Warburtons plans to refurbish the bakery so that it is ready to start production within nine months. It will be Warburtons' 12th bakery and will help to serve the North East alongside the firm's existing facility near Newcastle upon Tyne.
Jonathan Warburton, company chairman, said: "The north of England is one of our strongest trading areas where demand for Warburtons products continues to grow. The addition of another strategic site in the south of the region makes sound business sense. It will help us provide an even better service to our retail customers and consumers."
The move is part of Warburtons' aim to corner the premium bread sector by combining mass manufacture with local supply. "One of our brand aspirations is that we try to provide the freshest, softest premium brands to the market and to do this we need to have plants really close to our points of sale," said Roz Cuschieri, group marketing director.
The popularity of local produce generally has certainly made a comeback among consumers in recent years, as shown by the rapid growth in farmers' markets offering premium local goods. A 2003 survey by market researchers Mintel showed that 23 per cent of those asked bought food from farmers' markets and that British shoppers preferred local goods because they deemed it to be fresher.
Warburtons' 'local' policy has paid dividends so far by making it the UK's third biggest bread manufacturer behind British Bakeries and RHM, a feat made more impressive by the fact that Warburtons makes no own-label products.
The company must now hope that the UK bread market can hold up to its programme of expansion, which also includes the construction of a huge bakery capable of producing two million bread loaves per week in West Yorkshire.
The latest figures from Mintel show that the UK bakery market has been steady in the last few years with a value of more than £3 billion in 2003, and most growth is expected in the premium sector; a move likely to suit Warburtons.
But the threat of market stagnation still looms, particularly in the face of a threat from low-carbohydrate trends, and the UK Federation of Bakers reported that total bread production fell from 150,000 tonnes in 1999 to 125,000 tonnes in 2003.
Cuschieri believes the industry, and Warburtons, can cope: "All companies have a responsibility to continuously innovate and assess what consumers want, and if we keep doing that then we can continue to grow."