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Mar 26, 2019

Breakfast Cereal Price Increases

 

We are increasing the price of a number of our Nestlé and Uncle Tobys cereals. As we appreciate that no one likes a price rise, we’d like to explain why we’ve done this.

Our factory is in the small Victorian farming community of Wahgunyah, on the border of Victoria and NSW. We support farmers in a number of ways - among the most important are through the National Oat Breeding Program, and by prioritising buying oats from farms near our factory.

In the last year, we’ve seen neighbouring farms affected by first drought, and then frosts, which has had an impact not just on those farmers, but the whole community. It’s also made it harder for us to source the oats and grains we need, particularly oats that meet the higher specifications of the superior Uncle Tobys oat, and we’ve had to look further afield to find enough. Right around Australia, the cost of grains has risen significantly.

It’s not just the price of grains that has affected us. Since mid 2018, as well an average increase of 37% in the price we pay for oats and other grains, we’ve also seen increases in the prices of fruits and nuts (10%), and since 2015, increases in the cost of electricity (28%) and gas (21%).

At the same time, we’ve aggressively reviewed every aspect of our operations so that we can absorb as much of the impact of the costs as possible, and don’t have to pass all the increase on. On average, our prices are rising by an average of 6.3% - although it varies between products – which is considerably less than the increase in the cost of producing them.

With our roots in Australian farming for the last 125 years, there are two things we don’t want to compromise: the superior quality of Uncle Tobys oats, and our commitment to buying from Australian farmers.

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