Wrapped bread returns to value growth after four years of decline

Wrapped bread is back in growth after four consecutive years of decline, as soaring wheat prices and the impact of the weak pound are being passed on to shoppers.

Sales are up 0.2% to £1,397m, Kantar Worldpanel data for the year to 21 May 2017 reveals. “Growth is driven by price inflation of 0.7% while bread still posts decline in volume terms of 0.5%,” said analyst Clair Liboureau.

A standard 800g white loaf from Britain’s biggest bread brand, Warburtons, is selling for an average of £1.04 in the big four, up from £1 a year ago. Hovis Soft White is up from 95p to £1.01 [Brand View].

Inflation is being driven by soaring wheat prices. Last season EU production was down 10% as bad weather hit, particularly in France. In the UK, wheat production fell 13% as demand grew, partly as a result of relatively high milling wheat standards and sterling’s weakness making British wheat more attractive to overseas buyers.

“There are three factors: UK supply and demand issues, and the French crop, down considerably as it was hit by adverse conditions in the spring,” said AHDB Market Intelligence analyst Millie Askew. “Thirdly, we’ve seen currency volatility as a result of the EU referendum.”

Feed wheat supplies were also getting squeezed, added Askew: “Growing demand from biofuel plants that use feed wheat is playing a part, especially after the Ensus plant in Teesside restarted last July.”