Trading Room home page

Goodman Fielder wants better bread price

Market watch top headlines

Australian reports

World reports

Stocks to watch

FMG, AGO, BHP, RIO, JBH, HVN, WOW, WES, MYR, PMV, PDN, UGL, LEI,

MELBOURNE, Feb 13 AAP

February 13 2013, 4:09PM

Food supplier Goodman Fielder says it may not renew its contract to supply supermarket giant Coles with cheap bread unless it gets an increase in price.

Goodman Fielder chief executive Chris Delaney said on Wednesday that its contract to supply bread to Coles that is sold for one dollar per loaf expires on June 30, 2013.

"I would not be willing to renew that contract at today's pricing," Mr Delaney told reporters.

"But at some level of pricing there's a benefit, and that's obviously the question that we're going through."

Mr Delaney said the world had moved on in the past 18 months.

"I think there is a recognition of that in the industry, which would include the retailers," he said.

"We will have good collaborative discussions about where that contract moves to."

Mr Delaney said the Coles contract was a significant contract that carried a lot of volume.

He said retailers determine what price they will sell bread at, taking into account the input price and other factors.

Goodman Fielder's biggest division, baking, has been under pressure from the low prices of private label bread such as those offered by Coles and Woolworths. Rising input costs have also had an impact.

Goodman Fielder said price pressure from supermarket private label bread in Australia continued to place negative price and volume pressure on proprietary-branded bread.

Goodman Fielder's bread brands include Helga's, Vogel's, Nature's Fresh, Freya's, La Famiglia, and others.