Caravan bumps up prices to counter raw material costs
products to cope with rising raw material costs across the food
industry.
The manufacturer and supplier of bakery and food ingredients, specialty chemicals, polymer additives and blending equipment said the increases will take effect on March 1 2008. "As industry professionals know, the cost of raw materials has skyrocketed in recent months," said Ian Trood, vice president of sales. "Over the last year flour has almost doubled, while items such as eggs have nearly tripled. These increases have been driving our costs to record levels." The size of the increase will depend on specific product formulations. Typical increases will be about 10 percent. The reason for the rising cost of raw materials has been cited as poor weather affecting crops, high prices of oil (up to $100 per barrel) and the increasing demand for biofuels. Food companies have battled to maintain margins throughout 2007 in these conditions, and manufacturers have had to decide whether to swallow the increase of costs themselves, or whether to pass it on to their customers. Trood added: "At Caravan Ingredients, we understand the impact rising costs will have on our customers. Unfortunately, this unprecedented economic climate has left us with no choice. To ensure we are able to maintain the quality of our products, we must pass on these cost increases." The US Department of Agriculture predicted in December that high raw material costs will continue well into 2008. Price increases have been seen across at every stage across the food industry. Alginate supplier International Specialty Products (ISP) announced it was to increase its prices last November by 10-15 percent as it felt the pinch of higher raw material and energy costs. Other ingredients firms to announce price increases n recent months include DSM, Jungbunzlauer and Purac, which has increased the costs of ingredients like lactic acid for the third time this year. Earlier this month, FoodNavigator-USA.com reported that financial results released by food giants Kraft and Kellogg showed a drop in earnings on the back of the mounting costs for raw ingredients. Last month, confectionery firm Hershey announced an average wholesale price increase of 3 per cent across the US, as the company moved to improve on the disastrous profit loss of 65 percent posted for the fourth quarter. Premier Foods and Sara Lee also pushed up prices.
