Orkla offloads bakery business to retail group

By Oliver Nieburg

- Last updated on GMT

Related tags Baker Bakery Bakers

Orkla offloads bakery business to retail group
Norwegian firm Orkla Brands has announced the sale of its bakery unit Bakers to the retail group NorgesGruppen for an undisclosed fee as retailers augment their dominance on the Norwegian bakery market.

Orkla took the decision to sell Bakers as it said it was struggling to meet operational demands for fresh bakery produce.

Torkild Nordberg, CEO of Orkla Brands said: “Bakers differs considerably from Orkla Brands' other branded goods operations.”

“Bakery goods must be fresh each day, which requires a different type of operational and distribution system from our other grocery products,”​ he said.

“Structural changes, substantial capacity and keen competition have characterised and will continue to characterise the bakery industry,” ​he continued.

Retail challenge

According to the UK’s Federation of Bakers: “The industrial bakeries market [​in Norway] is marked by strong competition due to the high concentration in the retail food sector, leading to a higher requirement for product innovation. “

It said that 95.1% of the Norwegian food trade is controlled by four major food chains, two of which operate in-store bakeries.

Norwegian bakery manufacturers are further hindered by high duties on exports, meaning they are largely restricted to their home market.

Bakers in numbers

Bakers has around 770 employees and posted operating revenues of about NOK 1.2bn (€152.9m) in 2010.

Orkla Foods’ third quarter profits showed a decline of 1% on the previous year, which it said was mainly due to negative volumes at Bakers

“At Bakers, cost adjustments were counteracted by a weak volume performance, and profit was lower than in 2010,”​ it said.

Orkla had owned Bakers since 1991. Bakers products include bread brands such as Bakers Naturlig Sunt, Bakern's Ferske, and Ingers SuperRug.

The sale includes all of Bakers' bakeries although the company has decided to retain pizza production at its plant in Sem, which will be continued by Stabburet.

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