Who is King: The Consumer or the Company?

10 January 2014 04:51 am - 0 - {{hitsCtrl.values.hits}}

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A severe milk powder shortage was reported during the past few days with consumers complaining that some of the vendors were hoarding large stocks of milk powder anticipating a price hike so that they could be sold at a higher price.

Many well-known brands in the market are in short supply with the workers at the Milco factory launching a strike demanding the removal of a Company Director. It is questionable whether these companies expect to create a marketing wonder.

The Daily Mirror discovered that in fact some of the stocks which arrived at the port of Colombo have not been released. An official from the Consumer Affairs Authority (CAA) who wished to remain anonymous said that except for one milk company, the other companies in Sri Lanka have requested for a price hike. The CAA is yet at an uncertain position whether to render a price hike.

According to this official there are a few reasons which pertain to the shortage of milk powder in the market. He said one of the major suppliers (Fonterra) has reduced the number of milk powder packets being sent to Sri Lanka. Also since there is inspection required for DCD, it takes more time to release stocks to the market.
Also he said a shortage of milk powder arises as most of the consumers have their own particular brand since there is a limited number they would stock. Therefore that itself has worsened the issue.

The Daily Mirror also learned that many health professionals have made requests to discourage milk powder usage as it did not have much nutrition compared to fresh milk.

Meanwhile, the Daily Mirror contacted a few Milk Powder companies to get their views regarding the shortage and requests for a price hike.

Bandula Egodage, Vice President of Corporate Affairs of Nestle Lanka, spoke to the Daily Mirror with regard to their position in the current shortage of milk powder and price hike. It was revealed that Nestle Lanka was the only company which has not requested for a price hike.

Egodage said they need not request a price hike at the moment.

“We need not have a price hike at the moment. We must look into the reasons for other companies to request a price hike. The other companies are multinational companies. Although ours is also a multinational company, the milk powder operation here is hundred per cent local. We collect fresh milk from all over the country and the production happens here. The companies requested a price hike due to market fluctuation,” he said.

As Egodage points out Nestle holds sixteen per cent of the market share. He said they have not stopped supplying milk powder or reduced manufacturing.
“There is no reason for us to halt the supply or the manufacturing. We are continuing with our work. We believe the consumer is the king and what is needed to be provided to the market is what the consumer needs, and the capacity to purchase,” he said.

He said there should not be a mafia in deciding the prices. However, he said Nestle might consider price hikes if any other circumstances made it necessary.
“We might have to increase our prices if there is a hike in electricity. But under the present circumstances we need not. However, I must say that we should not encourage the surrounding mafia in deciding prices,” he said.

The General Manager of Milco (Pvt) Limited, P.I.O. Fernando said they suspected some companies who requested for a price hike were behind the recent strike which took place.

“There was a strike for ten days. But the demands which the workers put forward were considered by the company. It is in fact questionable why they had to do so when the demands were already met. We suspect that some of the companies that have requested for a price hike are behind this. They seem to have created an issue to get attention to their demands,” he said.

Fernando said Milco has only eight per cent of the market share. That is not sufficient to meet the demands of the customers. He said that as a local manufacturer they relied on the fresh milk delivered by the suppliers.

‘We try to produce milk for the market as much as possible,” he said.

Despite several attempts to contact officials from Fonterra and Maliban Milk products Pvt. Ltd., the Daily Mirror was unable to get a comment.

(Pix by Waruna Wanniarachchi)

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Who is King: The Consumer or the Company?

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