Hovis has said it is holding bread prices largely firm this year after hikes of up to 30% in the aftermath of Russia’s war in Ukraine as wheat and energy costs were sent soaring.
The boss of the bread and bakery brand – which was founded in Stoke-on-Trent, Staffordshire, 138 years ago – told the PA news agency that Hovis prices were now “relatively stable” thanks to easing costs for the group.
Chief executive Jon Jenkins revealed the group hiked prices by 15% to 30% in its financial year to September 30 2023 after seeing a five or six-fold surge in some commodity prices, while energy and distribution costs also rocketed, following the war in Ukraine.
Wheat prices were impacted in particular after Russia’s invasion in February 2022, with Ukraine having been a major global supplier.
Mr Jenkins said Hovis was not expecting a “repeat of what we saw in 2022”, although he said wage costs remain a pressure.
The comments come as the latest set of available accounts for Hovis showed the group narrowed pre-tax losses in the 53 weeks to September 30 last year to £3.6 million, against losses of £28.6 million in the previous 38 weeks to September 24 2022.
It returned to an operating profit, at £3.2 million against losses of £24.5 million in the 38-week prior period.
Hovis said: “This financial progress was delivered by new pricing as the exceptional commodity inflation triggered by war in Ukraine was passed through to its customers.
“Operating improvements and cost savings were also made to drive a step up in overall efficiency and customer service, critical components of running a national bakery business.”
The group introduced automation across some of its sites as part of cost-cutting efforts, which saw 15 roles impacted at its operation in Belfast.
But Hovis, which employed 2,908 workers in 2022-23, said it was able to redeploy all staff affected by the move.
Mr Jenkins said that having got the group on a firmer financial footing, it is now investing to boost its profile, with a new £2 million advertising campaign starting on Wednesday.
The campaign will reintroduce the renowned Hovis tag line “as good today as it’s always been”, with a voiceover by British actor Christopher Eccleston, who played the Ninth Doctor in the Doctor Who series.
It has also been investing in its supply chain and upgrading its national delivery fleet, while it is expanding a service which sees it carry other bakery products to stores on behalf of its supermarket customers.
But Mr Jenkins added a note of caution over the year ahead, saying the “cost-of-living crisis and recessionary economic backdrop remain challenging”.
He said consumer spending was still under pressure, with the sector also seeing an ongoing switch towards cheaper own-brand products.
Mr Jenkins said the cost-of-living crisis has seen an increase in demand for Hovis sliced white bread, because it is likely to be enjoyed by the whole family.
Hovis was bought by private equity firm Endless in November 2020 from joint venture owners Gores Group and Mr Kipling firm Premier Foods.
The deal followed a major turnaround at Hovis, which sold the majority of its milling business in 2018 to focus on baking operations.
Mr Jenkins said there were “no immediate plans” for Endless to put Hovis up for sale.
“My expectation is that we are going to be working with Endless for a few more years,” he added.