Bakery suppliers: No loafing around if you want to keep going Ormo and Allied Bakeries Ireland know all too well the importance of strong brands and new specialities as the multiples make life tougher says Karen Dempsey It's a fact of Northern Irish brand life that the multiples have changed the way their suppliers do business. Only the fit will survive, and brands have been working out to ensure they are in sufficiently good shape. This is particularly evident in the bakery sector where a number of players ­ such as O'Hara's and Kennedy's ­ have seen their businesses crumble due to the intense competition. While the multiples have held back from the excesses of EDLP in order to protect the Province's bakery market, the price of bread has nevertheless tumbled over the last couple of years, taking the cost of a standard loaf from around 79p to between 49p and 59p. Speak to any local bakery and they'll tell you that it costs more to bake a loaf in Northern Ireland, because of high wage costs and their smaller scale of production, than anywhere else in the UK. Then throw in the fact that own label is taking hold ­ it now accounts for 37% of bread sales ­ and you can see why independent brands are feeling the pressure. While manufacturers are undeniably doing well out of own label contracts, they cannot afford to put all their eggs in one bread basket. As one manufacturer puts it: "A retailer can easily move his business to another manufacturer and you've lost your business. "You're in a much more secure position if you develop your own brands. They give you strength and you can't be screwed over as easily." Ormo Bakery is an example of a manufacturer that continues to grow its business on the back of its reputation as a local brand. Its range includes Irish speciality breads such as potato farls, soda farls, wheaten bread, pancakes and barmbrack. Ormo's sales and marketing director Stuart McCulloch says: "Brands are stronger here than on the mainland and research is clear that the consumer wants locally produced bread. We're the biggest locally owned independent food manufacturer in NI so we're a big player and that gives us strength." A new marketing campaign ­ with the theme "Only One Ormo" ­ is due to launch in Northern Ireland this month in support of the Ormo brand which has own van distribution the length and breadth of the country, helping to maintain a strong presence for Ormo's bakery products with independent grocers. But perhaps the brand is best known for its dominance of the speciality sector ­ and that's something it intends to exploit as it develops its business outside of the Province. McCulloch says: "There is a demand for regional products and we are branded with an Irish theme, but people don't buy it just because it's Irish." He says Ormo thoroughly researched the mainland market to ensure that it came up with the right products. Exports from the province now account for £8m of Ormo's £36m turnover. As well as selling its branded bread into the multiples, Ormo also has an own label contract with Marks & Spencer with a range of Irish breads appearing under the St Michael brand name. Meanwhile, Ormo continues to develop new products, including a low fat hot cross bun. It has also recently spent £3.5m on new equipment which will give the company the flexibility to produce more products in an extended range of shapes and sizes. New launches in the pipeline include a bacon and cheese soda farl and improvements in the Ormo Hotplate range. The company has also just been accredited by the Soil Association and is on the verge of launching a new organic product. New product development is top of the agenda for another local manufacturer ­ Allied Bakeries Ireland. Headed by md Alan Hempton, it is the province's biggest bakery and has depots in Belfast, Coleraine and Dublin. Allied works on an island of Ireland basis and is the only bakery with distribution in every county, north and south of the border. Its key brands include Kingsmill, Sunblest, Allinson and Burgen. Like Ormo, organic is an avenue that Allied plans to pursue. It has already brought out Kingsmill Organic and is developing an organic bake-off and hotplate range. In a strategy specific for the Northern Ireland market, it invested £150,000 in new machinery to produce the first resealable pancake packs in Europe, the idea being to keep the pancakes fresher for longer and ultimately save the consumer money ­ an idea so blindingly obvious it's a wonder no one thought of it before. Resealable packs for Northern Ireland specialities, soda farls and potato bread, should soon follow. Hempton says: "Manufacturers need to be more specialised and should be thinking in terms of developing niche products. This is an area in which I think there exists tremendous opportunities. Similarly, retailers must find a way to be competitive in the convenience sector without competing like for like." Allied has never been backward about branding. Its Sunblest family brand (which has a 16% share of Northern Ireland's total bread market) has linked up with Northern Ireland's Children's Hospice to launch a charity appeal with consumers collecting coupons from Sunblest packs. Allied pays 10p into the fund for every coupon collected. But while it's been busy reinforcing ties with the local community, Allied hasn't taken its eye off the bottom line. Last year it introduced a new way of servicing the independent sector, hiring a team of specially trained business development managers whose role it is to ensure that Allied Bakeries' service is tailored specifically to meet the retailer's individual needs. They give retailers advice on category management, marketing activity, promotional planning and point of sale. Often the advice is as simple as suggesting outlets stock up on soda bread and potato bread at the weekends to make sure they do not miss out on sales when customers are looking for key ingredients in their traditional Ulster fry. It's Allied's attempt to inject more professionalism into the way the company handles sales, to better service the needs of corner shops and to make it consumer focused. And it's certainly a big step beyond the traditional van sales method of servicing independents where the same person took the orders from the store, delivered the bread and undertook the merchandising. Allied will not reveal figures, but says that volume is up, as is profitability on the mix of business, as a result of the initiative. Where previously 90% of Allied's sales were was in white pan loaf, now customers are taking more super premium Kingsmill and hotplate and rolls so there is more opportunity for manufacturer and retailer alike to make money from added value lines, not to mention the extra revenue for additional impulse purchases, such as pancakes. Hempton says: "The arrival of the multiples has brought many benefits for the consumer, including lower prices, seven day trading, more professionalism and a slicker, better service. Northern Ireland manufacturers have had to step up a gear, and we have done that successfully." {{Z SUPPLEMENTS }}