Instant noodle staple now set for a round of price increases

Prices for instant noodles, the most popular convenience food in China, will increase nationwide due to dramatic increases in the cost of raw materials and product improvement.

Sources from the World Instant Noodle Association China Branch said that prices will rise beginning tomorrow at an average rate of about 20 percent, with the highest hike to be around 40 percent.

A Beijing Times report said prices of high-end instant noodles processed by overseas companies, such as Master Kong from Ting Hsin International Group and President made by Uni-president Enterprises Corp, have already climbed from last month, and Thursday's price increase will mainly come in medium- and lower-cost products from local producers.

Meng Suhe, director with the external affairs department of the World Instant Noodle Association China Branch, attributes the price surge to increased costs over last year for ingredients including flour, palm oil and seasonings.

The wholesale price of palm oil was 4,200 yuan a ton on average last year. The cost has jumped to around 8,000 yuan a ton currently. Flour was priced at 2.04 yuan a kg in 2006 and is now pegged at 2.16 yuan a kg .

Industry insiders said that 18 percent of instant noodle's costs are from palm oil and 30 percent come from flour.

"The overall price hikes are an effort by enterprises to save their lives, as many instant noodle producers, especially economical product processors, have not made any profit since the middle of last year," said Meng.

She also attributed the price surge to product improvement to meet consumer demand for healthier food and environmental protection. To provide non-fried noodles, organic flour and seasonings and environmentally friendly packaging, companies are increasing investment in research and development and upgrading their facilities.

A sales manager of Ting Hsin International Group, the maker of the well-known Master Kong brand of instant noodles, told China Daily that the instant noodle manufacturing costs are up by at least 16 percent since last year.

"Retail prices of some of our products increased 0.20 yuan per packet last month in key cities, which consumers feel is acceptable," said the manager, who asked to remain unnamed. "This round of price increase is necessary. Otherwise, we cannot survive under the high-cost pressures."

Wang Jianming, who purchases instant noodles in Beijing's Shouhang Supermarket, said that his favorite breakfast is still instant noodles.

"The price increase is understandable, as the price of all foodstuffs is climbing," he said.

China is the world's top consumer of instant noodles, with sales exceeding 30 billion packets last year.

(China Daily 07/25/2007 page15)