Goodman Fielder extends private label contract with Coles

Posted by Daniel Palmer on 6th May 2009

Australian food group Goodman Fielder has today announced an extension on their private label bread supply contract with Australia’s second largest supermarket chain – Coles. The news comes on the same day as they announce a new strategic direction.

Coles deal

The maker of Helga’s, Mighty Soft and Wonder White said that they had been awarded an extension for 12 months after completing negotiations with Coles. The deal covers the supply of white and grain loaf bread to Coles supermarkets nationally but financial details of the contract will not be disclosed.

Private label concerns?

Goodman has previously said that private label threatens their profits, with a disappointing first half profit decline announced in February partially blamed on the proliferation of generic brands. The growth of private label does threaten their high margin brands like Helga’s but their position of strength in the bread sector offers them a cushion as they, with George Weston, are regarded as the only companies capable of producing bread at a low enough cost to satisfy Coles and Woolworths.

Goodman Fielder sells their private label bread through independent chains, convenience stores and petrol stations in addition to the You’ll Love Coles brand. While rival George Weston Foods is the supplier to Woolworths.

Private label makes ground

Nielsen figures from 2008 discovered that private label share of the packaged bread category was now at 35.3%, markedly up on the 10 per cent share it commanded at the turn of the century – although growth is moderating.