As one of Western Australia's oldest bakeries faces an uncertain future, the premium bread market is growing from strength to strength.

Perth baker Andrew Ritchie set up his sourdough business in 2011, selling at farmers markets and specialist grocers.

Seven weeks ago, the father-of-four opened a cafe in Maylands near his bakery to sell bread directly to customers.

"Everyone who's doing what we're doing has a retail outlet and after five years of wholesale, you can definitely see why," Mr Ritchie said.

The Woodfired Baker sells a variety of sourdough loaves, which have been baked in a restored 1920s oven.

Each batch takes 15 hours to prepare, including fermentation, and the loaves sell for $9 each.

"There's been a big change in the last five to 10 years in regards to bread," Mr Ritchie said.

"People now want to know where their bread's coming from, where the wheat's coming from and the process," he said.

"It is expensive and I appreciate that, but when people understand the process that we do, the ingredients, the fact that it's organic, I think people are willing to pay a little bit extra."

Consumer demand drives premium push

The Woodfired Baker is one of a string of WA artisan bakeries that have set up or expanded in the past decade.

Ceyda Genc is the managing director of Carlisle-based Turkish Bakeries, which her father established more than 25 years ago.

In the past five years, the business has expanded, with plans for a retail shop in a shipping container at the front of the factory.

Ceyda Genc says the bakery has been forced to innovate to compete with supermarkets. ( ABC News: Emily Piesse )

Ms Genc says the bakery has been forced to innovate to remain competitive against the two major supermarkets, where it sells several products.

"When you're making a handmade Turkish bread, you don't ever think you'll be impacted you know in that [supermarket] space as well, which we have been," she said.

Turkish Bakeries will lower its prices in August and recently introduced a shelf-life extended bread to appeal to supermarket shoppers.

"It's an artisan, handmade product where the shelf-life has been increased for consumer convenience, so when you take it home it doesn't go mouldy within a few days," Ms Genc said.

The company has also rebranded part of the business and changed its packaging.

"People are still going to want Turkish bread and they're still going to want to buy authentic, local [bread] ... so we just have to do business smarter."

Premium market to grow in WA

The competitive pressures facing the bread industry claimed one of WA's oldest bakeries last week, when family business Mias entered voluntary administration.

The company, which produces sliced bread, said competition between the major supermarkets had pushed prices to unsustainably low levels.

IBISWorld Australia industry analyst Nathan Cloutman said the bread market was splitting in two directions.

"Coles and Woolworths are increasingly encroaching on the smaller players in terms of generic white loaves and you are seeing smaller players being squeezed out of the industry," he said.

"On the other hand, you have the growth of artisanal ... premium breads, gluten-free breads, and consumers are increasingly demanding these products.

"[The supermarkets] are moving in towards more kind of premium breads with in-store bakeries, but there is still growth for small bakeries to start making premium products at higher margins."

With an increasing number of small bakeries targeting the premium market, Mr Cloutman said some cities would be unable to sustain new entrants.

However, he expects the artisan market in Perth to continue to grow for some time.

"With Melbourne and Sydney, you can see that obviously the kind of trend in terms of the premium market is starting to flatten out," he said.

"In Western Australia and other states, this trend is slightly lower, so we've still got a while to see these consumer trends and the markets flatten out."