Greggs warns over wheat price impact
Bakery chain Greggs today warned that rising wheat prices could lead to customers paying more for its products in the coming months.
The Newcastle-based firm said it expected an increase in "ingredient cost" after severe droughts in Russia triggered a jump in wheat prices.
The group's warning came alongside a rise in pre-tax profits for the first half of the year, up 12.3% on a year earlier to £18.5 million.
Greggs has performed well during the downturn after aiming its promotional activity at consumers with less disposable income.
And its affordable products and deals have continued to sell well.
In the first half of this year, the company sold more than two million of its £1.80 meal deals while 4.5 million breakfast rolls have been sold since Greggs launched the range in February.
However, chief executive Ken McMeikan added: "The pressure on the trading environment looks likely to increase in the second half and we remain focused on managing costs tightly.
"We now expect and increase in ingredient cost inflation in the second half of the year, following the recent rise in wheat prices."
But Mr McMeikan said the group believed the increase in wheat prices was an "over-reaction" to events in Russia, which has banned all grain exports until December 31.
Mr McMeikan said the company expected wheat prices to be around £120 per tonne, but it was currently trading between £158 and £170 per tonne.
"Our view is that there has been an over-reaction, and we would hope prices would come back down," he said.
"If the prices stay around £158 to £170 per tonne, there could be a small price increase in the products in our stores."
- 2 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 3 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 Ian Brady: Moors murderer announces his support for Ukip and the SNP
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Russian hack of President Obama's emails worse than previously admitted
Ian Brady: Moors murderer announces his support for Ukip and the SNP
UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Nepal earthquake: US Pastor Tony Miano sparks outcry by suggesting Nepalis should convert and not rebuild their 'pagan shrines'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...