China's top dairy manufacturers—Mengniu, Yili and Sanyuan—recently announced price hikes of as much as 10 percent, as a result of costs inflation.
"Since last year, the prices of raw milk, packaging materials, as well as labor and logistics costs have been on the rise," said Sanyuan.
But the price increase has raised controversies given simmering worries over dairy safety in the country. In late December 2011, some pure milk products of Mengniu in Sichuan Province were found to be tainted with excessive amounts of aflatoxin, a cancer-causing toxin. The scandal dealt a blow to consumer confidence, though Mengniu immediately apologized to the public. Mengniu's sales in first-tier cities have dropped 10-20 percent due to the image crisis.
"By hiking prices, dairy firms may try to fulfill sales targets for the upcoming holiday season," said Wang Dingmian, President of the Guangdong Provincial Dairy Association. "The companies should give priority to quality, instead of profits." |