Price of packaged milk increased by Rs10 per litre

Retail markets incorporating the increase, challenges for companies to continue

KARACHI: In the midst of a challenge to increase sales, packaged milk marketing firms seemed to have made their task even more challenging after increasing prices by Rs10 per litre.

With social media targeting these products over claims of adulteration and loose milk providing intense competition, company officials say the decision was “not an easy one”.

“Packaged [UHT] milk price has gone up by Rs10 to Rs130 per litre in retail. The increase is simply the pass-on of the price-hike made by multinational companies and nothing else,” Karachi Retail Grocers Group General Secretary Fareed Qurashi confirmed to The Express Tribune on Tuesday.



“Nestle and Engro announced the increase in their prices on July 7. The retail markets are gradually incorporating the price-hike with induction of new supplies,” Qurashi said.

An Engro Foods’ official said it was not an easy decision to increase the price at this point of time - midway during the revival in sales.

“The industry’s sales had dropped by almost 30% after courts admitted a case against alleged adulteration in packaged milk months ago,” he said, adding that investigations later found the allegations to be false and based on misconceptions.

“We highlight here that Supreme Court conducted legal proceedings against some packaged milk brands for milk adulteration,” the company announced in a notice to the Pakistan Stock Exchange in April. “However, the Pakistan Council of Scientific and Industrial Research (PCSIR) termed six UHT milk brands fit for human health in January 2017.

“We believe the incident must have made consumers sceptical towards the use of packaged milk, thus further putting pressure on sales,” the announcement concluded.

The drop in sales and surge in cost of doing business over a lengthy period “have washed out all the profit margins,” the official disclosed, adding that a price hike was necessary under the conditions.



An official from Nestle Foods Pakistan said the last price increase was made in April of 2014, adding that the current increase was to adjust for inflation. She, however, refuted claims of decreasing sales in recent months due to legal proceedings.

“The court had given us a clean chit and our sales remained unaffected,” she replied to a question.

Other industry officials added they did not increase prices in the last fiscal year when the federal government imposed a 17% sales tax in the budget for FY2016-17. The industry had also absorbed the pressure then, they said.

Unlike many other regional countries, packaged milk industry has seen slower growth in Pakistan. The share of packaged milk stands below 10%.

Considering the country’s burgeoning population and considerable milk production, industry officials believe the market share should be between 15% and 20%.

They believe the price difference (packaged milk is 30%-40% expensive) between packaged milk and loose milk is a major reason for the low popularity and demand of the former.

“Moreover, the imposition of sales tax has dented the growth of the packaged milk industry because it further widened the gap in prices of UHT treated and loose milk,” industry insiders said.

Published in The Express Tribune, July 19^th, 2017.

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