ALLIED BAKERIES FACES CLOSURE THREAT

Allied Bakeries, the UK business behind household bread brands including Kingsmill, Allinson’s, and Sunblest, faces a potential closure if its planned merger with Hovis does not proceed, according to the Competition and Markets Authority (CMA). The regulator’s provisional findings have raised serious questions about the viability of Allied operating independently in the current market.

Rising production costs and declining demand for pre-sliced, packaged bread have left Allied in a vulnerable position. The CMA concluded that, without the merger, the company would likely exit the Great Britain market entirely. In this scenario, no alternative buyer would be able to step in to maintain Allied as a competitor, effectively leaving a significant gap in the UK bread sector.

While the merger would consolidate two of the country’s largest bread businesses, the CMA notes that blocking it would not prevent a reduction in competition. Allied’s potential closure would occur regardless, meaning the merger may not materially worsen competition in Great Britain.

The CMA has highlighted a separate concern in Northern Ireland, where the market dynamics differ. Here, Allied might have continued independently under different ownership, preserving competitive pressure. This issue remains under review as part of the regulator’s ongoing investigation.

Industry observers point to a broader trend of consolidation in the bakery sector, with smaller and mid-sized businesses struggling to maintain profitability amid inflationary pressures and changing consumer habits. Mergers like the one between Allied and Hovis are increasingly seen as a lifeline for long-standing brands, helping to secure jobs and maintain supply continuity.

The CMA has invited stakeholders and the public to provide feedback on its provisional findings before issuing a final decision. The regulator’s review is expected to be concluded in the coming months, potentially shaping the future of one of the UK’s most recognised bakery businesses.