Bread prices to fall as Goodman Fielder reaches agreement with supermarkets

Independent convenience stores and supermarkets will be checking to ensure that their bread pricing is competitive after bread manufacturer, Goodman Fielder, said it will move to everyday low pricing (ELP) through Coles and Woolworths.

The move to ELP (instead of the more common high/low pricing model) and the implementation of a new Goodman Fielder bread distribution system, which will cut the cost of delivering bread to retailers, will see continued downward price pressure within the category.

Announcing Goodman Fielder’s financial results for the half year ended December 2014, CEO Chris Delaney, said: “Trading conditions, particularly in the Baking and Grocery segments continue to be challenged by significant pricing pressure across several of our core categories.

“In baking, we significantly increased market share in our power brands in Australia and New Zealand from strengthened brand equity, product reformulation and innovation. However, net average selling prices were lower due to the very competitive pricing environment, particularly from increased promotional pricing in the fresh loaf category.

“In response, we are working with major retail customers to move our major brands in Australia from high/low promotional pricing to everyday low pricing which we believe will provide a better longer term value proposition by restoring consumer confidence in branded pricing, better align demand with production and enhance value in the category.”

Mr Delaney said that Goodman Fielder’s grocery business continues to be impacted by strong price competition in the spreads, flour and cake mix categories, which more than off-set the improved result in dressings and mayonnaise where the Praise brand continued to lead the category by recording its highest ever market share during the period.

Also this week, Goodman Fielder announced that the Anti-Monopoly Bureau of the Ministry of Commerce of the People’s Republic of China has granted approval for the proposed acquisition of Goodman Fielder by Wilmar International Limited and First Pacific Company Limited. However, Goodman Fielder said that the move still requires approval from the Overseas Investment Office in New Zealand. A shareholder meeting has been announced for 26 February to consider and vote on the proposed acquisition.

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