Full weight of new sugar price yet to be felt

Press, 9 April 1980, Page 2

Full weight of new sugar price yet to be felt

The price of beer, soft drinks, biscuits, confectionery and canned fruit will rise over the next two months after a 30 per cent increase in the price of sugar, announced on Monday.

• 'Sugar will rise from • 57c to 74c a kilogram.

< ■ The rise applies only to new stock, and sugar was available at the old price yesterday while stocks lasted. Christchurch supermarkets reported a rush on sugar stocks yesterday and many had sold out by noon. Customers were restricted to one three-kilogram bag a person at some shops after people bought, in bulk; in one case, 12 bags were bought at once. The president of the Canterbury Grocers’ Association (Mr M. Dench) said the sugar price rise surprised the trade, although there had been some warning of the 22 per cent butter price increase.

Mr Dench said half the products sold by grocers wduld havef some butter or sugar content. There would probably be some initial customer resistance to the price rises, but butter and sugar were basic items for consumers.

held less sugar than was normal because of tHe cost pf storing stock. Most outlets would have run Gilt of sugar yesterday and no new deliveries were expected for ’two days, he said. iThe sugar price rise would cost the brewing industry another SLS million a year, but this would not be passed on. until June, said the public relation^-officer of Lion Breweries D. Fitzgerald). -

iSugar, was the latest in a ligt erf recent cost increases to the industry that included other raw materials, freight, fuel, labour and bottles. ' “In spite of the costs we have tried to confine price increases to four to six

monthly periods, and this will certainly be included in the next adjustment in June,” he said.

The general manager of Southern Bottlers, Ltq, (Mr M. J. Jemison) said the company had increased, its prices last month to cover wage and freight costs. All prices would have to be increased again in the next month.

The company would probably be able to absorb part of the increase, but wholesale soft-drink prices would still rise by 10 to 15 per cent. ‘

Soft-drink makers would pay an extra $2.5 million a year because •of if the sugar price rise, and his company would have to pass on more than $350,000 a year, he said.

Sugar made up most of the ingredients, and the increased costs would have to be passed on.. This would mean that the price of a 750 ml bottle of soft drink would rise by 7c-Bc.' Confectionery and biscuit and cake makers said prices would rise by about 10 to 15 per cent in mid-May. The managing director of Ernest Adams, Ltd (Mr H. A. Adams), said it was inevitable that prices 'would reflect the cost of materials. Present stocks of sugar would probabjy last for about a month, but increases in the price of butter and dried fruit had come at the same time. . . •. The managed of Linwood Bakeries, Ltd .(Mr* D. Anthony), said prices could not be held down after all the increases in the last three weeks. In a fluctuating industry, prices? were a big factor with cakes as a luxury item.

The sugar price increase was “a bit of a shock” said the managing director of Griffin and Sons, Ltd (Mr R. L. King), yesterday. The company’s first obligation was to use up existing stocks of sugar and there

was more than a week’s supply throughout New Zealand. Once these were used up, price increases would have to follow soon.

The price rise would not make the cost of biscuits prohibitive, he said. Prices were to rise today to cover general costs. The increase had been sought some time ago and covered increased costs over the last six to eight months. The 4 per cent rise would increase the price of biscuits by 2c to 3c a packet, said the managing director of the Aulsebrooks Division of A.B. Consolidated, Ltd (Mr P. F. Brosnahan).

Monday’s butter and sugar price rises would lead to another increase of about 4c for a packet of biscuits. The price of confectionery would also rise by about 7 per cent, he said. The chairman of Wattie Industries, Ltd (Mr G. Wattie), said the price rise had just missed the fruit canning season, but would have to be nassed on eventually. The sugar price rise did not surprise the chairman of the Canterbury Sugar Develonment Society (Mr F. W. Newton). He said yesterday that the Drice would continue to rise until at least 1985.

The society, a farmer cooperative, has for some years urged that sugar h ee t be grown in Canterbury for sugar. Mr Newton described the 30 per' cent rise as “phenomenal.” But working from World . Bank commodity projections, an increase was expected.

The co-operative, in a .consortium also comprising Shell Oil and Dalgety (N.Z.), Ltd, has been negotiating to buy an established . beetsugar factory at Washington, in the United States. The factory was closed last year. The consortium is also negotiating in Britain to buy a fermentation unit which would also allow the production of alcohol ethanol, which can be used as a fuel.