Sky-high energy bills and higher wheat costs are pushing loaf prices which in turn are causing friction with customers as they continue to face cost of living crisis, says the chair of UK's family-run baker giant Warburtons.
“Constantly going back to customers asking for a price increase is bloody hard work,” Jonathan Warburton, the chair of the company, told The Guardian. “It doesn’t enhance the relationship with us, it causes friction.”
Soaring costs for wheat, water and yeast – as well as for powering its gas-fired ovens at 11 UK factories – have led the firm to put up the price of its bestselling loaf by a quarter in only nine months.
Warburton says he has little choice but to put up his prices, highlighting how sky-high energy costs are rippling through the British economy – from manufacturers to the supermarket shelf. Annual costs at the fifth-generation family business have reportedly risen to £118 million in the past year.
“I think people are understanding about these price rises if you’re clear and straightforward with them about what’s happening. It isn’t my fault that bloody idiot went into Ukraine, quite frankly,”.
“Putin doing what he’s doing in eastern Europe, on the back of Covid, is the major trigger. It has sent shock waves through the food industry," The Guardian quoted Warburton as saying.
Warburtons has increased the shelf price of its 800g Toastie loaf from £1 to £1.25 in only nine months – a move the chair says is entirely driven by higher costs.
“What we’re trying to do is recover our costs. We’re not trying to profit … we’re just trying to stay neutral by ultimately passing it on to the consumer. We can’t carry £118m-worth of extra cost. The business would be bankrupt and there would be 5,000 people out of work.”
“It affects the world market. You’re just affected by that. And you buy in US dollars and we do our best to forward cover and smooth it out,” he says.
Alongside higher energy costs, the war in Ukraine has disrupted the global supply of flour, fertiliser and sunflower oil. Russia and its neighbour are the first and fifth largest exporters of wheat in the world, accounting for almost a third of exports. Although British bakeries source very little from the region, the ongoing war has pushed global prices.
Warburton says his business is the largest user of Canadian wheat in Europe, preferring to mix the premium crop grown on the prairies of North America with English produce.
