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December 19, 2009

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Bright Dairy acts over rising milk costs

BRIGHT Dairy and Food Co yesterday raised prices of certain milk products, including fresh milk, UHT milk and yogurt, in Shanghai by 1.8 percent to 3 percent.

The rise followed an announcement by international rival Nestle SA that it would be increasing prices for some of its dairy products.

Dairy companies have been encountering higher costs for raw milk, transport and energy consumption over the past few months and more companies are said to be considering similar action to maintain profits. Bright Dairy spokeswoman Gong Yanqi said costs had risen significantly and transport, in particular, had gone up 10 percent this year.

"We have optimized manufacturing to absorb the extra cost," Gong said, "but it's still not enough."

Industry analysts, including Chen Cheng of China Investment Consulting, said Bright Dairy was vulnerable to higher costs for raw milk because it focused on fresh milk products. Dairy expert Wang Dingmian said the price of imported raw milk had risen from 22,000 yuan (US$3,222) a ton in August to 32,000 yuan by last month.

On Wednesday, Nestle SA, said it planned to raise the price of some milk products by 5 to 10 percent next year.


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