(Yicai Global) Feb. 16 -- China’s top three producers of braised meat, offal, and other off-cuts predicted sharp drops in net profit for last year because of the impact of Covid-19 and higher raw material prices.

Zhou Hei Ya International Holdings expects net profit to have shrunk by more than 90 percent to CNY20 million (USD2.9 million) in 2022, the Wuhan-based company warned on Feb. 13.

Net profit at Jiangxi Huangshanghuang Group Food likely fell 72 percent to 79 percent to between CNY30 million and CNY40 million last year, it said on Jan. 31. The Nanchang-based firm also expects to have had a lower store count for the first time.

Changsha-based Juewei Food said on Jan. 30 that its annual net profit probably dropped 74 percent to 78 percent to between CNY220 million and CNY260 million (USD32.1 million and USD37.9 million).

The three companies blamed rising raw material prices and a drop in footfall at stores, due to the Covid-19 pandemic, and the closure of some outlets for the lower earnings. Emerging brands also intensified the competition in the market.

To tackle rising costs, Juewei Food tried to hike its prices by 5 percent in early 2022 and between 7 percent and 10 percent in July. But the move did not boost the firm’s profit.

Some consumers complained that braised products made with duck meat were not worth the money as they cost more than beef. High prices deterred many other price-sensitive consumers as braised foods are not a must-have item in China.

The big three Chinese makers still need to optimize their physical store structure, supply chain, and management systems to reverse the performance decline as the market will gradually recover with the easing of Covid-19, said Wen Zhihong, a chain management industry expert and general manager at a Beijing-based consulting firm.

Editors: Shi Yi, Futura Costaglione