Japanese food company and instant noodle giant Nissin Food Products Co has reported double-digit growth in its revenues in mainland China and Hong Kong for the first quarter of the year. The surge in demand for its popular instant noodle products grew during the first three months of the year as people in China were forced to stay at home to mitigate the spread of the coronavirus pandemic.
In its exchange filing on Monday, the company's Hong Kong-based Chinese unit reported an 11.1 percent surge in revenues to HK$385.4 million for the quarter. It mentioned in the filing that customers in Hong Kong managed to buy out almost all of its stocks in major supermarkets as demand for cheap and convenient food items increased over the quarantine period.
In mainland China, the dramatic increase in sales of the company's cup noodles pushed total revenues for the quarter to HK$526.2 million. This represented a 10.3 percent increase when compared to the figures reported over the same period last year. The surge in its sales managed to offset the fall in profit margins of 0.8 percent due to the rise in the costs of raw materials. Total gross profits for Nissin's Chinese unit had surged by more than 7.9 percent to HK$284.2 million year-on-year.
The strong performance of its Chinese unit pushed the operating profits of its parent firm Nissin Food Holdings (Nissin Japan) by more than 26.6 percent. Total revenues for the controlling shareholder also increased more than 3.9 percent thanks to the surge in sales volumes in mainland China and Hong Kong.
In Hong Kong, Nissin holds more than 60 percent of the instant noodle market share. In mainland China, the company's products are the third most popular brand, particularly in southern China and its surrounding provinces. Nissin mentioned in the exchange filing that it had recorded a massive surge in sales volumes for its cup-type noodles, particularly in its Cup Noodles and Demae Iccho brands.
Nissin entered the Chinese market back in the early 1990s. The company was quick to expand its operations in the region, establishing several facilities, including its latest packaging center in Zhuhai city. In recent years, Nissin had reported a drop in market share as customers shifted to healthier food options such as direct food deliveries and organic food items.
Analysts have pointed out that the demand for instant noodles during the coronavirus pandemic may be temporary. Consumers will likely return to much healthier options once the crisis is over. Nissin and other companies like it will need to rapidly adapt to their consumers' evolving needs if they want to sustain long-term growth.
