Parmalat: Notification of price rise 10 July 2017

The following is a transcript of a letter sent from Parmalat to retailers and forwarded to QDO

The Australia dairy industry has endured a difficult year being negatively impacted by a range of issues including floods, heat waves, depressed commodity prices and reduced farm gate pricing implemented by a number of other processors in the market.

As a result the available milk pool across Southern Australia has shrunk with the latest estimated indicating a reduction of 8—9% nationally or 800-900 million litres in the 2016/17 season. At the same time globally, the underlying value of fat in every litre has been increasing for some four years and butter in particular is trading at global highs.

Additionally this milk pool reduction will see a significant increase in the southern region raw milk price for the 2017/18 season. Furthermore we have seen an increase in many input costs, including electricity +18%. Gas 16% and ingredients on average between 5-8%. As a result of these increases we now find it necessary t advise of an impending price increase across our portfolio.

As a responsible business partner we acknowledge and accept our role in managing these cost increases effectively through our own efficiencies. Therefore we will not be passing on the full extent of these input cost increases. We will also continue to invest in our brands for mutual growth.

Over the coming weeks a Parmalat representative will be in touch to discuss the details of these pricing changes, which will take effect from Monday 10 July 2017. Please feel free to discuss any questions you may have during these calls or alternatively you may contact the Parmalat Resolve Team on 1800 000 257.

Parmalat would like to thank you for your continued support and we look forward to working with you in 2017 and beyond.

ENDS