New bakers set to squeeze out larger competitors

By Catherine Boal

- Last updated on GMT

Related tags: Profit

A new group of UK bakery companies is gearing up to take on the
giants of the industry, according to market analyst group Plimsoll.

Research from the firm shows that emerging companies are increasing sales at three times the rate of larger competitors, delivering four times the profitability and giving five times the investment. Senior analyst David Pattison told​: "Our research shows that a group of small companies are overtaking the larger players in terms of profits, sales and Return on Investment." ​Tough trading in the sector has left the way clear for small firms poised to take advantage of factors such as price deflation, which are proving difficult to absorb by market leaders. Companies such as Premier Foods-owned RHM, Inter Link Foods and, owner of the UK's top bread brand, Warburtons dominate the upper end of the market. However these bakery giants have all felt the effects of unseasonable weather, rising commodity costs and spiralling energy prices over the last year. Out of the top 100 bakery firms, 46 are making less profit than last year with salaries at the top commanding 26 per cent of sales. Pattison said: "21 of the bigger companies are displaying symptoms of extreme tiredness. But the big companies are desperate not to miss out on the new profit and growth areas, so they are busy hunting down the emerging firms." ​ With consolidation such as Premier Food's recent £1.2 billion (€1.76bn) acquisition of RHM characterising the high end of the market, bigger companies may find themselves joining forces to maintain leading positions in the sector. Plimsoll's report is one section of a two-part analysis of the top 100 UK bakery industry. The report focuses on up and coming companies as well as examining the performance of market leaders.

Related topics: Ingredients

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