Nepal's instant noodle manufacturer CG Foods, known for its flagship Wai Wai brand, has seen a decline in revenue amid growing market competition from both domestic and international brands, according to a report by credit rating agency ICRA Nepal.

Despite holding a significant market share for years, CG Foods is now facing stiff competition, particularly in the spicy noodle segment, where consumer demand is surging. The company’s revenue from noodles, which accounted for 76% of total earnings during the first half of the current fiscal year (FY) 2024/25, has suffered due to this shift in consumer preferences.

Notably, new products like Current Noodles, produced by Yashoda Foods, and 2PM Noodles from Asian Thai Foods have gained strong traction in the spicy segment. ICRA Nepal attributes CG Foods’ revenue decline largely to the rising popularity of these alternatives. In FY 2023/24, CG’s income fell by 11%, and during the first nine months of the current fiscal year, it dropped a further 6%. The company’s operating income, which stood at over Rs 9.11 billion in FY 2022/23, declined to Rs 8.10 billion last year, and has reached only Rs 5.71 billion so far in the current fiscal year.

Meanwhile, Yashoda Foods has seen continuous growth. According to CARE Ratings, its operating income rose by 18.45% to Rs 5.87 billion in FY 2023/24 and reached Rs 5.02 billion in just the first eight months of the current fiscal year.

A legal dispute has also emerged between the two companies. CG Foods filed a lawsuit at the Patan High Court, accusing Current Noodles of copying Wai Wai's packaging design.

In response to market pressure, CG Foods has launched its own spicy noodle variant, but ICRA Nepal noted that it remains to be seen how much market share the new product can capture.

Despite the challenges, CG Foods still benefits from Nepal's high import tariffs on foreign noodles, which give domestic producers a pricing edge.

The company which has been operating in technical collaboration with Thailand’s Thai Preserved Food Factory since 1984 transitioned from a private to a public entity in 2023. Major ownership stakes are held by Nirvana Chaudhary (76%), Apollo Investment Pvt. Ltd. (20%), Varun Chaudhary (4%), and Rahul Chaudhary (0.2%).