February 28, 2007

Higher euro pushes up dairy prices in Vietnam

The weakening of the Vietnamese dong against the euro has pushed up prices of dairy products in Vietnam since certain production costs are paid in euros, a dairy distributor has said. 

Nguyen Hong Uy of the US-based Abbott said in the last 12 months the Vietnam dong had lost 7 percent against the euro while most Abbott products like Similac, Gain, and Ensure were made in Europe with labour and raw material costs denominated in the local currency.

Besides, a steep inflation rate of 8 percent in Vietnam last year had also made electricity, petrol, transportation, and storage more expensive, he said.

An executive from dairy firm, Dumex Vietnam, added that a drought in Australia had reduced international raw material supply and increased prices.

This month Dumex raised prices by 10 percent.

Do Thuy Nhung, head of marketing, Dutch Lady Vietnam, said his company was also considering price adjustments.

Abbott products have already seen a rise of 10 to 15 percent in prices in Ho Chi Minh City and Hanoi though the firm announced it would not raise prices until March 1.

Uy said agents and retailers had taken advantage of the information to increase the prices in advance.

Abbott staff carried out an inspection of its agents on February 26 to check such infringements.