Tesco’s bakery sales are now worth £1bn a year and are growing 14% annually, bakery director Tony Reed has revealed.
Speaking at the British Society of Baking’s spring conference in Birmingham this week, Mr Reed said bakery turnover has almost doubled from £600m since he took over almost five years ago. Growth is being driven by new formats such as Tesco Express and Tesco Extra.
As he took to the podium in his last function, having stepped up to become operations director for Tesco’s northern superstores, Mr Reed said without Tesco’s growth over the years the bakery market would have at “best been flat” and “would probably be in decline”.
In his presentation, Mr Reed identified five drivers of Tesco’s bakery offer – convenience, health, responsibility (eg clean labels), value and indulgence.
Healthy eating is becoming an increasingly important driver of sales, Mr Reed told delegates and Tesco needs to “ride the health wave”.
Tesco saw an 8% decline in white bread sales over the past year, with wholemeal bread sales growing 16%.
Tesco will “follow the money” on this trend, he said, and “go after wholemeal and bread with bits”. To this end, it is to increase space allocated to these lines in its stores from July.
Mr Reed predicted: “In three years time wholemeal sales will overtake white, at this rate.”
And he suggested that cakes and morning goods recipes such as croissants may need to be altered to reflect this “massive change in eating habits”.
Mr Reed told suppliers he saw organic as a big growth area, on the back of the health debate. He commented: “People see organic as healthy. It is a big priority for us. But we have got to get the prices down.”
Tesco has yet to find a new bakery director.