As Goodman Fielder focuses on growing its presence in the artisan bread sector, its chief executive Chris Delaney has said it may not renew its supply contract for Coles dollar-a-loaf bread, unless it gets a price increase.
The dollar-a-loaf supply contract expires at the end of June and Delaney has said he would not be willing to renew the contract at today's pricing.
"At some level of pricing there's a benefit, and that's obviously the question that we're going through," he said, adding that 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.
"We will have good collaborative discussions about where that contract moves to."
He said retailers determine what price they will sell bread at, taking into account the input price and other factors.
Goodman Fielder's beleaguered baking division has suffered as a result of the growth of private label and Coles and Woolworths' pricing strategies. As a result, the company is looking to extend its presence in higher-margin bakery channels, such as food service, QSR and the supermarkets' in-store bakeries.
Last year, the company invested approximately $15 million in an artisan bread plant in Erskine Park, Sydney, with an eye to growing its bakery business in different channels.
The plant includes stone-lined ovens to improve bread crust texture and commercial mixers that create ‘stress-free dough’ and is capable of producing a broad range of batards, baguettes, ciabattas and rolls.
