Ann: Trading Update FY2023, page-14

Realistically, how does a company 'increase EBITDA' when the price of its major input kilograms of milk solids) is rising by 30 per cent?

Supermarkets are not BGA's sole clients but they're a major distribution channel. COL/WOW/Aldi/MTS' IGAs/Costco are all tough negotiators, and yet on some of its iconic brands such as 'Simply Nuts' peanut butter, BGA must have received approval from at least WOW for a price rise as shoppers face a 10 per cent hike. Historically, it takes three months for a manufacturer's price rise request to be agreed to by supermarket managers, so increased revenue lags increased costs.

Integration may well be providing benefits and synergies, but if one is optimistic, the milk solids price hike is temporary and over time, BGA's wholesale and its clients' retail prices will rise, subject to endeavouring not to hit consumer demand too much. In non-dairy, dry supermarket goods, many Australians are seeing retail price rises of well above 10 per cent - sometimes 25 per cent overnight. Shoppers are being conditioned for large price rises.