Tue, Sep 30, 2008 page12

• Bakeries feeling the fallout of melamine scandal

  FOREIGN AFFAIRS Although the sector is suffering, two bakeries appear to be bucking the trend, Japanese brand Yamazaki and French chain Paul, the latter new to the market

  • By Jerry Lin / STAFF REPORTER
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  The local baking industry has suffered losses of up to NT$250 million (US$7.8 million) as consumers steer clear of bakery products amid fears of melamine-tainted food, a local bakery association official said.

  Chi Kuang-cheng (紀光成), chairman of the Taiwan Bakery Association (台灣省糕餅公會), said losses of its 5,000 members had escalated to NT$250 million over the past 10 days, estimating that each bakery would lose an average of NT$5,000 a day in sales.

  But the estimated losses did not include those of 2,000 other bakeries in Taiwan that are not members of the association, Chi said in an interview on Friday.

  Public concern about food safety came after the industrial chemical melamine was found in milk powder from China earlier this month, as well as in products imported to Taiwan and elsewhere in the world since.

  Local retailers have been told to stop selling products possibly contaminated by melamine, while importers of milk powder and other dairy products from China have been asked to recall them.

  DROP

  Shun Chen Bakery (順成蛋糕), which has 16 outlets in Taipei, has seen its sales drop by more than 10 percent in recent days because of the melamine scandal.

  “The melamine situation has inevitably taken a toll on our business, as consumers are anxious,” Ethan Tseng (曾智彥), a planning specialist at Shun Chen Bakery, said by telephone on Friday.

  “To quell consumer anxiety, not only do we stress the origin of the milk powder we use, we also ask our suppliers to provide test reports,” Tseng said.

  Chi criticized government wavering on product recalls and melamine standards and said local bakeries had been finding it increasingly difficult to make ends meet amid rising raw material prices and weakening private consumption even before the melamine scare.

  Chi declined to comment on how many bakeries might be in danger of closing down.

  In Taipei City, many bakeries have seen sales drop by on average 10 to 50 percent over this period. But there are also some bakeries, such as Taiwan Yamazaki Co (台灣山崎), that have in fact benefited from the scare because of consumers’ trust in Japanese brands, an official at the Taipei Bakery Association (台北市糕餅公會) said.

  Wang Haw (王浩), the association’s general secretary, said that consumers were choosing either trusted brands or middle to high-price items, just to be on the safe side.

  Another bakery bucking the trend by reporting high sales is French chain Paul. The bakery — which opened its Taipei outlet earlier this month and says it imports all of its dough from France — said its breads have been flying off the shelves despite their relatively high cost.

  Hung Jui-bin (洪瑞彬), director-general of the Council for Economic Planning and Development’s (CEPD) economic research department, said the melamine crisis would have a short-term negative impact on the economy.

  DAMAGE

  Recent typhoons have damaged crops and raised the costs of raw materials for foodstuff producers and the melamine crisis will inflict additional damage to the industrial food chain from bakeries to dairy producers and from wholesalers to distributors, Hung said.

  The Department of Health said last Tueday that product recalls would total NT$1 billion, but observers said the full impact to the nation’s economy is hard to estimate at the moment.

  Some people believe the potential losses to the local food industry may grow much larger than expected because the scandal is likely to harm consumers’ confidence in food safety thus affecting private consumption.

  Others like Hung, however, think it is possible that certain sectors in the food industry may reap temporary windfalls from the crisis as consumers swap milk-related products for what they consider to be safer alternatives.

  additional reporting by Crystal Hsu
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