Informal bakeries flood market with cheaper bread despite GMAZ wheat price hikes  – NewZimbabwe.com

By Alois Vinga

DESPITE the recent indications by the millers on impending wheat price hikes, small scale bakers have since taken advantage of the exorbitant bread prices by offering much cheaper bread which is fast gaining a considerable market share.

A visit by the NewZimbabwe.com Business news crew to a number of suburbs around Harare revealed that informal players have seized the void created by bigger players like Lobel’s and Bakers Inn whose current bread prices at around US$1,20 has outpaced affordability.

Bread manufactured by informal sector players and other formal but small-scale bakeries like DCK Bakeries and Nature’s Pride are gaining considerable market share on the strength of improved quality and reasonable pricing structures.

For instance, the DCK Bakeries charge about US$1 plus ZW$200 for two loaves of bread. Other emerging players like TN Bakeries are charging US$1 and an additional ZW$300 for two loaves of bread.

Some of the less common informal players are charging US$1 for two loaves of bread.

A tuck shop owner who sells such bread products at Glen View 1 shopping center who identified himself as Tawanda confirmed that in comparison, standard bread from market leaders like Baker’s Inn and Lobel’s were no longer selling as fast as they used to.

“I used to sell 100 loaves a day from the renowned bakeries in the past but more recently I can’t push more than 50 loaves a day because customers can no longer afford. Instead, preferences have shifted towards the cheaper bread from small bakeries which are in fact struggling to meet demand,” he said.

The developments fly in the face of yet another indication of looming bread price increases following the announcement by the Grain Millers Association of Zimbabwe (GMAZ) corporate affairs manager, Andrew Kunambura.

“The milling industry continues to face serious inflationary headwinds which include, the finance cost occasioned by the increase of interest rates from 100% to 200%. The increase of the local wheat price from GMB to millers by 0,8%,” he said.

He blamed the interbank exchange rate has moved up by 5,5% from US$1: ZW$362,6 to US$1: ZW$382,5 and said the currency devaluation had severely impacted on the general operation cost coupled with an upward review of the prices of fuel.

The Food Federation and Allied Workers Union of Zimbabwe (FFAWUZ) secretary general, Runesu Dzimiri also confirmed the trends saying they have even spread to other sectors like butcheries.

“Indeed, we are also seeing products by small scale bakeries flooding the markets as they take advantage of lowered prices. We then wonder why these larger players are now being outwitted by the smaller bakeries.

“Yes, they always complain about rising wheat prices but where are these small-scale players sourcing theirs from?” he asked.

The FFAWUZ leader described the situation as complicated arguing that while bread is available at cheaper prices, organizing and respect for workers’ rights in informalised sectors becomes difficult.

“But then again, these bigger bakeries remain reluctant to increase workers’ salaries in line with the rate at which they are increasing product prices. They have even declined to offer US$ allowances,” he said.

However, Bakery Industry Workers Union official, Munyaradzi Shanga said small bakeries are making it because they are easy and cheaper to run due to small compliments usually not remunerated in terms of the industry regulations.

“Informal sector traders like vendors also prefer to buy bakery products from small bakeries for resale vendors. The machinery like ovens which they use are relatively small and considerably cheaper to run for maximum profit.

“I wouldn’t agree on this notion about quality because theirs is usually compromised but still they stay afloat and wedge stiff competition with large bakeries. They also use limited premix thereby compromising the quality but still they command a fair share of the market,” he said.