This month has seen a fall yet again in the price of sliced bread. We are all under pressure now running our bakery businesses to compete with the undermining of sliced bread prices. Tesco who have been under the cosh have reacted to Aldi and Lidl’s lower prices on bakery products and reduced the Hovis to 78p. This week Morrisons have Hovis at 75p. I can’t understand why Hovis are putting these deals out there for the supermarkets and I honestly don’t think that they are making any money , once you have factored in credit terms, logistics and general costs like sales teams negotiating the deal in the first place and then there is the technical side of all this. There is also some account manager who has an ongoing dialogue daily to make sure that deliveries have been made correctly and there are no issues.
I understand that the bakeries need to push volume through their plants, but aren’t they being just “busy fools”?
The cost of maintenance on their plants and the new investment in machinery will take it’s toll. It’s just like running your car 24 hours a day, parts wear and servicing is needed more often, they all add big costs to a manufacturer.
The plain and simple problem is that there are too many retailers out there selling bread and knocking each other out to attract customers into their stores. They can afford to sell it cheaply as they can make margins on the other thousands of lines they sell. I blame the retailers myself , they are not selling anymore and our industry is getting put under immense pressure.
The bakers union this week have suggested a minimum wage of £10 per hour, which is fair enough, but where is the extra money coming from? It won’t be the likes of the major multiples as they only want their bread cheaper and cheaper. Something will have to give and it unfortunately will probably one of the major bakery brands, or failing that a lot of redundancies.
Finally I accept that bread is a major part of our staple diet and that families have to be able to afford it, but you cannot run a major bakery operation, pay for TV adverts, marketing, investment and daily logistics so that Tesco can have their margin (which is the lions share of the price still) and the bread sell for 75p, the margin is too fine for the bakers.