Major Chinese dairy operators, including the country's largest player China Mengniu Dairy Co Ltd, have raised the prices of some of their products, citing higher raw material costs, even as the industry struggles to restore consumer confidence after a series of scandals.
Some analysts said the price hikes could further delay a recovery in the country's dairy industry which was shaken again in December by a milk scandal at Mengniu, while others said it could fuel competition in the sector. "It may not be a good thing for Mengniu as it may lose market share to competitors in the short run, but its prospects remain promising in the long run," said Conita Hung, head of equity research at Delta Asia Financial Group.
Mengniu said the increase, the size of which it did not reveal, took effect at the start of the year, while a spokesman at Beijing Sanyuan Foods Co Ltd said it had hiked prices by 0.10-0.20 yuan to compensate for rising raw material, labour and logistics costs.
The Southern Metropolis Daily newspaper reported on Wednesday that Inner Mongolia Yili Industrial Group Co Ltd had also raised prices. Yili officials were not immediately available for comment. Mengniu, which produces milk, ice-cream and yogurt, said last month it had destroyed products found by a government quality watchdog to contain a cancer-causing substance called aflatoxin. The company lost about a quarter of its market value in a single day after the scandal was revealed.