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, labor 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.  

Mengniu also competes with foreign players including the world's largest food company Nestle and French foodmaker Danone in the mainland.

Last week, China's quality watchdog said it had found no further cases of milk tainted with high levels of carcinogenic mildew after testing products of major dairy producers.

"We expect Mengniu will take 4-6 months to regain sales momentum to pre-crisis levels," Alex Cheng, an analyst at ICBC Equity Research, said in a research note. 

BOCI Research has revised down Mengniu's earnings estimates by 9 percent and 2 percent for 2012 and 2013, respectively, but the broker retains a "buy" on the stock due to a promising industry outlook.  

Shares in Mengniu, were up 4 percent on Wednesday, outpacing a slight fall in the Hang Seng Index. Sanyuan's stock was down 0.4 percent, while Yili fell 2.6 percent.

China is a huge growth market for dairy as demand from a growing middle-class increases rapidly, although a big challenge is to supply high-quality brands that satisfy domestic demand.

Many Chinese consumers, especially parents of infants, buy imported milk powders due to safety fears over locally made  products, creating a favorable market for imported milk powder. In 2010, China imported over 400,000 tons of milk powder, a 60 percent increase over 2009, according to China Research and Intelligence. 

Investors in Chinese dairy companies got hit three years ago after tainted milk was blamed for the deaths of six children. Shares in Mengniu plunged 65 percent in 2008, although they have roughly doubled since then.