Rising costs may push up milk price

CP-Meiji says the milk industry has been suffering from a severe shortage of raw supplies for two years now, which has caused all producers to shoulder higher costs and means the company might need to raise its prices.

President Paisal Chongbanyatcharoen said yesterday that daily demand for fresh milk ran at 2,000 tonnes, but farmers can produce only 1,500 tonnes. This has driven the price from the standard Bt12.50 per litre last year to Bt13.75.

The shortage is expected to last for two more years.

The problem stems from an oversupply two years ago. Farmers were producing 2,200 to 2,700 tonnes per day and making losses, so many of them gradually stopped raising cows, which led to the current shortfall.

Paisal said the situation was likely to get worse in March and April when the hot weather reduces the supply of grass for cows to feed on and leads to less capability to produce milk. Though more farmers are raising more calves now, it will take two more years for the cattle to grow big enough to be milked.

CP-Meiji does not yet know whether the government will agree to a price hike for fresh milk but, if it looks like it will, the company will ask approval for an increase of Bt1.50 per litre.

Paisal said production costs had already jumped 30-40 per cent, due to higher prices for fuel and petrochemicals.

CP-Meiji has devised strategies to build its brand awareness and grow this year's sales by 20 per cent over last year's Bt3 billion. About 10 per cent of last year's sales came from exports, mainly to Singapore and Hong Kong.

From now, all its products will be sold under a single logo. Milk cartons and jugs and yoghurt cups have been redesigned. All of its yoghurt drinks come attached with characters from Tokyo Disneyland, as its mother company Meiji in Japan is a major sponsor of the popular family entertainment centre.

It will also launch innovative products such as cultured yoghurt, said deputy general manager for marketing Ardhit Hensuk.

The company has allocated Bt200 million as its marketing budget for this year, he said.

CP-Meiji sells four products - fresh milk, yoghurt drinks, cup yoghurt and cultured yoghurt. Its product line covers four of the nine segments in a milk market that is worth Bt30 billion.

CP-Meiji leads the fresh-milk segment with a 49-per-cent share and is second in pasteurised yoghurt beverages. It is No 3 in cultured yoghurt with 10 per cent and soft yoghurt with 13 per cent.

New yoghurt products will tout low or zero fat to appeal particularly to women.

Nitida Asawanipont

Thailand News
The Nation Thailand
Friday January 26, 2007