Competitive wrapped bread market takes £25m toll on Warburtons

Warburtons’ turnover fell more than £25m last year as the “increasingly competitive” wrapped bread market impacted the business.

But although sales fell 4.6% year on year to £526.3m in the 52 weeks to 24 September 2016, operating profit increased 2.3% to £35.5m as the business kept a tight rein on costs. The average number of employees decreased from 4,588 to 4,522 over the period.

In April this year, Warburtons announced plans to close its Giles Foods bakery in Milton Keynes, with the loss of almost 220 jobs. At the time, the company said the decision was a result of “significant ongoing challenges facing the business and is despite considerable time and financial investment”. The company has since confirmed the site will close.

In its annual report for the 52 weeks to 24 September, posted last week, Warburtons said profit had been achieved through a “continued focus on the quality of product and service” and development of new product ranges. These included the Giant Crumpets launched to great fanfare in October 2015 with an advertising campaign fronted by The Muppets.

Warburtons has this year been given planning permission to add a two-storey 2,278sq m research and development centre to its existing headquarters and bakery at Hereford Street, Bolton.

“As an ambitious business, Warburtons are proud to be the number one bakery brand in the UK, but have ambitions to become Britain’s best food business,” stated the planning application. “The new R&D facility will be a key development, which will ensure the company continues to innovate and lead the bakery food sector.”

Warburtons said other recently introduced product ranges had continued to grow in the period covered by its annual report and had partly compensated for the “general market decline and increasingly competitive nature of the wrapped bread market”.

“Our performance has remained stable, despite the continuation of difficult trading conditions and volume decline in the wider bakery market,” said Warburtons chairman Jonathan Warburton. “The performance reflects our continued focus on breakthrough innovation, quality and service in a very competitive marketplace.”

“As the number one bakery brand in Britain, we are committed to growing our share of the bakery market by developing new products alongside our current leading lines. Continued investment ensures we are focused on meeting the needs of changing consumer trends.  This focus, along with our family ownership structure, means we are uniquely positioned to invest for the long term and ensures that we can always produce the best quality products on the market.”

According to IRI data for the year to 31 December 2016, Warburtons wrapped bread sales declined 11.2% - or around £60m – ahead of the 4.2% decline in the total wrapped bread market.

Warburtons remains the most popular UK fmcg brand, showed the annual Brand Footprint UK ranking produced by retail analysts Kantar Worldpanel last month, with 84.2% of the population buying it an average of 25.2 times a year. Warburtons has lost some ground compared with last year, however.

The bakery has recently been filming a new ad campaign featuring comedian Peter Kay.

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