Expect higher food prices
BANDAR SERI BEGAWAN
FOOD distributors in Brunei are predicting price increases of between five and 10 per cent for products ranging from carbonated drinks to biscuits and other consumables.
Food market experts have mixed views to what the market will be like this year but none are expecting a large growth in sales.
"There will be a slight drop in sales because everything is going up and the consumers don't have the purchasing power that they used to have," said a local food industry expert.
He added that the main contributor to the increase in prices has to do with the shipping costs.
"An estimated 90 per cent of all consumables are imported ... and suppliers from other countries have sent in memos and quotations that (prices of) finished products from Malaysia and Singapore have already gone up from 12-15 per cent," he said.
Some distributors are cutting their margins to offset the rise in costs but should the cost keep rising they will have no choice but to pass on the burden to consumers, he added.
Eric Lim, sales director of Syarikat Perniagaan Malar Setia, said most of the food products are purchased in US dollars and if the currency continues to strengthen against the Brunei dollar, then prices will go up.
"The increase (in prices) will not be noticeable. For instance, if (the price of) an item is increased by a few cents, then you don't really see it," he said. Lim added that Malar Setia does predict a slight growth in sales this year, regardless of the increase in prices.
"There will be a growth this year, but it won't be a double-digit growth, but we see that we will at least maintain our business this year."
He added that unlike other countries that are strongly affected by the global economic crisis, the Brunei market has a very strong spending power.
"At this moment the Muslim market in Brunei has the strongest buying power, and about 85 per cent of the market is made up of Muslims," he said. The industry expert says that the market will contract this year due to the rising food prices.
"There will be a slight drop in sales and one thing about food costs is that it never drops, it will just maintain or increase," he said.
He said that the food industry this year will definitely be more competitive because most of the distributing companies are now going for a smaller piece of the pie and that most companies are aiming to at least maintain their sales from last year. "Now even though oil prices are dropping, shipping costs still have not gone down," he added.
The Brunei Times