Thu, Aug 03, 2006 - Page 12 News List

Paper makers pushing stores for price hikes

PROFITS IN THE TOILET Kimberly-Clark Taiwan and other manufacturers say they cannot afford to keep absorbing increases in their raw material costs

By Jackie Lin  /  STAFF REPORTER

Battered by surging material costs, paper and tissue makers have decided to raise retail prices by 5 percent to 10 percent this month, although hypermarkets are still trying to suppress the price hike demand in this NT$10 billion (US$304 million) market.

"We're really under great pressure," said Chen Chung-min (陳忠民), family care business director of Kimberly-Clark Taiwan, manufacturer of the popular Sujay (舒潔) tissues.

The cost of paper pulp has increased by 30 percent from US$530 per tonne at the end of last year to US$680 now.

Gas rates recently climbed by 15 percent, heavy oil surged by 20 percent and electricity rates have also risen by 8 percent, tissue makers note.

"Having absorbed so many costs, we've come to the point where it's impossible not to raise our prices anymore," Chen said in a telephone interview yesterday.

Stressing that their price increase is not meant to drive up prices of other consumer staples, Chen said the adjustment does not fully reflect the double-digit increases in manufacturing costs.

Starting this month, Kimberly-Clark Taiwan will reduce the frequency of its promotional campaigns and boost the promotional prices for toilet paper and tissues by 5 to 10 percent.

For example, a 12-box pack of Kerlisu (可麗舒) brand tissues that now costs NT$109 will cost between NT$115 and NT$119, depending on the retailer. Paper towels will cost between NT$95 and NT$99, compared with NT$89 now, Chen said.

Citing Morgan Stanley's report that prices of paper pulp will remain high through 2008, Chen said the company is mulling a full-scale price hike for its products.

The market's second-largest manufacturer, Yuen Foong Yu Paper Co (永豐餘紙業), confirmed it might follow Kimberly-Clark's lead this month with the same range of hikes, vice president Juliana Liu (劉瑞娥) said.

Smaller rival Cheng Loong Corp (正隆), which produces Andante (春風) tissues, complained about its growing losses caused by skyrocketing costs and the difficulties of negotiating price hikes with major retailers.

"Retailers have taken a hard-line attitude. Carrefour Taiwan and RT-Mart (大潤發) have refused our requests to boost prices," a Cheng Loong executive said on the condition of anonymity.

Dream Lin (林夢紹), Carrefour's public relations manager, said tissue makers have demanded price hikes since the beginning of the year but her company has refused.

"We need to take into account consumers' feelings," Lin said. "Shoppers have become more sensitive and our business performance in the first half of the year was worse than expected."

Far Eastern Geant (愛買吉安) said it would raise tissue prices, but not those of other key items.

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