$1 loaves put bakers 'under siege'

More and more loaves of brands that cost more than $1 were going unsold. Photo / File

Cheap products’ wild popularity hurting more expensive brands and jobs may soon be at risk, warns union.

One-dollar loaves of bread are flying off the shelves in the millions - but a bakers' union says Kiwis' love of a cheap deal could put jobs at risk.

Fierce competition between the country's two main supermarket owners saw the price of bread drop to just $1 earlier this year.

As supermarkets indicate such pricing will continue, the Bakers and Pastrycooks' Union has sounded the alarm about an industry "under siege".

Secretary Norm Holley told the Herald that brands in the middle-to-upper price bracket were not selling as a result of the $1 deals.

As a result the country's two biggest bakers had been cornered into a position where jobs could eventually be lost, he said.

However, Countdown says its $1 Homebrand breads are here to stay "for as long as possible", and price drops on other brands have increased bread sales overall.

Mr Holley represents about 350-400 workers at the North Island bread plants of Goodman Fielder and George Weston Foods (Tip Top bakeries).

The two competitors are by far the biggest suppliers and between them produce dozens of bread brands as well as the $1 brands such as Budget and Homebrand.

Mr Holley said he understood the supermarkets only pay for bread that sells - suppliers take back loaves that do not.

"The supermarkets have no value whatsoever in a loaf of bread until it goes through the checkout, then they own it.

"If it's not sold the company has to come and pick all that bread up and take it away ... it goes into crumb for stock food."

More and more loaves of brands that cost more than $1 were going unsold, Mr Holley said.

"The person who will buy Vogel's bread will buy Vogel's bread. The people who will buy their gluten-free bread will buy their gluten-free bread.

"But the average run-of-the-mill shopper is going to look at that [$1 price] and go, 'Oh well', and the other stuff stays there on the shelf."

A spokesman for George Weston Foods said that the current market dynamics were not sustainable. Goodman Fielder said the terms of its contracts were strictly confidential.

Asked why the two big bakeries supplied the cheap bread if it was so detrimental to business, Mr Holley said supermarkets were big customers.

"Each [company] is looking at the other one and thinking, if we don't supply ... you're going to get all the bread [sales in supermarkets]."

However, Countdown spokeswoman Kate Porter said it had worked closely with Goodman Fielder to put together the $1 Homebrand white and wheatmeal bread deal.

"We've sold over five million loaves at this new price and customers really like this better value."

Ms Porter said prices on Freyas, Tip Top, Signature Range and in-store baked breads had dropped, which had "reinvigorated interest in bread" and increased overall sales.

Countdown, which is owned by Progressive Enterprises, said its $1 bread was not a "loss leader" but a new everyday price.

It dropped Homebrand bread from $1.48 to $1 on July 18, with a customer limit of four loaves per shop. In response, Foodstuffs, which owns Pak 'n Save and New World, dropped its Budget range to $1.

Foodstuffs corporate public relations director Antoinette Laird said it did not believe $1 loaves were economically sustainable in the long-term.

Bread wars
*Pricing of budget bread at $1 a loaf at supermarkets has led to a drop-off in sales of middle and upper-priced brands, a bakers' union says.
*The Bakers and Pastrycooks' Union says this is putting pressure on New Zealand's two biggest baking companies, and fears jobs could be lost in the long-term.
*However, Countdown says price drops on other brands have increased bread sales overall - and not only of the cheaper loaves.