Prices set to rise for major bread brands

CLAIRE ROGERS
Last updated 08:14 23/11/2012
bread stand
FAIRFAX NZ
Baked lines offered by Goodman Fielder will rise in price from next month.

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Supermarket shoppers look set to pay more for some breads after food producer Goodman Fielder said it would raise the prices it charges retailers.

The company makes Nature's Fresh, Quality Bakers, Vogel's, and Freya's bread, as well as spreads, dressings, baking ingredients, and dairy products.

Goodman Fielder New Zealand managing director Peter Reidie said that after discussions with retailers it would lift prices in its branded breads from next month.

"Over the last 18 months a significant number of the company's costs have risen, including key ingredients, energy, labour, and, more recently, distribution costs, with new government road-user charges coming into effect on the first of August. We are unable to continue absorbing these higher costs and have no option but to now reflect this in our baking product pricing."

He did not disclose the size of the increase.

A Countdown spokesperson said it was too early to comment on the increase, but said it would seek to negotiate the best price for customers.

Its rival, Foodstuffs, which runs the New World and Pak 'n Save supermarkets, was unavailable for comment.

Goodman Fielder signalled the price rises in Australia and New Zealand in its grocery and baking products at its annual meeting in Sydney yesterday.

It said the increases would help it recover higher input costs, including commodity ingredients. In August, it reported a A$147 million (NZ$187m) loss for the year to June 30, thanks in part to a "perfect storm" that saw volumes in its bakery division fall, commodity prices rise and retail prices plunge on competition from cheaper private labels.

By August, the price of some Australian wheat had risen almost 50 per cent since mid-May, after predictions of a poor corn harvest in the United States forced grain prices up sharply.

Goodman Fielder chief executive Chris Delaney told shareholders the company was on track to make A$100m in annualised savings by 2015.

That programme involved cutting its manufacturing facilities from 53 to 35 through consolidation of sites, closures and divestments. It had already closed or announced plans to close or sell 11 sites, including the Champion flour mills in Christchurch and Mt Maunganui that are part of its New Zealand Milling business, which is for sale.

Delaney said he expected to conclude a sale of the business, which employs about 130 people, "in the near future".

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Market conditions would remain a challenge. Consumer confidence in Australia and New Zealand continued to be subdued, and the pricing and competitive environment was still tough, he said.

The company is divesting non- core businesses and pouring its energy into boosting earnings in its core divisions of bakery, dairy, flour and cake mixes, spreads, and dressings and mayonnaise.

It was also planning to branch outside supermarkets with products such as artisan breads.

Goodman Fielder's shares rose 6.6 per cent on the NZX yesterday to close at 81 cents. Fairfax NZ

- Taranaki Daily News

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