BREAD INDUSTRY

Dealing with Uncertainty in the Bread Producing Industry

Dealing with Uncertainty in the Bread Producing Industry

Introduction - Company Snapshot

Warburtons is the UK's most popular brand of bakery breads. The company headquarter is located in Bolton, England. The company is giving a tough competition even the most iconic Hovis brand, and is producing by bakers of Warburtons private property (www.warburtons.co.uk). First baked in 1876 in the town of Bolton, Lancashire, by Ellen Warburton and sold in the grocery store family by her husband. In 2010, Warburtons bread was the most popular brand in the UK, with a market share of 24%, and the time the second largest selling brand of food products (for The Coca-Cola Company ).

Background

In 2008, the bakery sector continued to feel the effects of commodity inflation. The price of bakery products prepared increased significantly in the short term, while all stakeholders in the value chain had to contend with declining margins (Burn, 2008). The supply is unstable and Indian and Chinese consumers play an important role in the global demand for grains and cereals. We still do not know exactly if, in the long term, higher grain prices worldwide continue to affect baked goods, as the price of commodities fell towards the end of 2008, but remain in far higher than the figures prior to 2007. Consumers in Western Europe prefer healthy foods and specialty products of superior quality, while consumers in Eastern Europe, whose income is lower, are more influenced by price and seek more affordable (Burn, 2008).

This market is highly saturated; the volume of retail sales in the European Union is expected to remain stable. In the markets of Western Europe, which are larger emphasis on quality is closely linked to health benefits and innovation. People looking for foods that taste good and are not associated with various health problems such as obesity or heart disease. It is in these markets that we see the most decisive innovation in Europe: bakery products are prepared using fine ingredients to diversify health claims (Goldratt & Cox, 2004). In terms of strategic positioning and trends in the country, major industries breads are focusing on the functional and nutritional content of their products. For instance, companies have begun to include in their line of breads such as functional ingredients omega 3, 6 and 9, as well as in labelling products that contain 0% trans fat and 0% cholesterol.

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