Store giants' price wars hit bakers

High-street bakers have demanded an inquiry by the Office of Fair Trading after being caught in the crossfire of a bread-price war between rival supermarkets.

The National Association of Master Bakers (NAMB), which represents Britain's dwindling numbers of independent breadmakers, claims that the effect of savage price cuts of up to 30 per cent by the supermarkets will be to force up prices on other goods.

Tesco pledged permanent reductions on fresh bread produced at its in- store bakeries two weeks ago. A large white bloomer loaf has been reduced from 74p to 59p, compared to a price of between 85p and 95p at a high- street shop. Sainsbury's and Safeway have matched Tesco's prices.

The president of the NAMB, Roy Flint, said the problems had begun as early as last June when the association had complained about the discounting of sliced bread. "The price of flour increased two weeks ago making it more expensive to make bread. Tesco chose that time permanently to reduce the price of bread, and reduce it by 30 per cent." he said.

Bakers, he added, were struggling to survive in the market. Five years ago the NAMB had 5,000 members, today it has somewhere between 1,800 and 2,000. "Supermarkets have profit levels of 8 to 9 per cent; bakers have profit margins of 3 to 5 per cent. If we were to cut prices by 30 per cent there would be not much profit left. And we do not have 15,000 other lines that we can spread the cost over. This will inevitably damage craft bakers," he said.

The letter sent to the Office of Fair Trading warns that the combination of permanent discounting while increasing prices on other goods "must finally be against the public interest".

The association is calling for a parliamentary act similar to the Robinson- Patman Act in the US which does not allow supermarkets to discount one type of goods for more than a month.

"We understand competition," Mr Flint said. "We live in the real world, [but] my industry is caught in the crossfire between Sainsbury's, Tesco and Asda. All we're saying is why can't you discount something else for a change? Why does it always have to be bread?"

A spokesman for Tesco denied that prices of other goods in the store had been increased to pay for the bread discounts: "We certainly would not put up prices elsewhere. We guarantee our customers quality at the lowest cost. You have to look at the economics of scale. With our size we can pass on the savings we make to our customers and this is what we have done with bread."

A spokeswoman for Sainsbury's said: "It is not our policy to drive down prices in the market but we must follow the market trends so that our customers are never at a disadvantage. We try to remain competitive." She also denied the prices of other goods would be pushed up as a result.

The Office of Fair Trading confirmed yesterday that they had received a letter from the NAMB and were looking into the matter.

Bread winners

Type Tesco Sainsbury's High St

Crusty White Bloomer 59p 59p 90p

(800g)

Crusty White 59p 55p 90p

Farmhouse Bread (800g)

Wholemeal Bread (800g) 59p 62p 95p

French baguette 39p 39p 65p