Nestle to raise prices of selected dairy products

KUALA LUMPUR: Nestle (M) Bhd, a unit of the world's biggest food company, plans to increase prices of some of its dairy products by as early as next month, people fami-liar with the matter said yesterday.


Business Times understands that the price increase could be bet-ween 10 per cent and 30 per cent.

An official familiar with Nestle's operations here, speaking on condition of anonymity, confirmed that the company is studying options of a price increase, but was unaware of the quantum involved.

Nestle's corporate affairs manager Zamira Yasmin said Nestle will always avoid passing cost increases to consumers unless absolutely necessary.

"Nestle evaluates closely the development of the global milk pricing and evaluate our pricing accordingly," she said in an email reply.

It is learnt that the rationale for the increase in cost is because of the floods in Thailand, which have drastically increased the cost of raw materials, production and transport.

Nestle (Thai) Ltd has vast production capacity for milk and coffee products as well as the processing of the Purina pet food.

Industry players say a price increase by Nestle will surely be followed by rivals such as Fraser & Neave Holdings Bhd, which has shut down its factory operations in Thailand for the time being due to the severity of the floods.

F&N is the largest canned milk producer in Southeast Asia.

Nestle is 72.61 per cent owned by Switzerland's Nestle S.A. The other major stakeholders in the Malaysian unit are the Employees Provident Fund with a 7.65 per cent stake and Great Eastern Life Assurance (M) Bhd with a 2.21 per cent stake.

The company posted sales of RM4.02 billion in the financial year ended December 31 2010, alongside a net profit of RM391.40 million.