Plants must fold if bakery is to rise again, firms are told

More closures are on the way in the own-label plant bakery sector as operators grapple with over-capacity, according to one industry analyst.

"The industry could be looking very different in 18 months' time when rationalisation has worked through," Investec Securities' analyst David Lang told the Federation of Bakers' annual conference.

He pointed out that bakery plant utilisation was still only running at around 70%, when nearer 100% was needed to make the sector viable. Further excess capacity had to be removed, he said.

Outgoing federation chairman Ross Warburton said that major change was likely to flow from the recent consolidation of the own-label producers Harvestime and Rathbones under the name New Rathbones. The company is owned by the miller Finedon, which bought Rathbones from Greencore for euro 30m in April and also had a major shareholding in Harvestime. Greencore sold the bread business when it decided to exit the UK bread sector.

Rathbones' Newport, Gwent plant is already earmarked for closure and a review of its bakeries may result in further losses.

Meanwhile, Warburtons is known to have made use of spare capacity at a competitor's plant following a fire at its Wednesbury factory (Food Manufacture, February 2004, p11).

The knock on effects of consolidation are also being felt by bakery suppliers, according to Ian Pinner, md of ADM Milling, who said it is "passing right back through the chain". Allied Bakeries' chief executive Des Pullen said that consolidation had led to integration of its mills with the company's bakery business.