As ALDI expands into new Australian markets, the retailer is forging new partnerships with suppliers that can meet the high standards of its exclusive ranges. Retail World visited Davies Bakery at Broadmeadows in Melbourne to discover what it means to be a manufacturer behind the curtain.
By Hailey Settineri.
Davies Bakery is a fifth-generation family-owned business. The family has been in the baking industry for more than 125 years. During this time it has seen great changes in the Australian bread market, including, latterly, the growth of sliced and packaged bread in the 1950s, the trend towards wholegrain and wholemeal in the ’70s, and the recent interest in ‘premium’ varieties.
A spokesperson for Davies Bakery says one of the key challenges the bread industry has faced in the past two decades is a lack of investment due to the falling price point of sliced bread. Davies has bucked this trend by reinvesting in its business to ensure it can deliver a quality product at low cost. As a result, it is currently estimated to be the largest independent bakery in Australia by both value and volume.
“We keep reinvesting because the market is so competitive,” Davies Bakery said. “We’ve spent well over $10 million, probably closer to $15 million, on upgrading the equipment and the processes since we moved into the [Broadmeadows] bakery in 2007.
“Any investment is aimed at improving quality, yield or efficiency. We don’t expect our customers to pay for our inefficiencies. In terms of capital spend, we work towards engineering out those inefficiencies so we can deliver the best product at the best price, which in turn benefits the customer.”
As a contract manufacturer, Davies supplies fresh and frozen bread to a number of retailers and also has a long-standing contract producing savoury goods. In the fresh-bread stream, its largest customer by far is ALDI Australia, which accounts for around 40 per cent of the bakery’s business.
Davies manufactures bread, crumpets, English muffins and seasonal hot cross buns for ALDI’s Victorian stores. The goods are sold under ALDI’s exclusive label, Bakers Life, or (in the case of its premium hot cross buns) Specially Selected.
The bakery produces more than 50,000 loaves of bread every day and its highest volume product is the white, sliced, 650g loaf. It operates around the clock on 363 days a year to ensure fresh bread is delivered to 123 ALDI stores across Victoria by 8.30 each morning.
“One of the unique things about bread is that we need to control the distribution,” Davies Bakery said. “Newspapers and bread used to be the only things that lost a huge amount of value through the course of 24 hours. Now newspapers seem to have largely disappeared, but bread is still in that category where it’s highly time-sensitive. We need to make sure that we’ve got trucks all over the state every day to deliver to ALDI.”
Davies Bakery has invested millions of dollars into the baking industry and Victorian operations over the past four years. This investment has created new jobs (staff numbers are up from 120 to 180) and allowed for technology upgrades.
“Bread making is relatively simple, but the challenge for us is to produce large volumes of high-quality bread every day,” Davies Bakery said.
“In terms of ingredients, we use pretty much the same as when it was all made by hand. We’ve just mechanised it, because otherwise you’d be paying $10 per loaf, not the competitive prices you see at the moment.”
When Retail World visited Davies Bakery, three lines were in production, making bread, English muffins and hot cross buns.
Expert staff heavily supervised the highly automated process, making small adjustments when needed. According to the bakery, mechanised bread baking is a continuous process.
“Once the thing starts, it’s like having a tiger by the toe,” Davies Bakery said. “You can’t stop the process. If you let a piece of equipment stop, if an oven stops for more than five minutes, we’ve got to throw out 6,000 loaves of bread.”
With its strong sustainability values, Davies ensures that the bread that fails to make the cut is not truly wasted. Instead, it is recycled into feed for cattle. Plastic used on-site for packaging is also recycled to minimise waste.
Davies Bakery is fully SQF- (Safe Quality Food) and HACCP- (Hazard Analysis and Critical Control Points) certified and undergoes external auditing to ensure it has the best processes in place to maintain food quality and safety. The bakery is also audited against all its customer-specific standards, including ALDI’s.
Sampling, measuring and testing are carried out through the manufacturing line to ensure safety. All ingredients come from approved suppliers with a certificate of compliance and, on receipt, a sample of all of those ingredients is checked by the quality assurance team to make sure nothing is out of order.
All ingredients are sieved before they go into the product and pass thorough metal detectors and X-rays that detect foreign matter. These devices are also calibrated and tested every half-hour, so Davies Bakery is confident that all its final products are free from foreign bodies.
In addition, multiple inline check-weighers are used to ensure both the dough and the final product conform to the correct weight.
ALDI Australia works closely with Davies Bakery to ensure the quality of Bakers Life breads meet the retailer’s high standards. This includes ongoing comparisons with leading brands (the ALDI team conducts regular blind taste tests to ensure its product “comes out on top”) as well as input on formulation. ALDI’s push to lower salt content across its food products led to Davies Bakery reformulating its recipes, cutting salt content to 400mg per 100g (down from more than 600mg per 100g) in its breads.
The majority of the ALDI Bakers Life Bakehouse range now carries the Heart Foundation Tick.
New product ideas, including the Specially Selected Sour Cherry & Belgian Chocolate Hot Cross Buns released in time for Easter 2015, are a joint process. In this instance, ALDI identified a trend towards premium products and wanted to introduce an Easter product under its Specially Selected label to match the success of its Christmas lines. ALDI worked closely with Davies Bakery on different flavours and iterations before the new bun range was developed.
Wherever possible, Davies Bakery sources its ingredients from Australia. Local sources of highly specialised ingredients, such as bread improvers, are currently unavailable and, depending on the season, dried fruit from overseas is sometimes used. But the core ingredients and vast bulk of what goes into the product is Australian-sourced.
Davies Bakery is also certified by the Roundtable on Sustainable Palm Oil, meaning it can trace any palm oil used in its products back to the source and ensure it is from a sustainable provider.
Future of Bread
With much diversification across bread products in recent years, a major trend has been the popularity of artisan breads.
According to Davies Bakery, this is a good thing because it has driven the big bakers and packaged bread suppliers to innovate.
“People are more interested in bread again and sales are now growing roughly in line with population,” Davies Bakery said. “It’s not taking the world by storm, but it’s still very much a staple for everybody. There are very few people who don’t eat bread in some form – even if it’s in gluten-free form.”
Davies will continue to focus on creating high-quality everyday bread, such as the loaves it makes for ALDI that retail for 85¢.
“Even though it’s sold at a very, very competitive price at ALDI, we don’t take anything out of it to achieve that price,” Davies Bakery said. “I think that shows in the flavour.”