Gregg’s Bakery, UK’s largest bakery chain, has issued a warning about a coming price increase. This increase is due to the price hike of ingredients, mainly wheat. Russia, one of the world’s largest suppliers of wheat, has just experienced one of the worst droughts in their history.
A poor harvest in Canada and Australia have also increased grain prices. The price of wheat hit a two year high last week and has risen more than 40 per cent in one month. The price of barley has also doubled over the past six weeks.
The price increase warning from Gregg’s comes on the heels of a very successful first half report, with profits seeing an increase of 12.3 per cent to 18.6 million pounds. The increase in profit comes with a surge in sales, up 2.9 per cent to 321 million pounds.
“We have delivered a resilient first half performance under challenging conditions with total sales growth of 2.9 per cent and marginally positive like-for-like sales growth, in line with our expectations,” said chief executive Ken McMeikan.
Feeling very confidant about the coming year, he added: “The pressure on the trading environment looks likely to increase in the second half and we remain focused on managing costs tightly. We now expect an increase in ingredient cost inflation in the second half of the year, following the recent rise in wheat prices.”
Gregg’s decision to offer inexpensive meal deals and focus on individuals concerned with saving money on any consumables possible, seems to have paid off. They sold more then 2 million of the cheap deals, which is an increase of 167 per cent over last year.
Gregg’s is 1,437 units strong and plans to open another 50 to 60 this year, creating 500 new jobs in the process. Long term, Gregg’s foresees opening another 600 shops, and creation of over 6,000 jobs.