The days when bread used to be at the centre of our daily breakfast meals are nearing the end and consumers are in for a bumpy road.
This comes after the country’s food manufacturer, Tiger Brands, reported a significant decline in bakeries in the six months to 31 March as prices for commodities, including wheat, continue to rise at a rapid rate.
The food manufacturer said cost-saving initiatives and supply chain efficiencies have been accelerated and are delivering ahead of plan. However, these were not enough to counter the high level of input cost inflation, resulting in gross margin compression to 29.2% from 30.6% in the corresponding period last year.
Tiger Brands CEO, Noel Doyle, said the pressure on the consumer is likely to intensify.
“We are acutely feeling the full impact of the global supply chain squeeze and related inflationary pressures in the level of cost increases coming through. We expect the challenging economic climate to remain with pressure on the consumer likely to intensify,” he said.
He added that they are increasing efforts to reduce costs and further drive efficiencies to minimise the need for selling price increases. “Nevertheless, significant price increases across most of the portfolio are inevitable,” he said.
The company stated that it has seen some market gains for its white bread within the Albany brand but recorded a decline in its brown bread.
According to the report, consumers in the highest Living Standard Measure (LSM) level have been leading the groups when it comes to ditching bread, followed by consumers at the lower end of the income scale. The consumption of bread in the mid-income group is also declining.
Chief growth officer for Tiger Brands, Yokesh Maharaj, stated: “The bread category in totality, what we did see over the last three years is muted growth with a deceleration of at least 5% in the last fiscal [year], across multiple LSM levels.”
Picture: Cape Town ETC