Ingredient suppliers and millers have had a most appalling time in the past 18 months. We have seen the relative demise of several of their big customers such as Harvestime, Oakdale, and now Inter Link to name just three. Scattered in their wake have been the suppliers, who have continued to support such companies as they entered troubled trading, often to get kicked in the teeth - not to mention the pocket - when that company went into administration or liquidation.
If a company in administration re-surfaces with a new name and new owners, it suits the banks fine; they usually get all the monies owed to them as secured creditors, as does the VAT man. Remaining creditors, the baking industry’s key suppliers, often go to the dogs! That is the prevalent attitude and legislation. And all this is taking place against a background of costs shooting through the roof - from milk powder to butter, energy to flour prices - which affects suppliers as well as end users.
Irish bakery group McCambridge, which has bought Inter Link’s 11 bakery companies, is in the process of contacting creditors. We hope it will do its best by them and wish McCambridge all the best for the future success of the new enlarged company and its employees (pg 4).
But if I were an ingredient supplier now, I would be seriously asking myself the question: ’Do I want to continue to supply own-label manufacturers any more, or back the brands? Which offers more reliability?’
Some multiples have been squeezing margins for own-label far too tight too often. The result is self-evident. The message to manufacturers must also be ’get your market position right’. No-one says it is easy, but it is certainly vital.
More optimistically, Greggs MD Sir Michael Darrington has steered Greggs out of the doldrums in a short space of time (pg 4). And even the weather seems to be cheering up. The support given by bakers to fellow bakers during the floods has been typical of this industry (pg 8). The camaraderie is something to be proud of.
Also this week, we venture a little further afield to Italy to hear about the pride taken in one particular craft bakery (pg 16). It’s a charming tale.