CONSUMERS are facing tough financial pressures, a situation likely to persist in coming months due to rising prices such as for food, fuel and other commodities, RCL Foods chief executive Paul Cruickshank said yesterday.
RCL Foods, which produces more than 30 leading local brands such as Rainbow chicken, Selati sugar, Supreme flour, Sunbake bread, Ouma rusks, and Number 1 mageu, experienced volume declines in its products in the last three months of its interim period to December 31, Cruickshank said in an interview yesterday.
He attributed this to rising inflationary pressures on consumers and businesses, and said he expected these would continue into the second half.
For instance, rising costs at RCL included for fuel, high international maize prices (maize is used by the group for poultry feed and other food products), and high international wheat prices (wheat is used in the bakery and foods operations).
In the six months to December 31, RCL’s costs were also affected by an outbreak of avian flu in Southern Africa, civil unrest in July that disrupted operations at some KwaZulu-Natal and Gauteng sites, and a fire at its Komatipoort sugar warehouse in October.
“Of particular concern for food producers is the continued rise in agricultural commodity input costs due to escalating world prices,” Cruickshank said.
He said the group had tried to maintain prices as much as it could through the interim period but was in the process of raising prices due to the rising input costs.
To broaden the value-added component of the business, a pipeline of brand extensions and new offerings would be built up over the next two years, such as with Nola Value Mayonnaise, a new frozen pies offering, and a new crumb coating for the food service channel that was launched during the interim period.
The business also continued to enter private label partnerships with customers where appropriate.
“Our response to the headwinds affecting the food industry and our own business is to focus on what we can control,” he said.
By 3pm yesterday the share price was trading 5.85 percent lower at R14, up 77.02 percent over a year and up 8.94 percent over three years. It closed at R14.25.
edward.west@inl.co.za
BUSINESS REPORT ONLINE