Associated British Foods Finance Director Discusses the UK-Based Group's Grocery Business in an Interview With

Monday, November 22, 2010

BROMSGROVE, England, November 23, 2010 - In an exclusive interview with, Associated British Foods
(ABF) finance director, John Bason, discusses the UK-based group's grocery
business, which spans markets including the UK, the US and Australia, and the
impact that rising commodity prices are having on the company.

After ABF posted a 26% jump in underlying annual pre-tax profits,
just-food managing editor Dean Best spoke to Bason about the performance of
the company's grocery division over the last 12 months,
a business that includes Kingsmill bread, Patak's cooking sauces and Mazola
cooking oil.

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Food manufacturers are feeling the pressure of rising commodity costs but
Bason insisted the impact on ABF had been "a mixed bag". Rising wheat and
edible oil prices are affecting margins at the company's UK bread and US
grocery operations, although soaring sugar prices in China have helped the
group's local sugar business. "We really benefit from these much, much higher
prices in China. They went two years ago to a low point more like CNY3,000 a
tonne - they are nearly at CNY8,000 a tonne now," Bason said.

Rising commodity costs mean manufacturers are asking for price increases
from their retail customers. Bason said ABF is no different. "When wheat
prices go up 50%, you have to talk to the retailers in terms of looking for
an increase in price."

Premier Foods, a main rival to ABF in the UK bread sector, has recently
had a number of its brands delisted by leading supermarket Tesco after the
grocer refused the manufacturer's request to increase prices. Bason said
talks with UK retailers over price were always "tough" but said ABF's own
negotiations were "progressing well."

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