The steep rationalisation at Premier (pg 4) was expected - but it’s not over yet! Much of the preliminary action is centred on cake production, with Manor Bakeries moving to Premier’s St Albans site, Avana Cakes integrating with RF Brookes and closure of the cakes division head office at Windsor, together with van sales operation. The mills will be "looked at" in the future, says Premier.
Meanwhile, at Bowman’s 150th anniversary, guest speaker and city analyst David Lang of Investec predicted that private equity investment may well transform the milling sector in the future (pg 13). And, he says that, over the last 20 years, the milling industry has moved from being over 80% owned by companies that are integrated downstream into milling/ baking to around 50% today - that’s a very big move.
These are difficult times. Raw materials and commodities are suffering steep rises. Last week, we wrote about big increases in flour and butter, but manufacturers are also suffering from milk powder up 35%, soya up 40% and the list goes on. You cannot combat those levels of price rises with efficiency or small price increases - you’d go bust!
Tunnock’s of Uddingston, which makes top-selling teacakes with a traditional twist, last week issued its first profits warning in the company’s 117-year history. MD Boyd Tunnock told Scotland on Sunday that, in little over two years, the company has seen water bills treble and gas rates go up by 66% - as well as the rise in raw materials - "the worst situation in my working lifetime".
So understanding is needed at every level of food - right through to retailers and consumers, who have had plenty of chance to read and hear about wheat and other increases and know how their own energy prices have risen.
Countering all the uncertainty, Goswell’s Bakery (pg 16), which mainly supplies supermarkets, has carved out a perfect niche. It specialises in wholesale and puts an emphasis on ’natural’, even more than organic. It is extremely focused and has a loyal following.
"We like doing difficult things," says director Colin Lyons about his range, which includes Honey & Oatbran and Sunflower & Barley. Over the past four years, both his listings and sales have increased. He’s timed ’natural’ just right.