By Lu Haoting and Qu Xiaozhen (China Daily)
Updated: 2008-04-24 07:10

Rising raw material costs throughout the world have driven up dairy product prices too. Exports of milk from Australia and New Zealand, for example, where large parts have been under drought for the past three years, have gone down.

"Dairy products have seen the biggest jump in prices among all the products we sell," says Ding Wei, marketing manager of Shanghai-based Sinodis, a leading importer and distributor of food products in China. "The cost of dairy products has increased 20 to 30 percent since the second half of last year, compelling us to raise our prices much more frequently than before," Ding says. Sinodis supplies imported food products to major supermarket chains, hotels, restaurants and airlines in more than 30 Chinese cities.

In Beijing, the manager of Indian Kitchen, a popular restaurant with outlets in many Chinese cities, says meat dishes cost a lot more to make because the lamb and beef prices have increased two-fold. Sweet dishes, a specialty of many Indian restaurants, cost more too with sugar and vegetable oil becoming dearer. So to minimize its loss, Indian Kitchen has raised its lunch buffet price from 38 to 42 yuan per person.

US citizen Fred Kan, who works in the food and beverage industry, has a similar story to tell, even though he has not felt the impact of rising food prices that badly. "As a chef, I often shop for food and have a clear idea of the prices. Obviously, they are getting more expensive," says the 31-year-old who has been living in Shanghai for the past four years.

Kan used to run a restaurant in Shanghai. At present, he is trying to start a new one that specializes in Italian cuisine. "Since the cost of raw material is rising, we have to make some adjustments on food prices. But we cannot shift all the additional cost onto our customers," he says, despite realizing that the rising food prices pose a big threat to his upcoming venture.

Many stores and restaurants have raised the prices of their products and dishes to cope with the trend. Nick's and Mart at Lido Hotel, 70 percent of whose customers are foreigners, is selling cheese, wine, pasta and imported spices at higher prices, says manager Zhang Manjiang. But the store is now preparing to buy more varieties of products from domestic and foreign suppliers, instead of concentrating only on overseas manufacturers.

But then there are customers who swear by certain food brands and are ready to pay more for them. That should bring some respite to the harried store owners and restaurateurs.

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