Wheat, fuel costs influence bread price – Tiger Brands

“The wheat price almost doubled in the past 12 months from about R1,700 per ton to R3,100 per ton,” said spokesperson Jimmy Manyi, adding that fuel price increases had also pushed up the company's running costs.

Consumers are now paying 40 cents more for a loaf of Albany bread than they were last week.

While consumers have raised concerns that paying more for bread will result in a general increase in food prices, Manyi said it could be expected that any foodstuffs that have wheat as an ingredient will be affected.

Tiger Brands Limited has not reported a decrease in bread sales since the increase took effect on Monday.

“Albany is a high quality and nutritious brand, consumers have not stopped buying,” said Manyi.

An industry expert, who asked not to be named, told BuaNews, however, the slight increase in the price of wheat should not have an affect on the price of bread.

The price of wheat translates to 16 to 20% of the bread price, depending on the type of bread, he said.

Quoting the South African Future Exchange for agricultural products, he said the price per ton of wheat which the buyer pays was R2,140 on 14 July last year, and stood at R3,186 per ton on 14 January 2008.

Manyi explained to BuaNews that these prices were probably retail prices, while Tiger Brands Limited is a wholesale buyer. He added that the increase was based on the increase in wheat prices over 12 months, not the last six months.

Warren Hamer, spokesperson for Anat's Bakery which supplies pita bread products, said they had not reviewed the current pricing figures yet, adding that he was not sure if they would be increasing their prices substantially.

The company increases their prices annually around March.

Speaking to BuaNews he said: “When wheat prices increase it does affect us. If it is a substantial increase and we can't absorb it then we'll have no choice to increase our prices.”

Tiger Brands Limited agreed to pay an administrative penalty of R98.8 million for contravening the Competition Act last year.

The company had been accused of unnecessarily inflating the price of bread. Following an investigation, it was found that meetings between certain Tiger Brands employees and some competitors had taken place amounting to anti-competitive activity.

Manyi said the bread price increase was not implemented to make up for this loss.

He said action had been taken against the employees believed to be involved.

“Some of the offenders have already left the company. The sanction took into account the blameworthiness and seniority of the employees,” he said.

Nick Dennis, the Chief Executive Officer of Tiger Brands Limited who has since announced his early retirement, said: “We took extremely seriously the allegations levelled against us as they ran counter to the ethical standards for which we are known and respected.”

Article published courtesy of BuaNews