Why Warburtons is smart to go posh with its new cake sub-brand

Cake lovers rejoice. Because just as you all got bored of baking, Warburtons has announced plans to launch an eight-strong range of luxury slices.

The 145-year old brand, which is famous for its bread, bagels and crumpets, is rolling out the premium treats under a new sub-brand called Ellie Warburton – named after the great, great auntie of chairman Jonathan Warburton.

The range – which includes Cookie Dough with Caramel Slice and Lemon with Blackberry Compote – will be available from two local pop-up shops in Harrogate and Skipton as a six-month trial. Should it prove popular, Warburtons will use its extensive distribution network to get the cakes on supermarket shelves across the UK.

It’s a canny move from Warburtons, which is leveraging its flexibility as a family business to invest in new production lines and run trials of potential products to see if they hit home.

Unlike some of its rivals, Britain’s biggest bread brand has been stretching its horizons beyond traditional loaves for a while now. In April, it announced plans to move into pitta bread, having last year rolled out a range of sliced sandwich rolls and a four-strong range of ‘Half & Half’ SKUs made from 50% wholemeal and 50% white flour.

Earlier this month, meanwhile, it announced plans to plough £26m into its bakeries in Stockton and Burnley to help it “meet growing demand for non-bread bakery products”, such as crumpets and bagels.

Moving into cakes is, admittedly, a slightly riskier move than pitta and sandwich rolls. Boris Johnson’s obesity plans are poised to put the kibosh on HFSS promotions, which will cost the category an estimated 13% in retail sales value. And the lockdown home-baking boom, which saw half of Brits bake at home at least once a week on average – was costly for some cake brands. McVitie’s shifted 8.2 million fewer packs last year, for example, while Mary Berry’s branded range lost £1.4m, equating to 26.3% of its value.

But with 54% of people saying they returned to baking thanks to more free time over lockdown, according to our survey of 1,000 UK adults conducted by Lumina Intelligence in May, the home-baking craze is expected to wane again as Brits return to their workplaces.

And the forecast fall in consumer confidence could boost cake sales, which increased during the last major recession. Because when times get tough and we cut back on big expenses, we like to treat ourselves in more modest ways.

With that in mind, Warburtons is arguably smart to go premium with its cake brand. Not least because there is a distinct lack of large-scale premium cake brands on the market.

The big question, really, is what we will see next from this innovative bakery business? I’m putting my money on banana bread.