Battle lines are drawn

01 December, 2006
A regional taste map of Britain, commissioned by Warburtons, shows how regional power struggles are playing out in the plant baking industry. Andrew Williams reports
Page 26 
This month, Tesco issued a regional bread map of Britain, charting the local tastes across the country (British Baker, 3 November, pg 4). Meanwhile, Warburtons has issued its own taste map, charting how most people's bread tastes are increasingly favouring Hovis and Warburtons.
Based on sales figures of plant bread producers in each region, the Warburtons Bakery Review 2006 sheds light on some intriguing power struggles that are playing out within the plant baking industry.From the Midlands upwards, the UK map resembles the United States of Warburtons, while Hovis still dominates Wales and the south - a key battleground for the coming years as Warburtons increases its activities in the southern regions.Swing-0-meter resultsThe swing-o-meter shows that Hovis managed to boost its market share in all 10 UK regions, while Warburtons slipped up slightly in only one region - the north east - with a 0.2% share drop.Troubled Kingsmill had a tough year, appearing to be on the back foot in every region, and losing market share.But it was supermarket own-label that came off worst, between July 2005 and July 2006, with a value drop of 2.3%.The battle lines are being firmly drawn in the south. Warburtons is continuing its offensive on London and the south east, with a new site sought in the south and a £50m investment, doubling the size of its Enfield site over three years.This could further develop Warburtons' front-running 28% share of total consumer spend on wrapped bread.Warburtons is starting to build share in its development markets, as capacity becomes available following the Tuscany Park build and the repair of the fire-damaged Wednesbury plant, along with investments in Stockton, Rogerstone and Enfield.Where Warburtons has become the clear market leader, it has established a lead over Kingsmill and Hovis, while taking share from own-label, says market analyst David Lang of Investec.Now, as it moves into Hovis-land and starts to develop a meaningful presence in the west and south west, as well as coming up against Kingsmill in the south east, "it'll be a real punch-up," says Lang."The other two aren't going to be in any mood to give ground. The three of them are going to be fighting it out and the clear loser is going to be own-label."The question is whether Warburtons succeeds in establishing the sorts of strengths in the south west, London and the south east that they've achieved in their old Heartlands - the north, Scotland and the Midlands."But it was Hovis that outperformed Warburtons on value growth, up 21.2% in the year to June 2006, compared with a still-impressive 16.3% growth for Warburtons."Hovis has done a very good job in building on its historic health platform - it's a very relevant brand, especially with Best of Both - and they've been investing in that heavily," says Lang."But now Kingsmill is clearly getting its production and positioning sorted out, it is arresting the decline and the relaunch starts in earnest early next year." Welsh successHovis had a great year in Wales and the west, with up to nearly a quarter of total market share.Warburtons gained on third-placed Welsh plant baker Brace's, which also had a decent year at the expense of Kingsmill. The latter hangs on to its second-placed spot despite a 3% fall.Southern leader Hovis and Warburtons both made big gains across London and the south and east of England, with share up between 3% and 5%, and Hovis performing particularly well.And if trends continue, Hovis could be on course to overtake Kingsmill as the number-two bread behind Warburtons in Scotland.On the products side, the ongoing strategy across the market is to increase the average price of a loaf by getting people to trade up - a trend that has already seen an increase of 2% in the total number of bakery units sold and bakery sales value up by 6.3% on the previous year, to over £3 billion.Bread's value went up by 9.4%; the two best selling SKUs were Warburtons Toastie White, then Medium White, although the fastest-growing was Hovis Best of Both Medium.Boosting branded bakery further will mean encouraging experimentation into rolls and "bakery occasions", such as crumpets, bagels and tortillas - an area often neglected by consumers who typically buy just a loaf, says Warburtons.While it's virtually impossible for the bread category to grow the number of loaves sold - at close to 99% penetration - Warburtons predicts £96m could be added to the bakery category by 2008 if every household not currently buying rolls or bakery occasions could be persuaded to buy just one product a year."It's part of the market that hasn't been particularly well branded and Warburtons has brought something to the category," says Lang.Branded crumpets, tortillas and malt/fruit loaves all saw sizeable increases in value sales, with New York Bagels the top performer in percentage growth."The challenge for retailers and manufacturers alike is to ensure the category remains one in which shoppers want to experiment, through innovation of product and in-store innovation," says chairman Jonathan Warburton.Set against changing shopping habits, with most purchase decisions pre-established through learned patterns of behaviour, and people shopping more frequently but paying less per visit, the key to expanding this category will be getting people to experiment more.*Data sources: AC Nielsen Scantrack and Homescan, 52 w/e 17 June 2006; TNS Worldpanel; Warburtons Bakery Research; HIM CTP 2005; ID Magasin Research; Family Food Panel 2004



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