Milk price increase may reduce sales

Press, 30 December 1976, Page 1

Milk price increase may reduce sales

Milk sales were likely to fall further as a result of the price increase of a cent ' a bottle from February, ■ said a spokesman for one ' of the two milk treatment ■ stations in Christchurch. The rise puts the price j of a 600 ml (one pint) i bottle at nine cents. The I last increase in the standard milk price was in Dej cember, 1975, when the price doubled from four cents to eight cents. The treatment-station spokesman said there had been a steady decline in sales, which are down about 8 per cent on this time last year. Sales had increased during the year by about 24 per cent, but the decline had begun after the removal of the subsidy by the Government in February this year. Consumers were using milk more thriftily, he thought, and with the increase in the packet of tokens from Si to $2, there

had been a fall in sales from the vendors, and a slight increase in the amount of milk sold by dairies.

Although the price of cream had been increased about six months before the increase in milk prices, sales of cream were increasing.

It had been interesting to see a small fall in sales of milk after the prices of bread and other household foods had risen, said the spokesman. This indicated that households had only a limited amount to spend on food, he said. The fall in sales also affected vendors’ margins, said the spokesman. The smaller throughput caused vendors to seek an increase in their margins, and this was handed on to the consumer in a price increase.

The cost of milkshakes was not likely to rise after the increase took effect,

according to Mr S. Williams, the chairman of the Canterbury branch of the Restaurant and Allied Trades’ Association.

He said that that assumption depended on other prices which could change before February 1. Milkshakes, he said, usually contained about half or a third of a pint of milk, “not enough to cause an increase.” Any cost increases to the retailer would probably be passed on to other larger items sold by the dairy owner, said Mr Williams. Announcing the increase, the Minister of Agriculture (Mr Maclntyre) said there had been recent substantial increases in the operating costs of the town milk scheme and the rise would meet these.

“The price of milk in New Zealand will still be very low by world standards and the subsidy at this stage is about $35 million for this financial year,” he said. In districts where the milk price is higher than the standard price because of distribution costs, the one cent increase will still apply. A spokesman for Mr Maclntyre said later that the February increase would save about $7 million, allowing the subsidy to remain at the present level.

When the new price took effect, the spokesman said, the tokens would be withdrawn from circulation and replaced by new nine cent tokens.

Existing tokens would, however, be redeemable.