The supermarket wars that put small shops on the bread line

he supermarkets' struggle for supremacy puts far more than the big chains in the firing line. Small stores, from the corner shop to the family firm with half a dozen outlets, also get caught in the crossfire.

In Bristol, the battle has focused on one of the most basic issues for the cost-conscious shopper: the price of a loaf.

Many family bakers in the West Country city have given up selling bread because they cannot compete with the price war between supermarket chains, which has seen the cost of a loaf of bread cut to just 7p - little more than it cost in 1963. The traditional bakers sell a loaf at about 85p.

Last month, Tesco and Asda reduced the price of their own-brand 800g white sliced loaf from 17p to 9p. KwikSave, part of Bristol-based Somerfield, followed by slashing the cost of its "no frills" loaf from 17p to 7p.

The minimum cost of a standard sliced loaf below which it is impossible to make a profit is about 25p. With some 2m such loaves sold every day the supermarkets are clearly incurring huge losses - and bakers say it is unfair that they are able to cross-subsidise these losses.

"We're not bothered about the 7p loaf by itself," said Jane Hunt, co- owner of Avon Bakers, in Bishopston. "Our customers realise there is a difference between a cheap sliced white loaf and the crusty loaf we sell. But the big stores can afford to lose a little money on this bread and still make it up on the thousands of other lines they have."

This fundamental issue about price is what the Competition Commission will be studying during its investigation into supermarkets. In Bristol, all the supermarket chains justify the cuts by saying they will not allow their customers to be beaten on price. Tesco said it saw no evidence that local shops had been affected.

The bakers of Bristol beg to differ. "It's hit everyone. Many proper bakers are out of pocket," said Carol Parsons, of Granthouse Bakers in the suburb of Cotham, who has had to cut orders of bread by half in the past three months. "We can't make as much bread as we used to. The majority of my customers now go to the supermarkets for their 7p loaf."

Mrs Parson's day begins at 4.30am with the preparation of croissants, Danish pastries and baguettes. But for the first time in the seven years she has worked at the baker's she now questions the economics of her business. "You can't make a profit on 7p. We sell a standard loaf for 85p and I was selling bread for 5p back in 1963," she said. "We are plodding on but it's quite serious and I don't know how long we can keep it up."

At Avon Bakers, Jane Hunt said that supermarkets enjoyed an unfair advantage. "We're all worried because of the overall impact the supermarkets have on pricing policies," she said. "I'm concerned with what's happening to the High Streets of Bristol. They're becoming nothing more than rows of insurance firms and second-hand shops. The bakers, butchers and grocers are disappearing."

The message was the same from Kathleen Abbot, whose family-run bakery is in King Street, Avonmouth. "An awful lot of bakers are closing down. I don't even try to sell sliced bread any more".

The supermarkets' bread policy was described as "predatory pricing of the worst kind" by David Smith, chief executive of the National Association of Master Bakers, which has seen the number of family-run bakers in the UK plummet from 18,000 in 1946 to fewer than 3,500 today. "This pricing is simply subliminal advertising, and the supermarkets are vacuuming up the high street. If you take one domino - the grocer, post office, baker or butcher - off the high street, the others will fall too. A high street shop can't survive in isolation."

Mrs Hunt also said that the price war was altering the role that bread plays in people's lives. "The stores are eroding the importance and quality of bread. Consumers are beginning to think of bread as a cheap item when it isn't. It's an integral part of our diet."

But the supermarkets may not be having it all their own way. Herbert's, perhaps Bristol's best-known family bakery, is confident it can beat off competition from the larger chains. "We can honestly say we have not lost any trade. The supermarkets can do whatever they want because they can never sell the same quality bread as we do," said the bakery's Colin Bloom. "We know we have a good brand name but we're not complacent. We just concentrate on giving our customers what they want - and that can mean more organic and speciality bread."