Australian food manufacturer George Weston has followed the example set by one of its major competitors, Goodman Fielder, and announced a 5% increase in wholesale bread prices. As the Australian Financial Review reported, the move is in a bid to recover higher raw material prices. George Weston held out a good two weeks after Goodman Fielder hiked prices, possibly to see if the competitive advantage it would thereby gain would be sufficient to offset the lower price it was charging – and found it was not.
The retailers are bound to pass on the price increases to consumers, as there is no major third force in bread to force prices down. 
Goodman Fielder’s acquisition of the Bunge/Defiance baking operation two years ago effectively created a two-horse field in the Australian baking and milling sector.
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Analysts said the price rises would help Goodman Fielder and George Weston meet earnings forecasts for the 2001-2002 financial year. However, wheat prices are increasing steadily in Australia, leading some analysts to suggest a further wholesale price hike may be in the pipeline if margins are to be maintained.
Wheat prices has climbed 10% since February, reports the Review, largely due to an expected poor wheat crop in Western Australia, which is suffering its worst drought for over 80 years.
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