Bega Group Reports 10% Cost Increase Amid Red Sea and Middle East Disruptions

The closure of the Strait of Hormuz has driven up oil prices and contributed to supply chain shocks that added 10 percent to Bega Group's costs, chief executive Peter Findlay said. Supply chain shocks associated with the war in the Middle East had already pushed up expenses before the latest oil price surge.

Higher costs include packaging due to the closure of the Strait of Hormuz pushing up the price of resin used to make plastic.

Costs for the chemicals needed for Bega's factory cleaning are rising, as are costs for the rubber used in Bega's machinery and seals. Bega Group is paying farmers more for dairy. Dairy producers are battling supply shocks including soaring diesel and fertiliser prices.

"We're trying to fully match that," Peter Findlay said of the financial support for Bega's dairy farmers. "It's quite difficult. " Bega Group was passing a large chunk of its extra costs onto consumers but was actually absorbing some of it at this stage, Findlay said.

"We'll just have to see how long the crisis goes for," he said. " Bega Group is evaluating the crisis every month. "If it keeps going, costs will stay elevated," Bega Group chief executive Peter Findlay said.

Australia's two biggest supermarkets have already increased the price of home-brand milk. Woolworths chief executive Amanda Bardwell noted that fresh produce and dairy were seeing the first round of war-related price spikes in stores. Packaged items are expected to see price increases next.

"We do expect to see, unfortunately, prices increase in some products over the next three, six and possibly 12 months," Amanda Bardwell said during a financial update briefing last week. 7 percent. Automotive fuel prices jumped by more than 30 percent in March.