Possible further bread price increases warns Hovis

The price of bread has already increased this month but may have to increase again if the price of wheat continues to grow. Hovis has warned that premium loaves such as Hovis Best of Both are over £1 for the first time.

Premier Foods, which owns RHM, baker of Hovis and other breads, commented that wheat prices have seen record levels of increase over the last month and they have applied price increases accordingly. However, the company remarked that if wheat prices continue, bread and flour price increases will be required.

The company also remarked that in a matter of weeks, wheat prices had increased to double what they were during 2006. Consequently, the bakery division’s operating profits fell from £37.9 million to £19 million in the first half of 2006. However, first-half trading profits more than doubled to £96.8 million after the £1.2 billion takeover of RHM in December 2006. The group expects to meet their sales and trading profit growth targets for the year.

In August, the company had to close a distribution centre in Telford and a bakery in Bradford resulting in the loss of 430 jobs. The spokesperson for Premier Foods blamed demand for bio-fuels for the wheat-price increase, commenting growing fuel is in effect becoming an environmental tax on foods.

Premier also owns Branston, Quorn, Loyd Grossman and Campbell’s.

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