Greggs’ new £35M factory to spread snacks down south

13-Oct-2012 - Last updated on 14-Oct-2012 at 07:40 GMT

Related tags Retailing Commerce Supermarket Baker

Southern promise: Greggs is building a new factory in southern England

Greggs’ plans to invest £35M in a second manufacturing facility are part of its strategy to expand its presence in the south of England.

Julian Wild, food group director at legal firm Rollits, told FoodManufacture.co.uk: “Greggs is looking to expand its geographical territory in the south – particularly the south west – to fill in the parts of the country where it’s less strong.”

Wild said the new factory would enable Greggs to supply its increasing number of retail outlets in the south of England.

Greggs has a total of 1,641 shops across the UK.

In a statement issued to FoodManufacture.co.uk, the retail baker said: “We now anticipate opening around 100 net new shops over the year as a whole, ahead of our original expectation of 90. Our new shops are performing well and nearly half of these are in locations away from traditional high streets.”

The retail baker already has outlets in four motorway service stations and plans to open a further 30 in partnership in Moto Hospitality. Its two most recent openings were in Cobham on the M25 and Baldock on the A1 in Hertfordshire.

Wholesaling and franchising

Its brand has also shown a strong performance in wholesaling and franchising, in partnership with Iceland.

Greggs said: “The significant expansion of our wholesaling business, combined with the continued acceleration of new shop openings has brought forward our existing plans to build a second savoury manufacturing facility in the south of England.”

The company is now looking at potential sites for the factory and anticipates that construction will commence in mid-2013.

Greggs said: “This will be a £30–35M investment over a two-year period. It will provide the capacity we need to fulfil the significant growth potential for the brand in wholesaling, franchising and new shop openings while also further reducing our logistical costs.”

New channels

The baker said new channels such as its “strong new shop opening progmamme and continued success in wholesaling and franchising” had helped to drive growth in its total sales, which grew by 5.9%.

Greggs said: “Our ‘bake at home’ sales through more than 750 Iceland Foods stores continue to perform ahead of our original expectations. We have launched two new products, corned beef pasties and morello cherry lattice bakes, taking our total number of product lines available through Iceland to 11.”

Wild applauded the retail baker’s innovation: “They’ve done a remarkable job in one of the toughest sectors of the market. They’re extremely good value for money – which is a key to success in a recession – but they’re also doing some very interesting things by developing their coffee offering. Chief executive Kennedy McMeikan is doing an outstanding job in a difficult environment.”

To read about Greggs’ latest mixed financial results, click here.