Tesco is selling 800g loaves of Kingsmill at two-for-£1.20 – the lowest price for a major bread brand in at least five years.
Britain’s biggest supermarket kicked off the promotion last month, in the same week it announced plans to boost its UK presence in a £3.7bn merger with wholesaler Booker.
Five 800g SKUs are offered on the two-for-£1.20 deal according to data from retail analyst BrandView.com: Kingsmill 50/50 medium and thick; Kingsmill soft white medium; and Kingsmill wholemeal medium and thick.
The recommended selling price for these loaves is £1.25.
The previous low point for 800g or 750g branded bread has been 75p for a single loaf, with both Hovis and Kingsmill sold at this price at certain times in the past year.
Tesco’s new deal follows more than two years of drastic price cuts in the wrapped bread category, with bread being used as a key weapon in the supermarkets’ battle for market share.
The average price of a large branded loaf at one of the ‘big four’ supermarkets (Tesco, Asda, Sainsbury’s and Morrisons) has fallen 11p in the past two years, from £1.21 in January 2015 to £1.10 this week.
Average prices have recovered slightly in the past six months, from a low of £1.05 last September.
Price cuts have contributed to more than £120,000 being wiped off the value of the wrapped bread category, a decline of 8.4% year on year compared with a 7.2% drop in the volume of bread sold (IRI 52w/e 8 October 2016).
Bakers will be hoping the Tesco deal does not promote a further round of price cuts as margins are already under pressure from commodity price increases.
In addition to a weakened sterling pushing up the price of imported commodities, the price of UK wheat has increased as a result of tighter supplies and strong exports.
Kingsmill owner Associated British Foods declined to comment on the Tesco promotional activity, which is due to end on 12 February.
Average price of large (750g+) loaf of Warburtons, Hovis and Kingsmill bread at ’big four’ supermarkets. Source: BrandView.com
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