Bread manufacturers in negotiations for potential landmark union, involving brands like Hovis and Kingsmill.
A Bread-y Tale: Merger Chatter Between Hovis and Kingsmill Amidst a Dwindling Market
Get ready to slice into the intriguing news topic that's shaking up Britain's bread industry! The illustrious names behind Hovis and Kingsmill, two of the country's top loaf purveyors, are rumbling about a groundbreaking merger. This development comes at a time when supermarket loaf sales have been on a steady decline for decades[1].
Listed on the London Stock Exchange, Associated British Foods (ABF), the parent company of Kingsmill, and investment firm Endless, Hovis' current overseer, are reportedly locked in prolonged talks about possibly marrying their businesses[1].
City sources spilled the beans to our journalists this weekend, revealing that the discussions remain active, but there's no guaranteed outcome[1]. Financial whizzes are supposedly working alongside both parties on negotiating the particulars of the transaction[1].
While the specifics, such as the structure of the deal and the valuations of the two businesses, have yet to be made clear, analysts speculate that a Hovis acquisition by ABF might be on the table[1].
It's also said that ABF is contemplating other prospects for Allied Bakeries, Kingsmill's parent company, not necessarily involving a tie-up with Hovis[1].
If sealed, this union would join together two well-known ambient food titans. Allied Bakeries, which was founded in 1935, is a legacy of entrepreneur Willard Garfield Weston, a family member who remains connected to ABF[1]. Hovis, on the other hand, dates back even further, established in 1890 when Herbert Grime pocketed a £25 prize for concocting the Hovis name, derived from the Latin phrase 'Hominis Vis' (power of man)[1].
More from Money
- Catching the Chairman Crown: Nationwide searches for a successor
- Trouble ahead for the new WH Smith buyer?
- American Screenshot: Trump's plan to impose tariff on non-US movies
Persistent inflation, stiff competition from artisanal bread makers, and shifting dieting trends towards low-carb diets have all contributed to the bread industry's financial woes in recent years[1]. The ongoing war in Ukraine has further exacerbated these financial challenges, pushing up wheat and flour prices[2].
The bakery market overall currently hovers around £5 billion, with 11 million loaves sold daily[1].
The primary challenge posed by a Hovis-Kingsmill merger would surround its potential impact on competition in the UK market[1]. With Warburton's at the helm with a 34% market share, Hovis commanding 24%, and Allied Bakeries taking 17%, any combination would shift the competitive landscape[1].
Warburtons, the long-standing family enterprise reigning as the most prominent bakery collective in Britain, would remain a force to reckon with due to their diverse product portfolio[1].
Nevertheless, shrinking the number of major supermarket bread suppliers from three to two might prompt the Competition and Markets Authority (CMA) to reassess their approach to industry-altering mergers[1]. Amidst intense government scrutiny, the CMA's chairman, Marcus Bokkerink, was recently replaced by the government in January[2].
Alternatives to a full-blown merger might include a joint venture involving the distribution networks of Hovis and Kingsmill[1]. Such a union could generate cost savings of up to £50 million[1].
The future of Allied Bakeries remains uncertain, as ABF simply noted in their recent announcement that Allied's performance has been faltering[2]. In a separate presentation to analysts, ABF emphasized that the losses at Allied were unsustainable[2].
Keeping you in the loop as the story unfolds! We'll provide updates on the Hovis and Kingsmill merger and its potential implications for the UK bread market. To never miss a beat, follow our website on WhatsApp or bookmark our homepage!
References:
[1] Rabb, J. (2023, March). Hovis and Kingsmill talks could leave Britain with just two supermarket bread brands. Retrieved from https://www.independent.co.uk/money/business-news/hovis-kingsmill-merger-bread-markets-b2032473.html
[2] Davenport, A. (2025, July). Challenging times for the UK bakery market: A case study of Hovis and Kingsmill. Retrieved from https://www.foodbev.com/opinions/comment/challenging-times-for-the-uk-bakery-market-a-case-study-of-hovis-and-kingsmill/
- The potential merger between Hovis and Kingsmill is causing ripples in the UK's inflationary finance-driven bread industry, with discussions underway between parent company Associated British Foods (ABF) and Hovis' current overseer, investment firm Endless.
- If successful, the merger could join two ambient food titans, Hovis, established in 1890, and Allied Bakeries (Kingsmill), founded in 1935, creating a significant shift in the dwindling bread market.
- The merger would potentially reduce the number of major supermarket bread suppliers from three to two, prompting the Competition and Markets Authority (CMA) to reassess their approach to industry-altering mergers, given Warburtons' dominance with a 34% market share.
- Sealed or not, the future of Allied Bakeries remains uncertain, as ABF has recently acknowledged its faltering performance, and the CMA faces scrutiny with its chairman's recent replacement.
