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December 17, 2009

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Nestle set to raise price of milk powder

NESTLE SA, the world's largest food company, plans to raise the price of some milk powders by 5 to 10 percent in China next year, a move that may be copied by other dairy companies.

Nestle said the price increase was due mainly to rising costs for raw milk on the international market.

From January 1, the 400-gram Nestle Hi-Calcium milk powder will be sold between 33.70 yuan (US$4.94) and 39.10 yuan in stores in Shanghai, up from the current range of 30.60 yuan to 35.50 yuan.

The price of the 185-gram Nestle Eagle Brand full cream sweetened condensed milk will also go up to as much as 9.30 yuan compared to the existing maximum price of 8.80 yuan.

Nestle said five products will be affected by the price increase, and they account for a small proportion of its overall milk products range.

The Swiss firm noted prices of some core raw materials have risen and it also faced high inventory costs.

Dairy expert Wang Dingmian said the price of imported raw milk powder has risen from 22,000 yuan per ton in August to 32,000 yuan per ton by last month.

He told reporters that other factors should also be taken in consideration, for example the "cost for packaging, transport are also driving forces."

Officials from Bright Dairy & Food Co Ltd said the company is considering a price increase to pass on the additional costs to consumers.

Other dairy makers including Dumex, Mead Johnson and domestic brand Mengniu have yet to announce any price increase at local supermarkets.

Prices of domestic milk powders have risen twice this year.


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