Wheat prices have dipped to around $700 per bushel and have been steadily decreasing over the last nine months. This compares to the sky-high value in July 2012 of around $900 per bushel.
Francisco Redruello, senior food analyst at Euromonitor International, said that this provides great opportunities for the bakery industry to invest that extra cash.
“As wheat prices have decreased, it’s an opportunity for manufacturers to recover and invest more money in innovation,” Redruello told BakeryandSnacks.com.
“If you spend less money on wheat, you can spend elsewhere,” he added.
The year to invest, or save…
Last year, many bakery manufacturers were hit hard with the commodity situation, Redruello said.
“It was horrific for some of them on the commodities side. But all the projections indicate that this year is going to be better than last year,” he said.
“It’s going to be a good year for the industry.”
However, it is important to note that commodities only comprise a part of a product’s price, Redruello said. Other costs include marketing, packaging, transport and labeling to name a few, he said, “but there will be some savings for bakers, not a lot, but some”.
Helping the retailer battle
Injecting funds into innovation and production will also help bakery manufacturers in the increasingly tough battle with retailers, he said.
“Retailers will keep an eye on commodity prices too, so they will put pressure on bakery manufacturers to lower prices. Innovation and production investment will give manufacturers strength,” he said.