By Manoj John
Bread prices are set to witness another round of increase by the end of this year, it is reliably learnt. Sources told Bakery Biz that bread loafs will be costlier by 25 per cent as manufacturers are reeling under rising cost of inputs. This will be over and above the recent price rise. “A nationwide price rise is round the corner. Manufacturers are under immense pressure and they will be forced to pass on the rise in input costs to consumers by December,” NL Mehta, vice president of All India Bread Manufacturers Association (AIBMA), told Bakery Biz.
Prices of wheat, sugar, and vegetable oil have been on the rise steadily across the nation. Maida prices went up 70 paise to Re 1 per kg recently. This translates into a rise Rs 30 paise for a 400 g loaf. Manufactures are not inclined to pass on such minor production cost increase per loaf to consumers. They rather go for a cumulative price rise in two or three years. Veena Sharma, joint secretary of Roller Flour Millers Federation of India, said wheat prices were expected to decline by the festive season. “Wheat prices shot up on a perception that production was low. Things are now cooling off,” she said.
Manufacturers have already put to effect one round of price rise. The price of a 400 g loaf of bread, which costs Rs 20, was increased by up to Rs 5 in Delhi and Punjab recently.
Bread prices are usually revised in a span of three or four years only unlike other processed food items. Prices of milk, another essential item, are sometimes revised every year on the back of inflation.
“Discussions are on to determine the extent of the price increase. It could go up by Rs 2-5 for every 400 g pack,” Sudeep Ahuja, vice-president of AIBMA, had said at that time. He said the hike was indispensable because wheat flour had become costlier by up to Rs 3 per kg in the past few months. Flour constitutes 30-35 per cent of its selling price, followed by sugar, vegetable oil, fuel, and labour. The price of sugar has also risen as have labour and transportation costs, bringing down profit margins for bread makers.
The AIBMA represents all major bread makers in the country, including Britannia, Modern, Harvest Gold, and English Oven. Ramesh Mago, president of AIBMA, reserved his comment when contacted.
“Price rise is a periodic phenomenon. Every year, we can expect a hike of around five per cent. That is quite normal,” Sneh Jain, owner of Bakers’ Dozen, told Bakery Biz. Varun Berry, managing director of Britannia Industries, said input costs had risen eight per cent. Britannia is planning to hike prices of its bread by five-six per cent countrywide.
Another silent factor, though not voluminous, is the cost to comply with various regulations by the Food Safety and Standards Association of India (FSSAI). It is estimated that FSSAI compliance cost is around 30 paise per loaf. “Indian consumers are sensitive to bread prices,” says Mehta. Bread, compared with other essential food items, is cheaper. A 400 g bread costs around Rs 28. An equivalent quantity of Chapathis, for instance, costs as much as Rs 40.
