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Bread maker shrugs off 85c loaves

Australia’s largest food maker isn’t too bothered about the arrival of 85-cents-a-loaf bread on supermarket shelves.

Woolworths and Coles have this month upped the stakes in their “bread wars” with a further 15 per cent cut in the price of their private label loafs.

While consumers may cheer the move, the price cut is bad news for independent retailers and bakers.

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The introduction of $1 loaves in 2011 was a blow for food giant Goodman Fielder, which owns the Helga’s, Wonder White, Country Life and Mighty Soft brands, hurting its revenue and earnings.

But chief executive Chris Delaney said he was also focussed on other factors, including taste.

“We’ve been living with $1 bread for three years and the majority of our brands are selling at a significant premium to that $1,” he told reporters.

The company’s faster growing brand, Helga’s, sold for an average price of $3.60 a loaf during the past six months, indicating consumers were interested in more than just low prices, he said.

“What we are going to do is continue to focus on delivering significant value … not just on price but on taste, experience, nutrition, packaging formats and forms, and continue to innovate there.”

Sales of $1 bread hadn’t grown over the past year or so, Mr Delaney added, and Goodman Fielder would wait to see the impact of 85 cent loaves.

“We think there is a role and a place for 85 cent/$1 bread, obviously it has found its role, it has not been growing over the past year or so,” he said.

“We will have to watch and see if 85 cents spurs more growth and where that growth comes from.”

Goodman Fielder is currently the subject of a $1.4 billion takeover from Hong Kong-based investment firm First Pacific and Singapore Agribusiness.

The bid is contingent on approval from regulators and shareholders, but recently received the all clear from the Australian Competition and Consumer Commission.

-AAP

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