Allied Bakeries completes £210m investment programme

By Anne Bruce

- Last updated on GMT

Allied Bakeries completes £210m investment programme

Related tags: Allied bakeries, Associated british foods

Allied Bakeries has completed its £210m five-year modernisation programme across its UK bakeries with a £31m investment in its Stevenage bakery.

The Stevenage bakery, which employs around 300 people, has had a new bread line installed, which is capable of producing 9,000 loaves per hour. 

The £31m investment includes the installation of bulk silos, bulk ingredients systems, mixers, a tin and lid handling system, a prover and oven, a cooler, bread conveyors and a slicer / bagger combo.

Allied says the investment across its portfolio is the largest investment in UK bakery in recent years. 

‘Some of the most modern bakeries’

New bread plants have been introduced at Stockport, West Bromwich, Glasgow and London.   A new rolls plant has been introduced at West Bromwich and an £8.4m new sandwich thins plant has also been established at its Glasgow site- as Allied focuses on this growth product.

Martin Garlick, category director of Allied Bakeries said: “The investment is enabling our business to quickly capitalise on consumer and industry trends, producing a broad range of the highest quality products to attract new consumers into the category and to grow the Kingsmill brand.”

He said that Kantar figures show that despite a decline in traditional bread sales (-5.9%) impacting the overall growth of the bakery category, sandwich alternatives are having a positive impact (+11%) and this trend is set to continue in 2015.

Meanwhile, Nick Law, operations director at Allied Bakeries said:  “As a direct result of our investment, Allied Bakeries now has some of the most modern bakeries in the world and has a solid foundation upon which to compete in a value driven market.  Our customers and consumers are seeing the benefits of our investment – market leading innovation, one of the most varied bakery product portfolios, and consistently high quality products.”

It had also enhanced the working environment for staff while reducing the company’s impact on the environment, he added.

Difficult 2015

Allied Bakeries, owned by Associated British Foods, has had a difficult 2015 so far. It revealed at the start of March that its chief executive Mark Fairweather was to leave the company that week.

The news came after ABF issued a profits warning for Allied Bakeries in February. And the Kingsmill brand was then delisted by Tesco from March 23.

This month, as he presented the ABF 2014 annual results to September 2014, ABF chief executive George Weston said that the UK bakery market remained intensely competitive and the profitability of Allied Bakeries had reduced as a result.

He said that this was driven by a combination of over-capacity in the industry, reducing manufacturers’ margins, and retailers seeking to prove their value credentials in essential shopping items such as bread.

“The investment programme to modernise our bakeries is largely complete, our marginal cost of production has improved and we are now winning new volume in the market,” ​he said. “Although we lost the contract to supply Tesco with Kingsmill bread after the half year, the lost volume has been replaced elsewhere.”

Sarah Arrowsmith, chief executive of ABF's overall UK Grocery has taken the reins at Allied Bakeries until a new chief executive is appointed.

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