Further consolidation on the cards for bakeries

The European bakery market will continue to consolidate over the next five years in the wake of the recession, with frozen bakery companies leading the way in mergers and acquisitions, according to a new report.
The Rabobank report, The Bakery Sector Beyond the Down-turn, predicts that the bake-off market will go from strength to strength in coming years, as retai-lers look to offer 'freshly baked' products, while reducing wastage. Higher margins in frozen bakery mean firms in the sector are also well-placed to make acquisitions.
"Higher profitability can be attributed to the value-added nature of their products, which requires specialisation," said the report. "Bake-off products are prepared for use by bakers in batches, as required for sale, thus optimising stock and reducing wastage. They also attract a higher consumer price because of their 'freshness' in stores. Due to frozen bakery products' longer shelf-life and transportability, a business model can extend across a region, improving scaleability."
As consolidation continues and companies focus on their core business, controlling input costs will become more important, said the report. "Bakery players are expected to use hedging products or introduce joint buying arrangements with other players. They will also aim for back-to-back contracts with buyers and clients to minimise volatility," it said. Other factors shaping firms' resilience include controlling distribution costs and increasing exports.

In Short

Big supply deal
Distribution company JJ Food Service has struck a multi-million pound deal, which will see it supply ambient, chilled and frozen products to Cooks the Bakery stores across the UK. The open-ended contract, worth £4m per year, covers 72 Cooks stores, previously supplied by 3663.

Northern invests £26.5m in Fox's

Northern Foods is to plough £26.5m into its Fox's Biscuits brand, with new automated technology replacing hundreds of jobs. The firm plans to introduce automated equipment at its Batley, Kirkham and Uttoxeter sites, resulting in a reduction of approximately 220 employees "mainly through voluntary redundancy".
In its half-year results, the company said key investments over the next 18 months would include a new Creams line at Kirkham, new automation for its Melts line at Batley and a new wrapping system at Uttoxeter.
For the 26 weeks ended 26 September 2009, its bakery division revenue rose by 3.9%, with profits up 26.2% to £8.2m.
A £2m marketing drive for the Matthew Walker pudding brand will be launched ahead of the Christmas period.

North-west baking trade gains £1m grant boost

The baking industry in the north west is set to benefit from over £1m of government investment, which will be used to develop new products and boost production.
The North West Regional Development Agency (NWDA) has awarded grants to Bells of Lazonby, Peter Hunt's and United Biscuits for a variety of projects in the region. Bolton-based Peter Hunt's has secured a £250,000 grant under the Grants for Business Investment (GBI) programme to invest in new equipment, enabling the savouries company to diversify into the £100m par-baked Continental pastries market. The company believes it could gain 5% of this market within three years.
David Wood, Peter Hunt's MD, said: "The UK imports large quantities of freshly-baked croissants and Danish pastries, available in supermarket in-store bakeries. With the help of this NWDA grant, we will soon be producing high-quality products for this growing UK market from a new production line in Kearsley."
Meanwhile, Cumbria-based Bells of Lazonby has secured a £480,000 grant from the NWDA under the Grants for Research and Development scheme. The money will be used to improve the nutritional value of 'free-from' products by cutting salt, fat and processed sugars and boosting fibre content over a three-year period. As part of the deal, Bells will also invest £1m-£1.5m.
Said Bells' MD Michael Bell: "This project will bring the principles of thoughtful nutrition to free-from baked goods."
United Biscuits has also benefited from a £425,000 GBI scheme investment at its Aintree factory, enabling the firm to increase the output of TUC crackers and to start manufacturing Jaffa Cake Bars.
The NWDA is funded by the government, via the Single Budget, and the EU via the European Regional Development Fund. Its budget for 2009/10 is £397m.

In Short

Gallani to leave BCCC
Barbara Gallani is to step down from her position as sector manager for the Biscuit, Cake, Chocolate and Confectionery Sector Group and take up a new role. From January 2010, she will be the new director of Food Safety and Science at the Food and Drink Federation.

Scottish firm Henry Healy put on sale

Glasgow-based sandwich chain Henry Healy's five former shops are now up for sale after the business went into liquidationin October.
The chain, which has been trading since 1913, had suffered in the face of competition from national chains, coupled with the impact of the recession, said Scott McGregor, joint liquidator at business rescue and restructuring specialist Begbies Traynor. Its 27 staff were all made redundant.
Henry Healy's former shops are located on Hope Street, Queen Street, Mitchell Street, Howard Street and Stockwell Street and are still fully fitted with a good selection of catering equipment. Acting on behalf of the liquidators, business agent Christie & Co is inviting offers for the leasehold of the shops by 12pm on Friday 27 November.

Independents set tone for modern bakery outlets

Terence Conran's soon-to-be-rolled-out Albion café and bakery concept is part of an influential new breed of independent bakery shops that combine upmarket retail with casual dining.
That's the view of retail analyst Greg Hodge, from research company Planet Retail, who says that upmarket bakery shops and cafés, such as Gail's, Hummingbird, Konditor & Cook and Patisserie Valerie, are having a growing influence on larger chains. "These independent retailers are at the cutting edge and are starting to have an impact on the larger players," he said. "The deli-cum-café concept is all about fast-casual dining and you can see this trend developing with chains such as Carluccio's and Nando's, which combine elements of retail and foodservice in a relaxed setting."
The latest in this new generation of outlet is Shoreditch-based bakery and café Albion, due to be rolled out to three sites in London next year. Restaurateur Terence Conran has invested £10-£15m in the project, which will open new outlets in Covent Garden, Victoria and Regent's Park in the spring and summer. The chain could also be exten-ded nationally.
"Albion has been such a smash hit in Shoreditch we really feel it is something that could work throughout London and beyond," said Conran. "Albion is in many ways a British version of Carluccio's, with a small shop and a café. But it makes bread instead of pasta and has well-known British dishes on the menu."
Hodge added: "People like the quirkiness of independents and the fact they are not a chain."

In Short

Sodium reduction
Market research expert Mintel has revealed that sodium reduction features in its 2010 global Consumer Packaged Goods predictions as "the next major health movement". Mintel director of trends and innovation David Jago said the difference with sodium reduction was that it is being "pushed by food companies and health bodies, not by consumers".

New food and drink course in Scotland

A new qualification has been launched in Scotland, which aims to "open up new horizons" for employees in the food and drink industry.
The Higher National Certificate (HNC) in Food Science and Technology, which commenced at the end of October at Glasgow Metropolitan College, is a subsidised two-year day-release course that offers existing employees the chance to qualify as a food technologist in a bid to bridge the skills gap in this area.
The course does not have specific bakery units, but covers a lot of the general science behind baking including nutritional analysis and scientific process, said a spokesperson for food and drink sector skills council Improve. It costs £540 a year.

Starbucks adopts indie approach for UK stores

Starbucks has turned around its fortunes following a troubled patch, which saw it shed stores, as the UK's second-biggest coffee chain gears up to roll out its new "bespoke" outlets.
A spokesperson told British Baker: "We have more customers than ever before and our like-for-like store sales in the last three months have returned to growth.
"The last year has been challenging for us and for some of our customers, who have faced a real squeeze, but we've taken a number of steps to improve the value and experience we offer our customers and it's paying off," she added.
The firm will spend £25m over the next year refurbishing 100 stores as part of an exercise that "allows us to take a root-and-branch look at environmental performance", she said. Star-bucks designers will carry out all the designs on a store-by-store basis.
"The new approach means our designers will look at each UK store individually and ensure it reflects the environment and community in which it is placed," she said.
Among the changes will be a 20% cut in energy costs and around 10% in water use. The choice of food has been widened for breakfast, with crepes, fruit toast, porridge and whole fruit on the menu.
Starbucks' reward card scheme now offers free extras, such as a shot of Fairtade espresso, and free Wi-Fi will be available in-store.
l See Interior Motives, page 22

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