Mama noodle prices set to rise

Mama noodle prices set to rise
Bangkok Post (11 October 2007)

Saha Pathanapibul Plc, the consumer product distribution arm of the Saha Group, will freeze prices until the end of the year on everything except Mama, Saha's market leading instant noodle brand. President Boonchai Chokwatana said Mama instant noodle prices would rise in December for the first time in a decade, likely by one baht to six baht per 55- gramme pack.
The increase reflects the sharp rise in costs of wheat flour and palm oil, two major ingredients used for noodles. An executive at Thai President Foods Plc, the Saha unit that makes Mama noodles, said wheat flour prices were up 60% from early this year and refined palm oil prices were up 50% from January. Commodity prices have risen strongly this year due to growing demand from biofuel producers. Thai President says wheat flour and palm oil account for half of its costs. ''Basically, we have been the last [noodle producer] to raise prices. The recent increases in wheat and palm oil prices have been extraordinary. We have never seen wheat flour prices rise by 60% in just nine months,'' Mr Boonchai said. The move comes even as the Commerce Ministry next week will meet with more than 100 consumer goods manufacturers and retailers seeking co-operation to maintain prices for some 200 key products. Mr Boonchai said Saha would co-operate with the ministry, but would seek assistance in the form of tariff cuts for imported raw materials to compensate for rising costs. Production costs for detergent, another major Saha product, had also risen in recent months, he said. The Saha Group has tried to maintain profit margins by improving efficiency in logistics and inventory management. The group has joined with major companies such as the CP Group, Mitr Phol group, Siam Cement and Thai Beverage to co-operate in maximising transport utilisation on key trucking routes. Boonyarith Mahamontri, the managing director of Saha affiliate Lion Corporation (Thailand), the manufacturer of Pao detergent, said average raw material costs remained unchanged in the first nine months. But costs rose by 3% to 4% in October alone, leading the company to look to alternative materials. ''Until now, sales of Lion Corp are still far from our target of eight billion baht for the whole year. We hope to achieve the target once the general elections are held this December,'' Mr Boonyarith said. Sales of Saha Pathanapibul in the first nine months of this year grew by 7%. It reported first-half profits of 267.51 million baht on revenues of 8.04 billion, compared with 2006 profits of 369.82 million on revenues of 15.71 billion. Mr Boonchai said 2007 sales were expected to rise by 7%, below an earlier forecast of 10%, to 17.5 billion baht