Bakeries in one Victorian town are seeing rising butter prices hit their margins.
Bendigo bakeries say margins are tightening as global butter prices reach record highs.
Dairy Australia senior analyst John Droppert said international prices had been going up for 12 months, first hitting food manufacturers and others who bought large orders of butter.
“In the last few months that has started to make headlines again because we’ve seen butter prices passed through to consumers,” he said.
Flora Hill Bakehouse owner Rod Whittle had been in the business 20 years. He had seen a lot of changes and said this one was big.
“Two years ago I was paying $95 for a 25kg box, one year ago I was paying $120. Now I’m paying $225,” he said.
Mr Whittle had so far avoided passing costs onto consumers but said his profit margins were getting tighter.
Country Cakes used 60kg of butter a week. Owner Doug Clarkson said his prices had also stayed the same.
“I’ve had to use alternative sources (for butter) I would not normally deal with,” he said.
Mr Clarkson said customers would not see a price rise as long as the new sources did not change and Australian butter could be utilised.
“If those sources dry up it will be a whole different ball game,” he said.
The Eaglehawk Bakery used 10kg of butter a week.
They had altered some of their recipes, cutting back on butter and using more margarine. Despite this, they had also worn some of the price increase, owner David McIntyre said.
Mr Droppert said as well as lower production in parts of Australia recently, higher prices were being driven by increased demand for butter and milk at the checkout.
“Health science has become more sophisticated. People are OK with consuming dairy fat now. It’s not the big bad bogeyman we spent 50 or 60 years hearing about. Consumers are buying more butter and full cream milk,” he said.
Television shows like MasterChef were encouraging home cooking, Mr Droppert said, with more people buying butter to make their dishes.
There was also a greater demand for full cream milk, which meant less fat was being put aside for butter.
“On top of all that, the other mega-trend for consumers is around naturalness and having food that’s less processed,” he said.
“Compared to products like margarine, butter’s often perceived as a much more natural product. There’s only three ingredients: cream, water and salt.”