Cost of humble Weet-Bix set to rise

Photo / Sarah Ivey

As the cost of living continues to soar, New Zealanders are being warned our humble breakfast cereal could soon be a lot more expensive.

The price of a box of Weet-Bix could go up this year, as rising raw ingredient costs cut into the profit margins of manufacturer Sanitarium.

US firm Kellogg's, whose products include Rice Bubbles, Coco Pops, All Bran and Nutri Grain, also says its prices will be rising.

Sanitarium general manager Pierre van Heerden said costs for wheat, sugar and rice had increased.

"Commodities in general have gone up for various reasons around the world - partly because of natural disasters in Queensland, Japan and other areas and also because of China requiring a lot more food," he said.

"It does cut into margins and you've got to work through and see how long you can maintain the pricing at current levels."

Mr van Heerden said Sanitarium had absorbed rising ingredient and fuel costs, but price increases could be coming.

The company would try to keep any price increases as low as possible because consumers were being hit "from all levels, be it fuel and all the other areas".

Any percentage price increases it passed on to retailers would be in single digits.

Chicago Board of Trade wheat prices have increased 64 per cent over the past year, largely because of bad weather in large producer nations such as Canada.

Sugar was at US$600 ($768) a tonne in London this month, down slightly from a 30-year high this year.

The United Nations' Food and Agriculture Organisation said world food prices rose to near record levels in April, led by rising grain costs.

Kellogg's reported a 12 per cent fall in first quarter net income this month, partly because of higher ingredient costs, and said it was passing on the increases to consumers.

Dick Hubbard, chairman of Auckland cereal maker Hubbards, played down the impact of rising commodity costs, saying they were not having a large effect on his firm's profits.

"I've been in business for 35 years, some materials go up and some go down - it's just part of business.

"I think consumer demand and the state of the economy is probably a bigger factor."

CEREAL FILLERS

Weet-Bix regular $1 kg: $6.18
With a 9 per cent increase: $6.74

Rice Bubbles 460g: $3.98
With a 9 per cent increase: $4.34

Skippy Cornflakes 500g: $3.53
With a 9 per cent increase: $3.85

* Prices from woolworths.co.nz

* 9 per cent is the maximum single-digit increase, as forecast by Sanitarium.