Costco CEO says demand rises for rice and flour

A view of the Costco store in Superior, Colorado June 7, 2007.

NEW YORK (Reuters) - The chief executive officer of Costco Wholesale Corp said on Tuesday that the warehouse club operator has seen some unusual demand for certain items like rice and flour as customers, worried over global food shortages, look to stock up on basic items.

James Sinegal, Costco's chief executive officer, told Reuters in an interview that the retailer had seen increased demand in the past week and a half, and some of its stores, including certain locations in California's Bay Area, had put limits on the sales of these items.

"There's been an increase in purchasing but we think it's manageable. At the moment, we think we have it relatively under control," he said.

If a customer came in and said, "I want 10 pallets of flour, we'd probably say, 'No, we can't give you that. We can give you one pallet'," Sinegal said.

"We've tried to modify those," he said of the restrictions its store managers put in place. "So if somebody is buying a reasonable quantity, we let them have it."

Warehouse club operators like Costco cater to both individual shoppers as well as small business and restaurant owners looking to buy cheaper, bulk-sized goods for their operations.

Sinegal said customers can buy pallet-loads of products at its locations.

He said he believed the surge in demand was prompted by media reports in recent weeks discussing rising global demand and shortages in some countries for basic food items like rice and flour.

"If we run out, we're usually back in stock the next day," he said of these popular items.

He said store managers may have taken "precipitous action," by putting limits on sales of certain items, and he added: "We don't want to add to the furor here."

(Reporting by Nicole Maestri)