Made in Britain: Food manufacturers

Baker using its loaf as profits are sliced

Even bread is feeling the pinch in this slump but family-owned giant Warburtons is fighting back

Before the financial crisis changed the habits of a lifetime, it was quite common for families to throw away the last four or five slices of a loaf, a practice that was bad for the environment but good for bakers.

For most bread eaters, those days are long gone. As the recession has squeezed household budgets, consumers are increasingly freezing loaves and taking out slices as they need them, while stale crusts are being resurrected by the toaster.

But changing attitudes to bread freezing and wastage are only the latest in a series of challenges for a British baking industry which has been hit hard in recent years, according to Jonathan Warburton.

As chairman of Britain's biggest baker, the 136-year-old, family-owned Warburtons in Bolton, he should know. Churning out about 800 million wrapped loaves, wraps, crumpets, pancakes and bread rolls a year, Warburtons accounts for more than a fifth of the UK bakery market.

"The good, old-fashioned, standard sliced white and brown loaves that we grew up with are definitely in decline," said 55-year-old Mr Warburton, who took over running the company with his cousins, Ross and Brett, on same day as their three fathers retired in 1991.

Since then, the trio have expanded the bakery from its North-west roots, opening sites from Scotland to Bristol, and jettisoned peripheral businesses such as a jewellers, a car number-plate maker, fish farm and a share in a health club in Boston, Massachusetts.

"There has been a proliferation of stuff to eat [in the bakery arena] – 20 years ago, you could have a sandwich, or a sandwich or a sandwich. Now, you can get a slice of pizza, a wide choice of cakes – muffins, nutribars, muesli bars. Pret A Manger is a terrific business – look at the variety on offer there – and then you've got Starbucks and the other coffee chains," Mr Warburton said.

Rising energy and wheat costs and mounting health concerns over carbohydrates, preservatives and processed food in general have also taken their toll, he added.

And then there is the growing, but still very niche, market for "artisanal" loaves, which Mr Warburton portrays as a microcosm of Britain's snobbery towards large-scale manufacturing.

"It's the classic British psyche – mass is bad. But that's just not true. You don't get the same reaction in parts of Europe where they are very proud of their manufacturing industries," said Mr Warburton, who cut his teeth at the family business as a van boy, getting up at 4am to help deliver bread throughout Lancashire.

He went on to work for Unilever as a sales rep, selling cooking oil to cash-and-carries and chip shops in south-east London before returning full time to Warburtons at 23.

"We look down our noses at mass production. But I think getting our hands dirty is a bloody good thing. There is definitely a place for Lizzie Smith's organic bakery, charging £3 or £4 for an organic, handwrapped loaf, and personally I would always stop at a bakery and buy artisan bread when I'm travelling. But artisan bakers can't make 14.5 million loaves a week, at a very good price, like we do and most people can't afford them," he said.

"We've both got our place in society, but one knocking the other is incredibly counterproductive," he added. "I'd like to see the science that supported the notion that artisanal loaves are better for you."

So, one way or another, Warburtons is up against it, a point underlined when the group recently revealed profits fell by 38 per cent to £16.3m in the year to 24 September. The group suffered, in part, because it was unable to pass on much of the higher wheat and energy costs to consumers, whose loaf consumption was hit by the recession and changing attitudes to bread.

But the company, which has had decades of unbroken family ownership since being set up in a grocery store in 1876 opposite its present-day headquarters, has a plan and is confident it will work.

"Even though the waters are very choppy, we are in good nick. Being a family-run business gives us the willingness and ability to take longer-term decisions and enables us to weather difficult market conditions, an advantage that is particularly poignant at the moment," Mr Warburton said.

Because the company doesn't have to satisfy short-term, shareholder demands to maximise profits, it is investing heavily in its future, even though the extra spending dragged its profits down last year. Over the past 18 months Warburtons has been diversifying in a number of ways.

First, it has launched a range of "sandwich alternatives" such as "thins" (lean, low-calorie slices), pittas and wraps, to satisfy the growing demand for low-carb meals. Second, the company has introduced a range of snacks, such as pitta chips and third, it is now selling gluten-free products through retailers and pharmacies. Finally, Warburtons has started exporting to France and central Europe, where longer working hours are shifting markets which were traditionally dominated by freshly baked bread towards the company's longer-lasting wrapped loaves.

While it can be extremely handy when it comes to investing for the future, the path of family ownership is not always paved with roses.

"It never leaves you and you can't check out when you go on holiday," said Mr Warburton.

There is also considerable danger that family firms can create friction and laziness.

"A lot spend too much time arguing among themselves rather than running the business. We learned from our fathers very early that you have to get on. It was drummed into us that we have a privilege and it needs looking after.

"A lot of family businesses think the business is there for the lifestyle. The lifestyle comes from running a bloody good business. The business isn't meant to serve you, you are meant to serve it," he said.

Succession, too, can be a thorny issue and it's essential to get it right. Jonathan and his cousins are fifth generation. But they are adamant that the running of the business won't automatically go to the younger family members, much as they would like it to.

"Six of the next generation are around 17 to 20 and all are expected to spend a period of time working at the company because they have a responsibility to understand the business as shareholders even if they don't end up working here," said Mr Warburton, who has three sons and a daughter.

"Realistically it will be seven or eight years before we know who is right to run the business in the next generation. Clearly it makes a difference if one or two can be family members, but with our shareholder hats on we want the best people," he said.

Warburtons is now Britain's second-biggest grocery brand, behind Coca-Cola, with annual sales of £495m and 5,000 staff employed in 12 bakeries and 13 depots across Britain.

But even Warburtons, with its hefty cash reserves, isn't immune from the double-dip recession. Last year, it decided to close a bakery in Oldham to reduce costs, leading to 73 job losses.

However, while any redundancies are unpleasant, they might have been far worse at a public company.

"We are not running a charity, it is still a business. But there would probably have been a lot more redundancies if this wasn't a family business," said Mr Warburton.

European market: Traditions in retreat

Bread consumption is not only changing in the UK. Lifestyle changes are also affecting it on the Continent, albeit in a different way, creating opportunities for Warburtons to sell its loaves over there, according to Damian Ghee, the group's new business development director.

In contrast to Britain, where about 80 per cent of the bread people eat is wrapped, with a shelf life of about four days, most of the loaves consumed on the Continent have been freshly baked to be wolfed down that day.

But this is changing. "Longer working hours mean more and more Europeans are buying food less often and in greater quantities, increasingly from hypermarkets. So there has been a decline in fresh bread sales and growth in wrapped products over there," says Mr Ghee.

"Even in France, there is a decline in the number of boulangeries, which make fresh baguettes that last four hours," he adds.

These changes have opened up a market in Europe for wrapped breads such as Warburtons, but with a modification.

Traditionally, Warburtons' loaves have had a four-day shelf-life, which means there isn't enough time to get them to Europe. But Europeans typically demand a 12-day shelf life because they tend to keep wrapped loaves in the cupboard as a reserve option for when they can't make it to the local bakery.

And so the loaves Warburtons supplies to France, the Czech Republic, Poland, Slovakia and Hungary have a few extra preservatives injected into them, giving them a 19-day shelf-life and giving the baker a week to wrap, transport and distribute them to Europe.

PROMOTED VIDEO
Arts and Entertainment
glastonbury
News
i100
Arts and Entertainment
Shock of the news: Jake Gyllenhaal in ‘Nightcrawler’
filmReview: Gyllenhaal, in one of his finest performances, is funny, engaging and sinister all at once
Arts and Entertainment
Shelley Duvall stars in Stanley Kubrick's The Shining
filmCritic Kaleem Aftab picks his favourites for Halloween
News
people
Arts and Entertainment
Kit Harington has been given a huge pay rise to extend his contract as Jon Snow in Game of Thrones
tv
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Taste the difference: Nell Frizzell tucks into a fry-up in Jesse's cafe in east London
food + drinkHow a bike accident left one woman living in a distorted world in which spices smell of old socks and muesli tastes like pork fat
Sport
Luke Shaw’s performance in the derby will be key to how his Manchester United side get on
footballBeating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Life and Style
Google's doodle celebrating Halloween 2014
tech
Arts and Entertainment
Don’t send in the clowns: masks and make-up conceal true facial expressions, thwarting our instinct to read people’s minds through their faces, as seen in ‘It’
filmThis Halloween, we ask what makes Ouija boards, demon dolls, and evil clowns so frightening?
News
peopleFarage challenges 'liberally biased' comedians to 'call him a narcissist'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes