Is Massimo’s Price Increase Out of Whack?

Malaysians have been worried that the cost of living is now rising faster than it has for some time. Their fears seem justified with the price increase of Gardenia and Massimo breads. The Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) wants Massimo’s manufacturer, The Italian Baker, to explain the price hike.

Source:http://utusandaily.blogspot.com

KPDNHEP Deputy Minister Datuk Rosol Wahid was reported by Berita Harian as saying that the bread maker must justify the increase in the price of their products which will start on 3 January. Rosol said the price increase would affect the people as they are still struggling with the COVID-19 pandemic and exacerbated by the flood disaster across the country.

Rosol reminded that during the price increase in Gardenia bread products on December 1 last year, his ministry also held a consultation session with its manufacturer, Gardenia Bakeries. He said Gardenia cited costlier raw materials, which were beyond their control, as the reason for the price increase. Rosol added that the ministry accepted the reason given and as an alternative, Gardenia Bakeries has promised to produce a new bread product that will be sold at the old price.

The same move can be made by Massimo producers so that the people have a choice. In the meantime, Rosol highlighted that the government can only control the price of regular white bread and if producers intend to increase the price, they need to inform KPDNHEP first.

The Italian Baker raised the price of White Sandwich 400 grams (g) to RM2.80 per loaf (old price RM2.38) and increase of 17.6%, White Sandwich 600g to RM4 (RM3.35) an increase of 19.4%, Wheat Germ 400g to RM3 (RM2.48) and Wheat Germ 600g to RM4.25 (RM3.71).

The 100% Whole Wheat bread now sells at RM4.10, while the Duetto cream bread is priced at RM1. The Italian Baker, which is a 100%-owned subsidiary of Federal Flour Mills (one of many companies owned by Malaysian tycoon Robert Kuok), introduced Massimo to Malaysians in 2011. 

Gardenia increased its prices in December last year. The price of its Gardenia original Classic 400gm was increased from RM2.50 to RM2.80 (an increase of 12%) while its jumbo 600gm version was increased from RM3.55 to RM4.00, an increase of 12.7%.

Netizens have reacted strongly to the price changes. After all, prices are going up at a relatively rapid rate on a variety of items and services, faster than at any time since the coronavirus (Covid-19) pandemic in 2020.

At the same time, while the cost of living has increased many workers have not seen salaries rise. This is the key issue. Price rises here end-up as cost-push inflation without any accompanying rise in wages. Wages remain sticky upward.

Gardenia and Massimo may have little choice but to raise prices. Gardenia is controlled by Syed Mokhtar while Massimo by Robert Kuok. Both brands now match on price, but the contention is Massimo’s price increase is higher than that of Gardenia on a percentage basis. Consumers could avoid either brands and look at other alternatives or both manufacturers produce smaller breads at the “old” price. Will that help?

References:

1. Massimo bread price increase: KPDNHEP asks for justification, Fernando Fong, 3/1/2022 (https://www.therakyatpost.com)

2. Putrajaya to summon Massimo over bread price hike, Malaysiakini, 3/1/2022