Exclusive interview: Part 1

Issues facing the UK's bakery industry in 2009

By Lindsey Partos

- Last updated on GMT

Related tags Bread Wheat Flour

Bread is a good-value, consumer staple and the current economic climate is an opportunity to reinforce its value, says the director of a leading UK bakery body.

Sales in the UK's ₤2.5bn (€2.7bn) to ₤3bn (€3.2bn) bread market have witnessed a long term contraction in volume over recent years, but Gordon Polson, director of the UK's Federation of Bakers, is optimistic that today's more challenging economic climate could bring gains to the market.

"We hope to stop that decline this year,"​ he told BakeryandSnacks.com.

Price attraction

Looking to a year of contracted consumer spending all round in the UK, Polson adds that the fundamental point the federation is looking at in 2009 is that bread, in particular, can be a good-value, flexible product. A varied product that is "not just toast, but can be used to make sandwiches to take to work, and for making bread-and-butter pudding at home"​, he said.

"We feel that bread is in a good position to meet consumer demand for a good value-for-money product,"​ reinforced Polson.

In the UK, a loaf of bread can range from about 45 pence (€0.48) to around £1.50 (€1.62) or £1.60 (€1.73) for a premium product.

The price of bread has risen steadily over the past 12 to 18 months in pace with the leap in price for key raw materials, notably wheat. Looking to 2009, Polson commented: "I don't think the price of bread will come down"​.

Wheat security a priority for 2009

Key to keeping prices steady is the supply and flow of bread wheat. Echoing the views of wheat users across the UK, Polson is hoping for a good wheat harvest in the UK this year. While the UK actually witnessed a good wheat harvest in 2008, much of the wheat was not of bread-making quality, a phenomenon that put yet more pressure on already bullish wheat prices.

"There needs to be some contribution to the increase the world stocks,"​ added Polson, again reflecting the view of a food industry at large impacted by price rises due to the lowest global wheat stock levels in over 30 years.

"Sufficient planting is equal to sufficient supply, but we're concerned that because there was so much poor quality wheat last year, that engendered a price disincentive for farmers, they may be discouraged to plant wheat this year,"​ commented the industry body director. Farmers, he adds, have the argument that they need a commercial incentive.

When questioned about using financial instruments such as the futures market to lock-in supply and price, Polson added that in terms of flour price and risk management, most of the Federation's members negotiate with millers to "best fit their business"​, locking-in contracts with the millers for forward supplies. Some members, said Polson, trace all the way back along the supply chain to find out precisely where, and from which field, their wheat hails from.

In part II of this interview Gordon Polson will discuss the impact of recent rules from Brussels on 'prescribed quantities' for bread, and the imminent decision on folic acid: two key issues facing the bakery industry as they move forward through 2009.

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