Allied Bakeries looks set to stop production at its Kingsmill site in Cardiff, as a cost-cutting exercise following the loss of its Tesco own-label contract.
The company intends to cease manufacturing in September of loaves, rolls and snacks such as crumpets and tea cakes, but keep the facility running as a distribution centre. As a result, 180 people – about half the Cardiff workforce – are at risk of redundancy.
It comes after Allied revealed it would no longer supply Tesco with own-label bread from next year. In its interim results for the 24 weeks to 2 May 2019, the ABF-owned business included a £65m impairment charge against its income, to reflect the estimated cost of the loss of its biggest private-label contract.
As a result, Allied had “undertaken a detailed review of our bakery network to optimise our production capacity, locations and routes to market” said a spokesman for the bakery.
“Our aim is to ensure we continue to supply high-quality fresh-wrapped bread to customers across the country as efficiently as possible. As a result of this review, we are proposing to restructure our facility in Cardiff,” he added.
“If our recommendations are accepted, the site will continue to operate as a logistics depot, distributing our products into Wales and the south west of England, while its bakery operations would be re-allocated to our larger facilities in the UK that have capacity available to meet customer demand.”
The business would now consult with staff members to review its proposals. In the event of the changes going ahead, Allied would “provide support to anyone impacted to help them find a new job, either at another Allied Bakeries site, or elsewhere in the local community” the spokesman said.
The news comes just days after The Grocer revealed that ABF had shaken up Allied’s senior management, handing over its running to commercial director Liam McNamara and operations director Nick Law, with CEO Jon Jenkins stepping down after four years at the helm.
In grocery, Kingsmill, Allied’s biggest brand, is in serious decline – down 6.4% in value to £194.2m on volumes down 11.6% [Nielsen 52 w/e 16 March 2019]. Meanwhile, stablemate Burgen has slumped in value by 25.6% to £6m. Only Allinson’s has made money, surging 38.7% to £8.7m.