August is traditionally a quiet month - not so in the baking industry! Instead we see the price of wheat hit an all-time world high and another possible big closure at Premier Foods-owned British Bakeries.
The news about the highest-ever world wheat prices made all the business pages of the daily press. It is a grim reality, as industry leaders tell us (pg 4), but it is not the only one.
We are investigating price rises in other vital commodities and will report back in the next issue. But virtually every single price rise affects the baking industry more than any other because there simply are no other goods that use flour, butter, dried milk, yeast and gluten so much. You cannot bake a loaf, cake or pudding without them.
Last week we reported on bakery suppliers’ dealings with the supermarkets (BB, Aug 24, pg 15) and the difficulties they encountered with price pressures. This week I asked Kevin Hawkins, director general of the British Retail Consortium, which mainly represents supermarkets, to respond (pg 15). He does so forcefully but makes the point; "Supermarkets know that if they put their suppliers under pressure, it restricts investment and stifles innovation."
It is therefore a very unfortunate time to be having a price war because these price rises cannot be absorbed by suppliers; ’absorption’ is truly impossible!
Innovation, as Kevin Hawkins says, is extremely important and a good news story to emerge is that of Battle Bake House in East Sussex which has won a contract to supply 60 Sainsbury’s stores in the south east (pg 8). Sainsbury’s Debra Wharton, whom I know has a canny eye for successful products, has welcomed Battle under the company’s Supply Something New scheme. In turn, Battle says: "Sainsbury’s has given us a lot of support."
But it is still very tough out there, particularly for large-scale operators. The bad news at British Bakeries Bradford is the potential loss of 370 jobs. Telford too is holding discussions so employees will be feeling shocked and vulnerable.
Meanwhile, it’s your last chance to book for the Baking Industry Awards, 17 September, hosted by Joanna Lumley. At least 900 will be there so do join them! Tel 01293 846593 or email: firstname.lastname@example.org today!