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26 Mar, 2008 14:49

Russian juice giant spills $US 25 MLN

The boss of Russia’s top juice and dairy producer Wimm-Bill-Dann says price freezes have cost the company up to $US 25 million in pre tax earnings. Nestle CEO blames worldwide trends, after raising prices in Russia by up to 10%.

The New-York listed major lead a group of food companies which froze prices on basic foodstuffs to May 1 after inflation hit 11% in the New Year.

Wimm-Bill-Dann had insisted it initiated the price controls to support low-income Russians.

But in an interview with RT, Wimm-Bill-Dann’s Chief Executive David Yakobashvili called on the government to remove the freeze, saying that prices would only rise by 5% if left to market forces.

“The market is the best judgment on how the prices can go up. It will give us more freedom to release prices, but I don't believe that it will be a very high increase, it might be 5 or 10%. In our EBITDA we lost $US 25 million, and the major part of it was because of the price freeze,” stated Yakobashvili.

Nestle blames worldwide trends

Swiss food group Nestle, which has raised prices in Russia by up to 10% in the first quarter of this year, says prices are going up due to major increases in producers’ costs.

“Raw materials cost increases are a worldwide trend, which is even stronger in Russia. Because the price of some raw materials wasn't at the worldwide level and now are catching up. Then also we have the cost of salaries, the cost of energy, which impacts transportation costs. The food industry as a whole is under a huge cost inflation pressure,” Nestle Russia CEO Bernard Meunier said.