Auckland food manufacturer says some costs are coming down, but staffing is a battle

Food manufacturer Venerdi is slicing some of its loaves thinner as a result of rising costs.

Tim Grainger, largest shareholder in the Auckland-based paleo and gluten free firm, said the company had decided against changing any of its recipes as a response to rising ingredient prices. 

Instead, it had decided to increase prices on two of its products, and slice its “dense, nutritious” bread a bit thinner.

Manufacturers such as Venerdi have been hit with swelling costs, as Russia’s invasion of Ukraine destabilised the grain trade and supply chains were disrupted by the pandemic.

Grainger said its paleo bread would now have a few extra slices in each pack and “it toasts up even better now”.

Prices for its paleo super seeded loaf and almond and linseed loaves had risen from $9.99 to $10.29.

Eggs have been one of the more costly ingredient price-rises for Venerdi, Grainger said.

The price the food company paid for a kilogram of eggs had increased from about $19.50 to between $40 to $50 a kilo currently.

A report by economic consultant Infometrics found egg prices had increased by 16% year-on-year in November 2022.

Infometrics said a change in New Zealand’s egg production methods to remove caged egg production had seen available egg numbers fall and prices rise in response to sustained demand for eggs – exacerbated by already-high inflationary pressures on food prices.

Grainger said Venerdi’s new egg pricing came into effect in May and was the largest cost increase the business was facing.

But overall, Grainger said prices “were flattening”. He said Venerdi had seen three pricing decreases and six increases for products or services for manufacture.

Freight had been one of the costs where there had been a “slight reduction” in costs, while rice and pumpkin seeds prices had risen.

“This is the kind of first time we started to see some decreases, but there are still other things moving up ... There is pressure when prices are going up, you're always trying to find those efficiencies to kind of offset [cost increases]. The most obvious is when ingredients go up [in price], because you can't offset that. You can try and get rid of more speed out of the machines, try and reduce waste in the factory ... but it's really nice to see that freight isn't continuing to add into it."

Grainger said the other big challenge for the business is attendance at work. He said the manufacturer had noticed larger "swings" of staff availability since an additional five days of sick leave was introduced.

"That drives a lot of chaos in manufacturing."

He said the firm hired additional staff to try and cover for increased sick days. But ensuring there were enough staff so the business was covering shifts and stability for planning "was the hardest thing to achieve".

BNZ's June rural wrap said there were many potential reasons for the strength in domestic retail food price increases over the past year or so, with many likely operating together.

These included things like the poor weather, labour shortages and supply challenges, rising wages, higher costs through the supply chain including rising NZ international freight costs, and potential changes in margins within the supply chain.