Premier Foods has announced plans to close two bakeries with the loss of 900 jobs.

The move comes after Premier lost a £75m contract with The Co-operative Group to Allied Bakeries. As well as all own-label products, the contract included all Hovis-branded lines, which will be delisted by mid-2013.

Premier wants to close its Greenford and Birmingham sites next year, in addition to the previously announced closure of its Eastleigh bakery, and consolidate bread production into the 13 sites that would remain.

It also plans to close distribution operations in Greenford, Birmingham, Mendlesham and Plymouth in order to adapt to the lower volumes the contract loss will trigger.

Consultation with the 900 employees affected by the proposals and their representatives will start in coming days.

“Having generated solid growth momentum in our grocery division, it is critical that we act to assure the long-term future of the bread division. By simplifying our cost base, we can increase focus on improving efficiency, quality and service levels to help grow our core Hovis business. We recognise the impact these actions will have for our employees at the sites affected. Decisions will not be taken lightly but they are necessary if we are to build a strong and successful future for the bread division and those who remain with our business,” said CEO Michael Clarke.