Food industry needs to live with inflation

Dubai: Volatility in the global food industry seems have slackened a bit, but that does necessarily mean it has been licked for good.

“Commodity inflation had been more volatile in the last two or three years; there are maybe two, three or four commodity-related inflation running through the global food business,” said Paul Norman at Kellogg International.

“Most food companies therefore are looking at between 3-4 per cent productivity gains internally each year. That what we look to save each year and helps offset to a large extent the need to pass on inflation-related costs to the consumer. We will only ask customers what they are inclined to pay.

“In the recent past, in this market, we have not passed on any cost inflation.”

According to a top regional official, the last time Kellogg raised retail prices here was in early 2011.

On the raft of local and regional private labels that are getting into the breakfast cereal space, Norman said: “It’s normal we are going to be copied as pricing is always an issue to be played with, But what eventually will drive our brands is through offering more value — from an ingredient perspective, or a benefit perspective — for what consumers pay for them.”