(Yicai Global) March 10 -- Guiyang Nanming Laoganma Food, maker of one of China’s best-loved hot and spicy sauces, has raised its wholesale prices to offset soaring ingredient costs, but so far the price hike has not been transferred to the customer, The Paper reported.

Laoganma, which holds around 20 percent of the market, has raised the price of a box of 24 bottles of chilli sauce by CNY18 (USD2.85), according to a dealer in Guangzhou, southern Guangdong province who was informed on March 1.

“The price has gone up by CNY30 (USD4.75) a box to CNY211 and is a bit much,” a dealer in Yiwu, eastern Zhejiang province said.

So far, consumers are not feeling the pinch and a bottle of the beloved hot and spicy sauce on e-commerce sites Tmall and JD.com still cost CNY9.90 (USD1.50) yesterday.

“Laoganma, which means ‘Old Grandmother,’ has kept its prices low for years to maintain its market share,” said Zhu Danpeng, a food industry analyst. But the unrelenting surge in the price of basic ingredients, such as chilli peppers, and increased labor costs are squeezing its margins.

China’s consumer inflation has remained lower than in many overseas countries, despite the surge in the price of a lot of raw materials, largely due to a 10 percent appreciation against the US dollar which has helped to offset some of the upward pressure from imported consumer goods, said Teng Tai, dean of Wanbo New Economy Research Institute. Stiff competition between businesses has also helped keep prices low.

However, this period of low inflation is likely to only last the first six months of the year, after which price rises will eventually be transmitted to the customer, Teng said.

The uptick in price is unlikely to dent the Guiyang, southwestern Guizhou province-based company's popularity. Its products can be found in over 80 countries and regions around the world and are even considered high fashion. In 2018 a designer hoody featuring a portrait of founder Tao Huabi, known as the ‘hottest woman in China,’ made its way down the catwalk during New York Fashion Week. The only way to own this prized object was to purchase 99 bottles of Laoganma sauces, worth CNY1,288 (USD182) at the time.

Editor: Kim Taylor