Asda has transferred own-label business worth an estimated £10 million a year from Allied Bakeries to RHM Bread Bakeries.
Allied will stop supplying private-label to Asda at the end of February, apart from two lines – its “Big Loaf” in medium- and thick-sliced. It will continue to supply a range of branded goods.
The loss of volume, which could be up to around a million loaves a week, will mean Allied will have to review its bakery operations, speculated baking industry city analyst David Lang from Investec. “Allied’s new CEO Brian Robinson will want to have a look at restructuring to bring throughput in line with capacity,” he said.
Allied recently picked up a chunk of Tesco’s business from Harvestime (2005), which would mitigate the loss of volume, he added.
Asda bakery director Huw Edwards told British Baker the decision to transfer to RHM was taken on a “whole range of issues”. “We never look at it purely on price. It’s about quality and service as well,” he said.
Asda’s own-label range will remain as it is after the transfer, Mr Edwards added. However Asda will update packaging to bring it in line with its new-look morning goods range, relaunched in Autumn with brighter packaging. “We are taking the opportunity to make the range look more contemporary,” said Mr Edwards.
Allied took over the Asda business about three years ago. In a statement, it confirmed the changes, but noted: “Allied continues to supply Asda with a wide range of bakery goods, including brands such as Kingsmill, Allinson and Burgen.”
RHM said it did not wish to comment.