Wheat shortages could prompt price hike, warns Greggs

Bakery chain Greggs has added its name to the growing list of companies warning that a sharp increase in the cost of commodities such as wheat could result in price rises later this year, although Chief Executive Ken McMeikan pledged to try to limit the impact on consumers.

Mr McMeikan, who also warned that Greggs was nervous about whether it would be able to continue to increase sales during the rest of 2010, said: "We now expect an increase in ingredient cost inflation in the second half of the year, following the recent rise in wheat prices." His comments follow concern about the impact of the poor harvests in Russia and the Ukraine, which have led to a sharp spike in the price of wheat this month.

However, he tried to allay concerns about a hike in the price of Greggs's sausage rolls and its other products.

"If there were to be any price rises, they would be pretty small and they would be pennies – it would be tiny," Mr McMeikan said.

He also pointed out that the price of wheat rose "more dramatically" to around £200 per tonne in 2007 and 2008, which compares to the recent high of £170 a tonne. "We think that prices have overheated and we expect and hope that they will come back down," Mr McMeikan said.

For the 26 weeks to 3 July, Greggs posted a 12.3 per cent uplift in pre-tax profits to £18.6m. The bakery chain, which has 1,437 shops in the UK, delivered like-for-like sales up by 0.7 per cent over the period.

But Mr McMeikan said he "did not know" if underlying sales would remain in positive territory during the second half, as he warned of tougher trading on the high street. "The pressure on the trading environment looks likely to increase in the second half and we remain focused on managing costs tightly."

Ben Hunt, an analyst at Oriel Securities, said: "We suspect current trading has deteriorated, too, as public sector job security has diminished.

"We also continue to have concerns for the competitive nature of the fresh food market, as space is being rolled out rapidly by the likes of Subway and the supermarkets."

Greggs did strike an upbeat note with a progress report on its eight new concept stores in London – which provide more products for self-selection by customers – citing "double digit" sales growth. Greggs plans a further 19 shops in the capital in the second half.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there