Competition heats up in crowded bakery market

By Catherine Boal

- Last updated on GMT

Related tags: Marketing, Analyst

At least 100 British bakery firms are vulnerable to aggressive
predator companies intent on squeezing out weaker forces in the
market, according to a new report from analysts Plimsoll.

The market research group predicts a shake-up in the industry within the next few months as these firms are acquired and as many as 133 are sold off by their parent companies. In comparison to these struggling firms, Plimsoll classifies the successful businesses into two categories: major companies that are expanding rapidly and others which are preying on ailing competitors to boost their own market position. According to the report, takeover targets are generally privately-owned, in financial difficulty and are controlled by a board of elderly members facing retirement. Plimsoll senior analyst David Pattison said: "These are typically the two classic profiles of the takeover target - up-and-coming industry players and those who have fallen on hard times. Sadly in the latter category we see some firms that were doing very well only a few years ago but allowed costs, debts and margins to get out of hand." ​ The report suggests that the UK market will become something of a buying frenzy with firms being snapped up simply to keep them from the hands of competitors. The larger forces in the sector will focus on businesses with sales around £5 million (€7.3m) to boost their own profitability. Pattison said: "Against a background of over capacity, rising costs and falling margins, consolidation in the UK bakery market is inevitable in 2007." ​The VIBE analysis of the bakery industry was published by Plimsoll last week.

Related topics: Ingredients

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