Kingsmill manufacturer Allied Bakeries would close if the merger with Hovis doesn’t go ahead, the Competition & Markets Authority (CMA) has found.
The provisional findings were revealed in an interim report published today (26 March 2026) by the independent inquiry group which is investigating whether the proposed merger would substantially lessen competition in the supply of bread and other baked goods in Britain and Northern Ireland.
The CMA believes that the merger would not substantially reduce competition in Great Britain as with or without the merger the competition between Allied Bakeries and Hovis would be lost.
However, it has provisionally found competition concerns in the supply of bread and certain other bakery products in Northern Ireland.
As a result, Allied Bakeries owner Associated British Foods (ABF) is currently running a sales process for its bakery business in Northern Ireland. This is largely operated independently to the British business, with its own manufacturing and distribution facilities. Notably, unlike the GB business, the Northern Ireland one is profitable, according to the CMA report.
Why does the CMA think Allied Bakeries would close?
The CMA’s investigation so far noted that Allied Bakeries is a ‘heavily loss-making business in a structurally declining market’, pointing to Kingmill’s weak brand position in the market compared to Warburtons and Hovis which has ‘contributed to the significant decline in branded volumes’.
Notably, Kingsmill has slipped into fourth position in the ranking of Britain’s biggest bread brands – with relative newcomer Jason’s Sourdough taking a podium position – after Kingsmill lost nearly a third of its value sales in a year [NIQ 52 w/e 6 September 2025]. This saw its sales fall from £107.6m to £73.7m. For comparison, Jason’s sales more than doubled from £37m to £79.5m while Hovis suffered an 8.8% loss with sales dropping from £374.3m to £341.1m.
Kingsmill isn’t the only one struggling. During the investigation, some large grocery retailers highlighted the financial difficulties facing bread suppliers and the risk of bread firms exiting the market. Roberts was noted as a recent example of a bread business which had been acquired in a pre-packaged administration process, as well as Morrisons’ decision to shutter the Rathbones bakery in Wakefield as trading conditions in the bakery market become “even more challenging”.
Concerns were also raised about the potential impact of an uncontrolled market exit on bread prices, and the risk of food security owing to supply issues.
Allied Bakeries has made significant losses over the last 14 years due to the overall decline in demand for bread, the increase in demand for lower margin private label products and significant increases in costs such as energy, wheat, and distribution costs. These losses have been funded by parent company ABF while various restructuring initiatives were pursued to try and fix it.
CMA considered whether another buyer would be interested in Allied Bakeries and found that there is ‘unlikely to be an alternative purchaser of the whole AB business’ that would continue to use its assets to supply bread and other bakery products in competition with Hovis. What’s more, any potential purchases would require significant funding to absorb the losses to turn Allied around.
What are the next steps?
The deadline for submitting responses to the interim report is 5pm on Thursday 16 April 2026.
The inquiry group is now inviting ABF and Hovis to submit a remedy proposal within the next 14 calendar days, which the CMA would then expect to consult on publicly.
A final decision is due by 24 June 2026.
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