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Baking bread for the mass market based on modern production technology can be a steady and profitable business.
In Singapore's case, direct import from lower-cost bakers in southern Malaysia has made competition among the local bakers even tougher especially for the lower-end daily staple bread products. Major retailers pushing own housebrands of breads have also added further price competition. To top it all, the local market standard of keeping a 1-day shelf-life for bread has made the bread baking industry a high-cost, high-wastage one - unlikely to produce consistently good profits.
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The bakeries in the shopping centres and neighbourhood shops are giving these local bakers a hard time.
Frankly speaking, I used to buy Gardenia or Sunshine breads but I have shifted to buying full loaf bread from small bakeries.
The quality and freshness are much higher at about the same price.
At least, the bread from the small bakeries will turn mouldy after 3 days but the bread from gardenia and sunshine will remain the same look for a week.
There are probably less additives in the bread from the small bakeries.
Auric Pacific is the owner of Sunshine Bread. It has a pretty good balance sheet(50cts of cash vs share price of 61+ cts). But the ROE is terrible.
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hmm, i am a loyal (possibly blinded) supporter of Gardernia's wholemeal since its "good enough to eat on its own", and value its fibre. I consume it through its whole 5 day shelf span. Now that i checked again, i thought that used to be 7 days. i also found Gardenia in M'sia sold cheaper and what seems to be of lower quality. Sadly the product has been getting less and less shelf space in Sg supermarkets over the years - perhaps due to brand and product proliferation, and less loyal supporters. Agreed though that the plain basic product is commodity and faces tough competition. With so many copies, the moat for the flavoured ones don't seem too deep either.
That said, I think bread is an excellent alternative to rice and will hold its own especially amongst an increasingly western educated crowd. I had a Sg friend who studied in England and loves bread more than rice. Breaktalk is a different permutation of the same thing.
not vested
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Just want to add to the earlier discussion on farmland products etc
I frequent a wholesale type of mini-mart at fishery port road on saturdays mornings to get products of farmland (tuna, potato chips) ORCHARD FRESH etc. They are at a slight discount to supermaket prices. Canned tuna at $1.60 & potato chips at $2.20 when i went a few months ago.
Not sure if this outfit belongs to QAF. I should check it out.
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Yeah, I forgot that I'd read that somewhere. I think it was from one of those interviews in The Edge. *slaps forehead* doh!
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a significant part of rev/profit comes from their AU primary prodn biz
QAF is looking to list this subsidiary prob in 2011
if successful, may see some upside
o'wise, this is quite a flatline stk with nice div
there r risks to this AU biz
read prev yrs' AR for more details
high raw materials (eg wheat, sugar) may eat into QAF profits
see 2008
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