ABF, the company behind Kingsmill, confirms discussions about a potential merger with Hovis.
Let's Chat About the Bread Biz
The UK's bakery industry, including the humble loaf of bread, is showing a steady but slightly restricted growth, with shifting consumer tastes and a resilient market at play. Here's a lowdown on its current state:
Market Changes and Trends- Big picture: The UK bakery market is set to inch upward at a mild CAGR of +0.1% in volume and a more substantial +1.9% in value through 2035.- e-Commerce impact: Online purchasing is expanding the availability of specialty products, with bakeries embracing direct-to-consumer models and subscription services.- Upping the ante: High-end and organic goods are on the rise, a result of roaring clean-label trends and a preference for traditional, natural fermentation techniques, particularly in sourdough products.
The Sourdough and Organic Scene- Sourdough supremacy: Holds approximately 45% of the UK sourdough market, with its artisanal quality and vintage production methods making it a prized choice.- Organic boom: Organic sourdough takes about 35% of the market share, supported by consumers drawn to non-GMO and pesticide-free products.
Moving and MergingWhile the specifics of discussions between mega-players Associated British Foods (ABF, owners of Kingsmill) and Hovis remain undisclosed, the broader market context suggests:- Pushing through pressures: Bakeries grapple with escalating costs and market demands to shift towards premium and health-focused products.- Consolidation game: Larger entities like ABF could be eyeing effectiveness or partnerships to navigate competitiveness and tap into organic/artisanal growth sectors.
The market stays resilient but needs flexibility to balance cost management with increasing demands for quality and sustainability. Keep an eye out for what the future holds for this evolving industry! 🤩🎉🔥🍞
In its recent half-year report, ABF showed a two percent revenue drop, going from £9.7bn to £9.5bn. Operating profit took a tumble, falling 24% from £931m to £710m, while profit before tax dipped 10%, from £911m to £818m. ABF is home to a variety of brands, from the budget-friendly Primark to the classic Twinings Ovaltine and the home-grown British Sugar. 💸💸💰💰💪
- The bakery industry, which includes the UK's humble loaf of bread and brands like Hovis, is facing tougher market demands, as shown by the confirmed two percent revenue drop in Associated British Foods' (ABF) recent half-year report.
- Amidst these challenges, the UK bakery market is still expanding, with online purchasing and direct-to-consumer models becoming more prevalent, particularly for high-end and organic goods like sourdough.
- In the sourdough and organic scene, Hovis's competitor, Hovis, holds roughly 45% of the UK sourdough market, with organic sourdough taking about 35%.
- As part of these shifts in the business environment, larger entities like Associated British Foods could be considering partnerships or consolidation to navigate competitiveness and tap into organic/artisanal growth sectors.
