ABF: Bread prices in the UK remain at their lowest level for eight years

  
The UK bakery market remains intensely competitive with retailers choosing bread as a means of highlighting their value for money to shoppers, shows the results from Associated British Foods.

Although average prices have been stable for the last six months, they remain at their lowest level for eight years.  Kingsmill’s market share grew, with a substantial increase in sales volumes, although bakery margins as a whole remain under pressure. 

Dorset Cereals continued to perform very well and has now been launched in Australia with good distribution in the two major national retailers. 

Jordans and Ryvita have both made further progress internationally, growing particularly well in Australia, Canada and France.

Operating profit in North America was maintained.  In the US, Stratas Foods achieved strong volume growth in foodservice and retail oils, and lower Mazola volumes were offset by a reduction in overheads.  In Mexico, oil volumes were lower and margins came under pressure from the devaluation of the peso. 

Trading at George Weston Foods in Australia was much improved.  Revenues were ahead of last year across all businesses with a particularly strong gain made by the Don KRC meat business.  Here further factory improvements and lower procurement costs also drove improved profitability.  Tip Top continued to drive a more efficient cost base and the brand has undergone a complete redesign with new packaging across the bakery range.

Sugar in the UK

AB Sugar has performed steadily in the first half, according to Associated British Foods.  World prices remain low but a tightening of EU and Chinese stock levels has resulted in a strengthening of domestic prices in those markets.

With most of British Sugar’s contracts for the current year already agreed, there will be no material impact on its profit from the improvement in pricing until next year.  The UK beet crop has made good progress, but after last year’s record production of 1.45 million tonnes, a smaller area was contracted for cultivation this year. This reduction, combined with beet yields returning to more typical levels, is expected to result in production just short of 1.0 million tonnes this year.  Operating performance remained very strong at all sites with campaigns now completed, and there remains a continued focus on the delivery of substantial cost reduction. 

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