Baker’s Delight aims for 5% growth in 2010-11 after supermarket discounting eats into sales

Bakery franchise chain Baker’s Delight will attempt to recover ground lost in a discounting war with Australia’s supermarkets with the launch of a $6 million advertising campaign that begins tonight.

The campaign, which represents the first major brand revitalisation undertaken by the company in 12 years, is aimed at getting Baker’s Delight growing again, after heavy discounting by Coles and Woolworths in the last 12 months saw the chain’s growth stall in the 2009-10 year.

But general manager Chris Caldwell expects sales growth of 4-5% to around $600 million in 2010-11 as the grocery giants scale back their bakery discounts and the ad campaign starts to boost sales.

“We feel confident because [the supermarkets] have gone all out over the last 12 months, but we’ve managed to hold our heads up pretty high,” he says.

Caldwell says Baker’s Delight, which has 500 franchisees in Australia, was forced to undertake a brand refreshment after market research showed the old ad campaign – which basically focused on a group of merry bakers goofing around with bread – had simply stopped working as well as it once did.

“We were finding that consumers love our ads and they love the Baker’s Delight brand… but they did struggle to repeat the key messages and products,” he says.

“That’s pretty alarming. We’re not in the business of making 30 seconds movies for entertainment.”

With product recall falling and the supermarkets angling for a bigger slice of the fresh bakery segment, Caldwell says Baker’s Delight struggled in the last six months of 2009. While sales growth resumed in the first half of 2009, Caldwell says the new campaign was necessary to protect market share into the future.

The new campaign, which will be rolled out over the next 24 weeks, will emphasise the fact that the chain’s products are baked from scratch in-store, every day. The campaign will also focus on the differences between specific Baker’s Delight products and those of their competitors.

And the merry bakers are gone.

“It’s time to move on be a bit more serious,” Caldwell says.

Around 50% of the marketing budget – which will be paid for out of the market fund to which franchisees contribute 2% of sales – will be spent on television advertisement.

Caldwell says franchisees have been very supportive of the new campaign and will not need to spend extra in the short-term, although they may need to invest in new uniforms and “store enhancements” later in the year.

“For a business like ours, getting our franchisees on board is almost as important as getting consumers on board.”