August 8, 2011

Almarai decreases milk prices

Almarai Dairy Company, Saudi Arabia's biggest food producer, has been coerced to decrease its milk prices following consumers' protest over an unfounded raise.

Almarai early last month raised the price of a two-litre bottle of fresh milk by 14%, from SAR7-8 (US$1.88-2.15), saying production costs have jumped because of the rising price of raw materials such as feedstock, which has gone up by 40-60% in the past year.

The price of packaging material has also gone up by about 30%, it said, in addition to the higher wages for workers, and higher maintenance and operation fees.

Attempting to cool down consumers' anger, the ministry of commerce forced all dairy companies to immediately revoke the price increase, or face penalties.

Almarai announced its compliance with the ministry of commerce and industry resolution, which warned dairy companies they could be penalised for arbitrarily increasing prices of fresh milk and laban packs.

"In compliance with the resolution issued by the ministry, Almarai is taking the price of its two-litre fresh milk and laban pack sizes in the kingdom of Saudi Arabia to the level that prevailed with immediate effect," the company said on Wednesday (Aug 3).

"However, Almarai believes that the rationale and justification for the price increase is still valid.

"We will continue to work with the relevant government authorities to address this issue."