Two bakery giants with products on shelves of all UK supermarkets ‘in talks over huge merger’
TWO bakery giants with products in every UK supermarket are in talks over a huge merger set to shake up Britain’s bread market.
Kingsmill and Hovis are deep in talks on a deal that would bring the two bakery giants together — and draw the eye of competition watchdogs.
If successful, the merger would create a giant in the UK’s £5 billion bakery sector, combining market shares that currently stand at 24 per cent for Hovis and 17 per centfor Allied, behind market leader Warburtons at 34 per cent.
Such a move could trigger an investigation by the Competition and Markets Authority (CMA), given the shrinking pool of major bread suppliers, according to Sky News.
The potential deal comes at a time when the bakery industry is under intense pressure.
Rising inflation, competition from niche and speciality bread makers, and a shift in consumer preferences towards lower-carb diets have all squeezed profits.
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The war in Ukraine has also played a part, pushing up wheat and flour prices and further driving costs for producers.
ABF, parent company of Allied Bakeries, has admitted that its baking division is struggling, describing the current financial losses as "unsustainable."
In a recent statement, the company said it is “evaluating strategic options” and expects to provide an update later in 2025.
Aside from Kingsmill, Allied also owns the Sunblest, Allinson’s, and Speedibake brands.
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Hovis, which was bought by private equity firm Endless in 2020, operates eight bakeries and a flour mill and employs around 2,700 staff.
Its current chief executive, Jon Jenkins, is a former boss at Allied Milling and Baking, bringing industry experience to the table.
Industry insiders suggest that combining the companies’ distribution networks could generate up to £50 million in cost savings.
However, they also point out that a full merger may not be the only route, a joint venture focusing on distribution, though less likely, has been floated as an alternative.
Even if the companies reach an agreement, the CMA will play a key role in determining whether the deal can go ahead.
With Warburtons still holding the largest overall market share, some argue the merger would simply balance the competitive landscape, while others warn it could reduce choice and drive up prices for consumers.
The bakery market is a significant part of daily life in the UK, with an estimated 11 million loaves sold each day.
Any change in the balance of suppliers would be felt widely across supermarkets and households.
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So far, both ABF and Endless have declined to comment on the ongoing talks.
But with pressure mounting and the bread market facing continued challenges, the outcome of these negotiations could reshape Britain’s bakery landscape for years to come.
