Milk price hikes leave many feeling sour

SHANGHAI - Many Shanghai consumers have become used to seeing frequent increases in food and beverage prices.

But when Bright Dairy & Food Co Ltd announced in February that it would raise the price of milk that it delivers to homes, the public reacted to the news as if it had opened an old wound.

According to reports, Bright Dairy accounts for 80 percent of the fresh milk products sold in Shanghai. Its products are also popular in many neighboring cities and townships in Zhejiang and Jiangsu provinces.

"When a Bright Dairy milkman told me in mid February that, starting on March 1, there would be a new round of price hikes on the milk that's delivered to my home, the first thing that came to my mind was 'What? Milk-price increases again? In less than three months?'," said Zhang Lan, a 30-year-old white-collar worker in Shanghai, who makes about 10,000 yuan ($1,600) a month.

Bright Dairy's latest price increase marks the second time the cost of the company's home-delivered products has risen since December. The prices on the products it sells in supermarkets have meanwhile remained stable.

In July, Zhang ordered 200 milliliters of a premium milk product from Bright Dairy for home delivery. The product then cost 3.7 yuan. By December, it was 3.8 yuan and it is now 3.9 yuan.

Zhang said he will now have to pay an additional 73 yuan a year to buy the same amount of Bright Dairy products that he had ordered in 2011.

And others will probably have to pay more.

"I have no choice but to accept it because I really don't think another milk company can give me home delivery in Shanghai," Zhang said.

Bright Dairy could not be reached for comments.

Zhou Siran, an analyst with CIConsulting Group, said the price increase is mainly the result of a rise in the costs of management and labor.

"Compared with (the dairies) Yili and Mengniu, Bright Dairy has a more complicated and bigger management team," Zhou said.

Bright Dairy is not the only company in China that has increased its retail prices in recent times. The Seattle-based coffee company Starbucks Corp announced in January that it would increase the prices of some of its products to 3 yuan from 1 yuan. Starbucks said the change marked the first time it has increased its retail prices since 2007.

Various well-known international companies, such as McDonald's Corp and KFC Corp, have also announced plans to increase the price of their products in the past two years.

Many householders said they have become inured to price hikes and have had to come up with different ways and ideas to cope with the increasing cost of food and beverage.

"This is a time when the price of everything is increasing," said a Shanghai retiree who declined to give his name. "It's been really frustrating to see the prices of food and beverages increase in the past two years. I now have to rethink how I spend my small income so I can maintain my standard of living. I think I'm getting used to continuous price hikes and now know how to manage them.

"I plan to visit a few wholesale markets in Shanghai over the weekend. The prices at such places are much lower than at ordinary retail markets. The biggest drawback is that I have to buy a lot at a time, so I think I'll ask some relatives to share some of it."