Waitrose is thrashing out a deal with Duchy Originals to bail out the Prince of Wales' food brand.
The agreement is likely to see Waitrose take over Duchy's operational costs, which last year amounted to £4m, and also make a donation to The Prince's Charities Foundation. No contributions have been made by Duchy since 2007, despite its website stating that all profits from the business go to charity.
It is understood Waitrose hopes to secure an exclusivity deal in return for pumping money into Duchy, which has been "bleeding money" in recent years, according to sources close to both businesses.
A straight takeover would be problematic, because of Duchy's charitable commitments.
However, Waitrose is expected to gradually incorporate all the functions of Duchy into its own business over the next 12 months, with the possible closure of Duchy's office in Richmond, Surrey.
Accounts for the year to 31 March 2008 show Duchy Originals made a profit of just £151,717, down from £793,432 the year before. During the same period operational costs rose from £3.3m to £4m.
Waitrose is Duchy's biggest customer, accounting for about 40% of sales. It stocks 45 lines, compared with 14 at Sainsbury's and just nine at Tesco. An exclusivity deal with Waitrose would secure future supply for the brand, which saw sales plummet £802,000 between 2007 and 2008.
"Waitrose has always been close to Duchy," said a source familiar with the situation, claiming a deal was mooted as far back as 2000.
As the talks continued, it emerged that Duchy has also handed control of its loss-making subsidiary the Duchy Originals bakery in Launceston, Cornwall, to Tamar Foods, whose owner Samworth Brothers also owns Ginsters pasties.
Tamar will become a licensed producer for Duchy and will produce its organic dessert range, as well as using the facilities to manufacture its own desserts.
Duchy chief executive Andrew Baker declined to comment on any deal with Waitrose, calling it "speculation", but said the deal with Tamar was a good outcome for both parties.
"The Launceston bakery has made trading losses all three years since it's been in business," he said.
"We are very happy that the brand will continue. We invested in and built a first-class organic bakery, but have never been able to sell enough Duchy Originals products to fill the place. This has given us an obvious impact on our profit and loss account."
Waitrose also refused to confirm or deny the deal. "We are in discussions with our suppliers all the time, but we are unable to comment on these due to their commercially sensitive nature," it said in a statement.
The agreement is likely to see Waitrose take over Duchy's operational costs, which last year amounted to £4m, and also make a donation to The Prince's Charities Foundation. No contributions have been made by Duchy since 2007, despite its website stating that all profits from the business go to charity.
It is understood Waitrose hopes to secure an exclusivity deal in return for pumping money into Duchy, which has been "bleeding money" in recent years, according to sources close to both businesses.
A straight takeover would be problematic, because of Duchy's charitable commitments.
However, Waitrose is expected to gradually incorporate all the functions of Duchy into its own business over the next 12 months, with the possible closure of Duchy's office in Richmond, Surrey.
Accounts for the year to 31 March 2008 show Duchy Originals made a profit of just £151,717, down from £793,432 the year before. During the same period operational costs rose from £3.3m to £4m.
Waitrose is Duchy's biggest customer, accounting for about 40% of sales. It stocks 45 lines, compared with 14 at Sainsbury's and just nine at Tesco. An exclusivity deal with Waitrose would secure future supply for the brand, which saw sales plummet £802,000 between 2007 and 2008.
"Waitrose has always been close to Duchy," said a source familiar with the situation, claiming a deal was mooted as far back as 2000.
As the talks continued, it emerged that Duchy has also handed control of its loss-making subsidiary the Duchy Originals bakery in Launceston, Cornwall, to Tamar Foods, whose owner Samworth Brothers also owns Ginsters pasties.
Tamar will become a licensed producer for Duchy and will produce its organic dessert range, as well as using the facilities to manufacture its own desserts.
Duchy chief executive Andrew Baker declined to comment on any deal with Waitrose, calling it "speculation", but said the deal with Tamar was a good outcome for both parties.
"The Launceston bakery has made trading losses all three years since it's been in business," he said.
"We are very happy that the brand will continue. We invested in and built a first-class organic bakery, but have never been able to sell enough Duchy Originals products to fill the place. This has given us an obvious impact on our profit and loss account."
Waitrose also refused to confirm or deny the deal. "We are in discussions with our suppliers all the time, but we are unable to comment on these due to their commercially sensitive nature," it said in a statement.
Brown shows he's down to earth
Prince Charles may have led the way by founding Duchy Originals 19 years ago, but it appears the Prime Minister has also caught the grow-your-own bug. Fruit and veg grown in the Number 10 garden are being sold for the first time in one of the canteens used by government staff, with lettuces on sale for £1.98. Sarah Brown is known to be a keen gardener and is thought to have been behind the push.
Prince Charles may have led the way by founding Duchy Originals 19 years ago, but it appears the Prime Minister has also caught the grow-your-own bug. Fruit and veg grown in the Number 10 garden are being sold for the first time in one of the canteens used by government staff, with lettuces on sale for £1.98. Sarah Brown is known to be a keen gardener and is thought to have been behind the push.
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