Sweet and sour problem

Pastry and other dessert-makers are trying to work out methods to deal with the rising cost of sugar without increasing the prices of their products.

Somnuk Pleangsuriyakarn, deputy general manager of URC (Thailand), which produces Lausanne and Tivoli wafers and Dynamite candy, said the price hike of sugar by Bt5.35 per kilogram last month added 4 per cent to the cost of the company's production.

The price of white sugar at the factory door earlier jumped to Bt2,033 per 100-kg pack, up from Bt1,498 previously.

The cost of other raw materials, such as wheat flour and milk, have already gone up.

 "The price of the candy is Bt1 per two candies and the price of the wafer is between Bt2 and Bt5 per wafer. Their prices have never increased over the past 10 years. If one day we increase the candy price to Bt1 per unit, who will buy it?" Somnuk said.

 He added that the company was waiting to see if other wafer-makers would increase their prices. If they do so, his company will follow suit.

 The company is also working out a plan to see what it can do if the prices of raw materials go up even higher. One possible option is to reduce the product size instead of increasing prices.

 The company is also carrying out a cost-reduction programme, including a cut in the marketing budget of between 1 and 2 per cent this year. Its marketing budget accounts for 8 to 10 per cent of the sales value.

 Pornpimol Kaewsri-ngam, managing director of Akachai Salee Suphan, a well-known cake and desserts producer in Suphan Buri province, said the rising sugar cost added between 3 per cent and 4 per cent to the company's dessert production cost.  Like URC, her company is trying not to increase the product price.

 Early this year the company increased the price of its Salee dessert by Bt5 to Bt35 per package, in line with the rising price of the wheat flour to Bt800 per sack from Bt500. Wheat flour is a key ingredient in making the Salee dessert.

 If the company adjusted the product price again, nobody would buy it, she added.

 "We've experienced rising oil prices and rising labour costs. The minimum wage in Suphan Buri province has been adjusted to Bt154 per day, from Bt149. Moreover, the price of eggs went up to Bt2.50 per egg at the present from Bt1.50. Then the sugar cost went up," she said.

 Executives at other candy and dessert companies - including Thailotte, European Food and Cadbury Adams (Thailand) - all said they were trying to deal with the rising sugar price with increasing product prices as a last resort.