Gardenia to expand plant, cut bread prices

MANILA, Philippines - THE LOCAL subsidiary of bread multinational firm Gardenia International Pte. Ltd. is spending P700 million to expand its factory in Laguna. Gardenia is hiring 360 more workers as it expands its bread plant in Laguna. With the expansion, Gardenia Bakeries Philippines, Inc. seeks to more than double its daily production by mid-2009 to 250,000 loaves from 100,000. The expansion will come as the bread company expects falling flour prices, which makes bread cheaper, to boost demand. Company officials Monday said they would cut bread prices today amid the continued flour price drop. Falling flour costs have also prompted the firm to cut the price of a 600-gram loaf by a peso, and by 50 centavos for a 10-piece pack of pan de sal, effective today. "Gardenia is initiating a price rollback so the other bakeries will follow immediately by reducing their bread prices also," the firm, which accounts for 65% of bread sales in supermarkets, said in a statement Monday. "We delayed the expansion by almost two years already because of the high prices of wheat in the world market," Gardenia Philippines President and General Manager Simplicio P. Umali told reporters. Recently, however, US wheat prices have gone down by 6% to its lowest in more than one-and-a-half years due to sluggish demand. Local flour prices have been sliding as a result. The Globe brand of hard flour, for instance, now costs P910 per 25-kilo bag from P960 in September, data from the Trade department showed. Flour millers have also pledged more price cuts next year to reflect the removal of tariff on imported wheat. Gardenia Philippines hopes to recoup its investment in seven years since the loan used to fund the expansion must be repaid by then, Mr. Umali said on the sidelines of the briefing. The firm is also looking at exporting pastries with longer shelf lives by 2010, he added. The company will hire as many as 360 new workers, mostly in the distribution and retail division, for the expansion. — Jessica Anne D. Hermosa, BusinessWorld