6 months ago
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Bread prices are up two-thirds since the onset of the pandemic four years ago, and sales revenues at bakery companies appear to have risen in tandem.
For Consolidated Bakeries Jamaica, which trades as Purity Bakery, the gain has been 50 per cent, but its revenue lines also include other baked goods, including biscuits and snacks.
In April 2020, as the pandemic was unfolding, within the capital of Kingston and neighbouring parishes of St Andrew and St Catherine bread sold for an average of $325 per loaf. Precisely four years later, the price had spiked to $550, up 69 per cent, according to data from the Consumer Affairs Commission, CAC, a state-run consumer watchdog.
In St James, which houses Jamaica’s second-largest urban centre, Montego Bay, the spike was 60 per cent, from $327 to $525.
And amid it all, Consolidated Bakeries, which is in the business of making breads, biscuits, buns and pastries, and snacks, and is the producer of the Purity and Miss Birdie brands, grew its annual revenue to $1.5 billion last year, its 2023 financial results show.
That’s up 11 per cent over the previous year, but is also 50 per cent higher than in 2020. Also, sales are double what they were a decade earlier.
“In five years from now, you won’t see the same portfolio of products offered by the company,” said Managing Director and Chairman of Consolidated Bakeries Anthony Chang, while hinting that the company will continue shifting towards snacks, which earn higher margins than bread, the latter often seen as the most price-sensitive product with the thinnest margins.
“We see ourselves beyond a $2-billion company; we want to grow faster,” Chang said in an interview with the Financial Gleaner on Tuesday.
Within the bread market, the rising prices have resulted in consumers searching for alternatives.
“Everyone wants to drive a BMW but at Toyota prices,” said Chang.
Still the company is attuned to market preferences and says it remains focused on providing value to consumers searching for cheaper prices, but also those looking for healthier, more sophisticated offerings.
“We want to give value and affordability; that is important for us,” he said.
The Consolidated Bakeries operation produced solid gross profit of $594 million, delivering a margin of 39 per cent relative to sales, for year ending December 2023, but its margins thinned dramatically at the bottom line, coming out at one per cent for both FY2022 and FY2023. Earnings were flat at six cents per share in both years, but in dollar terms there was a slight dip from $13.88 million to $12.94 million.
Profits thinned due to heavy administrative and marketing costs, which rose by double digits to more than half-billion dollars.
Chang says the company is on the right track and that costs will attenuate with a larger revenue base.
“We are cooking in the right direction,” said Chang. “We have a portfolio of segments that are going well. We are not a huge company, but we are emerging. The segments are working to plan. Some are growing faster, and others are not growing as fast.”
Chang said that the company will have to allocate time and resources to the segments that they see as the future. This includes single-serve snacks.
During the year, the company spent $106 million on new delivery vehicles and technical equipment for its factory off Red Hills Road in Kingston, and took out a $116-million loan to finance its operations.
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