Kingsmill owner Allied Bakeries is set to close its Norwich distribution depot.
News of the planned closure comes two weeks after it was announced Allied had been hit by “significant margin decline” as a result of intense competition in the bread market.
This week Allied said the investment needed to modernise the buildings and infrastructure at the Norwich depot would not provide sufficient return in the long term.
“Due to the highly competitive nature of the UK bread market, we continually review our operations to continue to offer the best service to our customers and to manage the cost base of our business,” said Allied operations director Nick Law.
Allied is currently consulting with the 49 staff that work at the site, adding there would be no compulsory redundancies.
The bakery is in talks with third-party logistics firm CEVA about it taking on local deliveries, and is hoping a “significant number” of employees will transfer their employment to that business.
“We don’t take decisions like this lightly, and appreciate this will be an uncertain and difficult time for everyone at the Norwich depot – many of whom are long-serving and loyal members of the team,” added Law. “The proposed depot closure in no way reflects on either their high professional standards or absolute commitment to doing a great job for our customers.”
In a trading update ahead of a close period for its full-year results, Allied owner Associated British Foods this month said the bakery business had benefited from the relaunch of Kingsmill earlier this year.
But it added: “A very competitive market with low retail prices, a resurgence of lower-margin own-label as retailers sought to differentiate their bakery offering, and inflationary cost pressures combined to result in a significant margin decline.”