In a trading update today, major food manufacturer Bakkavor said its sales volumes in the UK, US and China had started to show early signs of recovery. This comes after the business took battering at the height of the lockdown.
In the UK, the group’s like-for-like revenues were down 19% in April and 13% in May compared with the same period last year as demand for its food-to-go lines was impacted by the closure of businesses and people working from home.
Bakkavor highlighted that the market remains volatile with the frequency of shopping visits reaching historically low levels. Its performance across its meals, pizza & bread, and desserts categories is said to have steadily improved. However, its salads category and food-to-go products continue to be impacted, with “significantly lower volumes” year-on-year.
Meanwhile, Bakkavor revealed that was working closely with its customers to drive growth back into its categories and to expand ranges that were simplified at the start of the outbreak.
The group took a number actions at the start of the outbreak to lower its cost base and preserve cash, with all discretionary expenditure and non-essential capital investment still on hold. It also adjusted capacity across its sites in response to both current and anticipated demand.
The group revealed today that it was restarting production at the two factories it temporarily closed in March. However, earlier this week, Bakkavor confirmed that just over 500 jobs could be under threat at one of its production sites in Spalding, Lincolnshire, because of the coronavirus pandemic.
Agust Gudmundsson, Chief Executive, said: “In the UK, consumer behaviours continue to adjust, and while it will take time for sales to return, I have been encouraged by the recent increase in volumes. Current events have also reinforced my confidence in the vital role we play in partnering with our customers to deliver the fresh, healthy and convenient food that consumers look for every day.”
He added: “We are a robust, balanced and well capitalised Group and the steps we are taking to protect our business, combined with the current improvement in trading, gives us every confidence for the future.”
Earlier this month, Adelie Foods collapsed after administrators were unable to secure a buyer for the ailing food-to-go manufacturer. The business had been hit hard by the coronavirus lockdown which reduced demand for its sandwiches, salads, and snacks.
NAM Implications:
- Bakkavor patently has the flexibility to readjust to meet new norm demand.
- Rivals may benefit from reassessing relative competitive appeal in the food-to-go categories…
- …and modifying their offering accordingly.
