Is the plant baking industry getting more profitable? That is the question raised by the new 2006 Key Note report into bread and Bakery Products.
The report rounds up latest figures lodged with Companies House. One company is certainly doing alright for itself. No prizes for guessing it’s Warburtons, which recorded a £45.4 million profit in 2004. But Cheshire–based Frank Roberts & Sons and Sheffield-based Fletchers Bakeries also posted good profits last time round.
That contrasts with figures from British Bakeries, which reported a £12.7m loss in the year to May 2004, and ABF Grain Products, including Allied Bakeries, which posted a £13.8m loss in the year to September 17, 2005. Northampton-based Fine Lady Bakeries and Hull-based William Jackson Bakery also reported losses in their last submissions to Companies House.
But if the figures prove anything, it is never to take statistics at face value. Once you call on leading analyst David Lang to shed light on them, you get a very different picture. Flour is sold between the milling and baking divisions of the big players at nothing like market rates. And exceptional costs also distort the picture. Allied Bakeries actually made around £15m and British Bakeries around £30m in 2004, estimates Mr Lang. Meanwhile, William Jackson actually saw a pleasing £88,000 profit with its export business taken into account.
So, from the mire, the good news: the plant baking industry is profitable – probably by more than £100m a year. There is a proviso. Exceptional costs, which have been taken out of the calculations, have an unpleasant habit of cropping up regularly.
Tesco’s bakery director for the last four-and-a-half years, Tony Reed, would argue Tesco can take some of the credit for the health of the industry (pgs 15 to 17). He says without the growth of Tesco, the bakery market in the UK would have been flat at best, and would probably be in decline.
Also in this issue, the last feature in Andrew Williams’ series on bakery retailing on the internet (pgs 18-19). We hope it will help readers make even more profit!
And as British Baker was going to press news came the Food Standards Agency is about to start its 12-week consultation on possible fortification of bread with folic acid (pg 3). The estimated cost of fortifying flour is around £700,000 a year. Who picks up this tab is set to be a contentious issue.