In the major convenience networks, packaged bread is one of only a handful of categories suffering loss of sales - both value and volume. Total volume fell 8% in the year to 13 February 2005. Worse still, convenience is the only channel where this is happening. That means it is not just all those low-carb diets turning customers off. It must be something to do with the channel.
Goodman Fielder Baking, maker of Wonder White and Mighty Soft, and George Weston Foods, maker of Sunblest and Tip Top Up, are Australia's major bread manufacturers and suppliers to the route and convenience channel. ACSN asked both to comment on what's happening in the bread market at Australia's route and convenience outlets.
Goodman Fielder Baking declined to be interviewed or to make any contribution towards this article. After six weeks of unanswered emails and phone calls to Goodman Fielder, a company spokesperson said that the company doesn't like talking to anyone in the media. Fortunately for ACSN readers its competitor, George Weston Foods, has a different view.
Justin O'Sullivan is National Business Manager for the Baking Division of George Weston Foods.
"The decline in convenience could be due to a number of factors," says Mr O'Sullivan. "For example, the supermarkets are very competitive, and Aldi sells a loaf of bread for 99 cents. The challenge is to address the trend."
It is hard for anyone to imagine a C-Store without bread. Like cigarettes, newspapers and milk, it is something you are expected to sell. The manufacturers are saying that this does not mean you can take it for granted.
"Some convenience retailers see bread as just a commodity - something the 'bread guys' look after," says Justin O'Sullivan. "We deliver then take back whatever is not sold, and retailers just provide the space at the back of the shop.
"We want to change this approach by helping the retailer appreciate the value in the category."
Bread, at nearly 30% gross margin and with high stock turns, is not a bad performer for the store.
"We need retailers to take more ownership of the category," Mr O'Sullivan continues. "They need to let us know when stock levels are running low, particularly at key trading times such as weekends and public holidays. We are also encouraging a shift to a more prominent store location.
"With respect to range, in convenience you need to keep it simple and focus on the big brands and big volume drivers. That means, sliced white. The 700-gram loaf is now the best branded seller."
To encourage incremental purchases in the category, route & convenience retailers should also carry some muffins, crumpets or raisin toast, particularly in winter - the bakery snacks season. To promote bread sales this year, George Weston Foods is running various winter promotional concepts, bundling bakery snacks with sliced white bread.
"It is all about keeping it simple and increasing the purchase incidence of bread," says Justin O'Sullivan.
Another way to increase the purchase incidence is to bundle with other products such as milk and newspapers. Sales of these other staples are not declining so cross-category promotions can lift sales.
"We are currently trialing a cross promotion on bread and newspapers with 7-Eleven," says Justin O'Sullivan.
"But, bread combines with so many other products in our daily life. Why not try bread and fresh deli products such as cheese or ham. We need to get customers used to the idea that they can get fresh bread daily at their convenience store."
Matilda Fuels is taking the combo one step further with its fuel discount deal that offers four cents per litre off when customers purchase a bread and milk combo for $4.95. Matilda Fuels was probably the only retailer last year that had to get its baker to step up production - to keep up with a big increase in the demand for bread in its store.
The sad sales story is pretty much widespread across states and across networks. The only bright spot is Queensland, which is the only state where volumes have risen, if only slightly, driven by growth in the Night Owl and BP networks.
"Our main message in working with retailers is: keep it simple, make sure there is stock on the shelves at the right time, bundle to promote additional sales, and let customers see that there is fresh bread in store every day."