Weston fresh bread sales declining as consumers look to alternatives

George Weston Ltd.’s fresh bread business is struggling as consumers are turning to flat breads and gluten-free offerings.

But the even bigger problem, according to a Globe and Mail article, is the rise of discounters like Walmart, Costco and Dollarama that are growing faster than conventional supermarkets and they don't like to give their business to Weston. The bulk of Weston's fresh bakery output goes to Loblaw, said the article.

The decline in the traditional grocery channels was acknowledged by Jairo Senise, president of the company’s Weston Foods division, in an article in Bakingbusiness.com, who added, "there is growth in the alternate channels, but we’re under-represented there and that’s obviously something that we are continuing to try and address.”

Weston is facing pressures to update its bread offers as well as be the supplier of choice of low-cost and conventional retailers.

Its competitor Canada Bread is also trying to grab new business with a modern new baking plant.

The article pointed to Weston's fresh bread sales that fell 4.6 per cent in the third quarter.

Irene Nattel, retail analyst at RBC Dominion Securities said that across North America, commercial fresh bread sales have slipped in the low to mid-single digit range, according to the article.

Weston executives said they’re working to develop new products such as grains, gluten-free and flat breads as sales have declined in white and whole-wheat products.

The company is also looking at growing business in non-traditional retail segments. The FP reports Weston hinted they're Tin talks with U.S. discounter Target Corp. to supply it with bread when it opens in Canada next year.

Retail analyst Perry Caicco at CIBC World Markets said in the article that the problem for Weston is that as they try to grow customers with Loblaw's competitors, the new business will have low margins because "the Loblaw-Weston relationship is always lurking in the background.”