Hovis brand loyalty tested as Tesco dispute continues

06 December, 2010
Page 4 

The Hovis lines delisted by Tesco in a two-month dispute over price are at risk of suffering long-term brand damage as shoppers switch to rival products, according to one brand expert.

Don Williams, CEO of branding and design consultancy Pi Global, said that the ongoing lack of availability of Hovis lines, such as Seed Sensations, in Tesco stores could have implications for all Hovis' brands.

"Consumers, unless they're die-hard obsessives, will not switch supermarkets for the sake of a loaf of bread, but they will switch brands," said Williams, "The problem for Hovis is that its Tesco consumers, who have a penchant for, maybe, seeded loaves, will trial competitors' products and, if they prefer them, it may result in migration from a particular product line and tempt trial of other offerings."

Tesco delisted around 11 Hovis lines in early October after the retailer refused to accept a price increase from Hovis parent company British Bakeries, owned by Premier Foods.

As BB went to press, Tesco.com showed the retailer was still not listing any of Hovis' Seed Sensations, Granary or Hearty Oat breads, although some white, wholemeal and Best of Both lines were available.

According to Martin Deboo, an analyst at Investec, Hovis has been able to stand its ground for so long because the lines that have been delisted represent a relatively small percentage of sales. "Sales of Seed Sensations and Granary only accounted for around 10% of British Bakeries' sales this year," he said.

Hovis said it had no comment to make when contacted by British Baker. A spokesman for Tesco said: "Our bread range is our bread range and our customers are very happy with it."

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