News briefs: Kraft, bread price crunch, and bakery closures

By Lindsey Partos

- Last updated on GMT

Related tags: Bread, Groupe danone, Baker

US food giant Kraft has set up a new Spanish and Portuguese Kraft
subsidiary following the purchase of Groupe Danone's global biscuit
business, including LU Iberia, in November 2007.

According to local media reports, the new Spanish and Portuguese Kraft subsidiary, Barcelona-based Kraft Biscuits Iberia (KBI), will now be responsible Kraft's biscuits operations in those two countries. French food company Groupe Danone agreed to sell its global biscuit business to Kraft for €5.3bn in cash last year. The acquisition included 32 manufacturing facilities and approximately 14,000 employees. But clearance for the deal was subject to regulatory requirements from the European Commission. The Commission found the sale would "significantly" reduce competition in the Spanish market for sweet biscuits as both Kraft and Danone have a significant presence in the market. The US firm Kraft agreed to divest some of its Spanish biscuit brands, including its Artiach biscuits business in Spain to Barcelona-based bakery Panrico. Meanwhile, across the channel, the BBC reports that concern is growing for the future of 350 jobs at Ferrari's bakery shops in south Wales after a factory closure. Union officials say the factory shutdown has led to the closure of Ferrari's stores around south Wales. Ferrari's was supplied by Best Bakeries in the Cynon Valley, which has closed with the loss of 40 jobs. The job losses followed 50 further losses last week, as the baker headed into administration. According to reports, the rising cost of basic food ingredients was a key factor contributing to challenging financial problems for Best Bakeries. Costs continue to dominate the news headlines both inside and outside of the food industry. From the UN's food programme to the World Bank, governments, industries and consumers are all trying to get to grips with the soaring costs today associated with basic food staples. Bread, a key indicator of food price inflation, is intimately linked to the cost of wheat, which has soared in recent months. While £85 (€107) per tonne for wheat seemed like a startling figure four years ago, today this has been overshadowed. Last month wheat traded on the LIFFE futures market at a considerable £170 (€214) to £175 (€220) a tonne, a figure that had almost doubled on the previous year. The nearby price on LIFFE in April 2007 saw figures for wheat of £95-£100 per tonne. Reports from across the globe this week attest to the impact of such rising costs on bread. Pakistani paper Daily Times reports that people on Monday complained that bakers (naanwallahs) and hotel managers are overcharging for bread though the flour price has not been increased.?? According to the report, the Islamabad administration managed to convince flourmill owners not to increase flour price from Rs 365 per 20 kg after a week of discussions. Food department officials told Daily Times that flour supply had been resumed in Islamabad and Rawalpindi.?? Elsewhere, Zimbabwean newspaper Financial Gazette writes this week that a shortage of bread is expected to intensify this week amid reports that the country's wheat stocks have been depleted. According to the report, sources in the industry said wheat stocks had run out, with the country holding about 1000 tonnes in transit to the state granary. The country has weekly wheat consumption levels of 7 500 tonnes. And in Europe, a recent Reuters report reveals that the iconic French baguette now costs between 5 and 8 per cent more than last year in Paris, according to Jacques Mabille, head of the Parisian bakers group. The article also cites Joseph Nicot, head of the French millers group, who said that flour prices, that account for 15 per cent of the baguette's total costs, have gained 20 to 25 per cent in the last year. In South Africa, local newspaper The Times claims prices for bread have rocketed this month. "After slicing bread prices in April and leaving them unchanged in May, retailers have increased its price this month - some of them by more than R1.60, a 30 per cent increase in one instance,"​ reports the paper. All four of the retailers whose groceries are included in The Times' shopping trolley have raised the price of bread, two of them by more than a rand, the paper adds.

Related topics: Kraft Foods, Markets, Ingredients

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