Rising cost of raw materials squeezes food producers
Higher input costs affect prices, reduce demand and eat into market share
Food producers are bracing themselves for more tough trading as prices of raw materials such as maize, steel, palm oil and glucose remain elevated - and for consumers this means further price hikes are on the cards. RCL Foods, the maker of 5 Star Maize Meal, Ouma Rusks, Selati sugar, Nola and Simply Chicken; AVI, which owns brands such as Five Roses and Bakers biscuits; and Libstar, which makes Lancewood and Denny products, this week all bemoaned the increases in the cost of raw materials.Libstar CFO Charl de Villiers said the group is "seeing inflation across multiple categories. For example, milk prices have gone up 20%, packaging costs have increased and so has the cost of labour. We work with our retailer partners and other channels to plan the pricing of the items we bring to the market." He said there might be price increases, but not all costs can be passed on to clients. "There is also the ongoing need to invest in efficiency to help mitigate pricing pressures. For exa...
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