Supermarket giant Woolworths has announced that more than 70 lines of its bread bakes in store will soon be free from artificial colours, flavours, emulsifiers and preservatives.
Woolworths said the move was indicative of consumer demand for “more natural products.”
The will further increase the power and presence of the private label brands on supermarket shelves, which has seen major bakers in Australia struggle to compete with the major supermarkets.
Goodman Fielder and George Weston Foods have reported difficult trading conditions as a result of the supermarket price wars.
In June, Goodman Fielder announced that it would be forced to slash more than 500 Goodman Fielder jobs across Australia as it restructures the business to reduce costs.
'It is expected that 115 roles will be removed from the baking division as a result of the consolidation of the three bakery facilities,' Goodman Fielder said in a statement.
'This brings the total number of roles removed across the company to 541 this financial year.'
As the impacts of the drought across the US began to show in the form of increased grain costs, Goodman Fielder revealed it regrets its choice to manufacture $1 bread for the Coles private label, as it is already unprofitable.
Like so many other industries, including the dairy, produce and food manufacturing, the bread sector is suffering the impacts of being forced to sell their products at prices less than the cost of production for the sake of supermarket private labels and their war on price.
“Dollar bread is at a loss,” managing director Chris Delaney said.
''This was not a good investment and I wouldn't do it again if I had a choice.”
Countless industry insiders and experts have labelled the current private label environment as unsustainable, as farmers and manufacturers leave their sectors because they can’t break even, let alone make a profit.
While Goodman Fielder says the flow on effects of the grain price increases will flow on to consumers, it remains unclear whether the supermarket giants will actually change the shelf price.
They could absorb the costs within their own businesses, but if past experience is any indication, that would be unlikely and it would be more probable that the bread companies and others impacted by the cost increases would absorb the costs within their already struggling structures as Coles continues to sell bread for $1.
The baking company’s private label contract with Coles is up for renewal in the first half of 2013.
The latest announcement from Woolworths, which will include new bread recipes that will see vegetable emulsifiers 471, 472 and 481, acidity regulator 297 and antioxidant 306 removed from the fresh bread that is baked in 560 Woolworths stores every day.
“ Our customers have provided very clear feedback that they are concerned about additives in their food, so we have made our in-store baked bread free from these artificial additives,” Alex Holt, Woolworths’ Head of Bakery said.
“Parents are particularly concerned about the presence of artificial flavours, colours, emulsifiers and preservatives in the food they give their kids, so we are proud to be able to say that Woolies’ fresh baked bread is now free from these additives and reassure our consumers that they can feel good about purchasing it.”