Shanghai. In fact, Wuhan owns a large number of top colleges and science institutions, and there are major food makers such as Bestore and fast food chain Zhouheiya," said Bestore vice-president Zhao Gang.

"We would like to attract more talent and build Wuhan into an important food development base globally. The epidemic's impact on the company is limited. It mainly affected sales in Hubei province. We are still quite confident of the operational goals this year and we will open more stores and logistics centers across the country," he said.

In late February, Bestore became the first company to launch an online IPO on the Shanghai Stock Exchange. Shares of the company have surged more than five times above its IPO price in a month.

Due to the contagion and suspension of production in February, a group of domestic enterprises has suffered some losses.

A report by China International Intellectech Co Ltd said 24 percent of companies nationwide have reduced hiring quotas. Some 11 percent of firms have laid off staff.

Separately, another Wuhan-based snack food chain, Zhouheiya International Holdings Co Ltd, closed its Wuhan factory in late January following the lockdown of the city. Its Wuhan factory has just resumed production.

The company is a supplier of cooked and marinated duck meat products, marinated vegetables and other by-products, using vacuum packaging.

It has two other factories in Cangzhou, Hebei province, and Dongguan, Guangdong province. Another two plants are under constructions.

The Hong Kong-listed company built its name on its special taste and seasonings. In early February, the brand closed most of its stores in the wake of the epidemic.

It has resumed business operations of more than 700 direct-sale stores among a total of about 1,300 nationwide, the company said.

In 2020, the total revenue of the snack food market is expected to reach 2 trillion yuan, according to the China Food Industry Association.

"The demand for healthy, high-quality and safe snack foods in China will continue to increase. Compared with Europe, the United States, Japan and South Korea, the per capita consumption volume and spending on snack foods in China is still relatively low, and the market has considerable growth potential," said Neil Wang, president of Frost& Sullivan in China.