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Soft-drink makers say costs are soaring
BAMRUNG AMNATCHAROENRIT & PHUSADEE ARUNMAS
Thai Namthip Ltd, the local bottler of Coke, Fanta and Sprite, yesterday criticised the Internal Trade Department for refusing to let soft-drink companies raise prices even though sugar and transport costs have soared in recent months. The state-mandated price ceiling on ex-factory prices was distorting the entire market, said Pornwut Sarasin, the vice-chairman of Thai Namthip.
''The department should allow the soft-drink market to move freely under the current market mechanism. If soft drinks are priced higher, then consumers will decide for themselves whether to buy or not,'' he added.
Soft-drink companies saw their production costs surge because of the impact of higher oil and sugar prices.
''What the department should do is to play a major role in monitoring fair trade among operators in the market rather than making a market intervention,'' Mr Pornwut said.
However, Yanyong Phuangrach, the director-general of the Internal Trade Department, said it had not yet taken into account any request from soft-drink companies to raise their prices as it was not an urgent issue.
Instead, the director-general urged producers to weigh the impact on the entire economy, particularly for inflation, if soft-drink prices were allowed to increase.
Soft drinks are currently on the Commerce Ministry's watch list, which covers 177 products. The watch list is the group of products that need close price monitoring every 14 days. Any price increase needs prior approval from the department.
Mr Pornwut said that soft-drink companies had not adjusted their prices for almost two years. The latest increase occurred when they got the green light from the department to lift the prices in 2006 on some items.
This year, producers have been meeting to ask about the possibility of a price increase, citing their surging operating costs.
But they have not reached any conclusion with the department so far. The department called for the beverage companies to make their existing production costs transparent before any decision would be made.
So far, Mr Pornwut said the company has shouldered rising operating costs from oil, raw materials such as cans and glass, and transport.
For example, sugar prices have risen 38%, he said. Sugar is one of the core ingredients for carbonated drinks.
However, the product prices of the company remain unchanged. Also, it has no plan yet to revise its business strategy, but is closely watching the situation.
''We will try hard to solve our problems point-by-point and cut budgets, which doesn't generate any income,'' Mr Pornwut said.
He said the company did not want to increase prices because it wanted its products to be as cheap as possible in order to boost volumes.
Small companies would find it harder to operate in this environment, he said, while big corporations could make changes in business strategy.
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