Premier Foods, the owner of ranges such as Mr Kipling and Bisto, has posted robust first-quarter trading figures on the back of strong branded sales growth after making moves to win back shoppers from own-label alternatives.
In its core Grocery division, revenue increased by 7.1% to £179.4m, with branded sales growing by 8.6% to £161.9m. The group stated the volume-led growth was due to “continued strong execution of the branded growth model and partly reflecting sharper promotional pricing”.
Premier Foods highlighted that several of its grocery brands delivered substantial growth, with Nissin and The Spice Tailor both being standout performers. Meanwhile, new categories revenue increased by 68% after its Ambrosia Porridge pots range gained share in the breakfast category. Angel Delight ice cream was also boosted by the launch of a handheld format.
Meanwhile, non-branded Grocery revenue declined by 5.1% £17.5m, which Premier Foods blamed on consumers switching back to brands and some contract exits.
In the group’s Sweet Treats division, sales edged up 0.4% to £59.9m in the quarter. Branded sales increased by 3.5% to £51.9m, with Premier Foods saying its market share had increased in both volume and value terms, partly reflecting more competitive promotional pricing of its brands to win back shoppers from own-label alternatives.
The group noted that in-store execution drove growth of its Mr Kipling and Cadbury cakes brands, supported by product innovation.
Non-branded Sweet Treat sales were down 16.0% to £8.0m, reflecting the movement of consumers back to brands and the impact of contract exits.
Meanwhile, Premier Foods saw strong overseas sales, up 24%, after the rollout of new lines in North America, Germany and Australia.
“During the quarter, we have gained both value and volume market share in Grocery and Sweet Treats, as more shoppers bought more of our leading brands, delivering good volume growth across our categories,” said Chief Executive Alex Whitehouse.
“As we look forward to the rest of the year, we have a strong set of marketing and product innovation plans for our brands in the UK and Ireland, while we continue to build distribution internationally. We expect to see more volume-led branded sales growth in the coming quarters, further progress overseas and our expectations for the full year remain unchanged.”
Earlier this week, industry data from Kantar showed sales of branded products increased by 3.6% last month, outpacing own-label items, which grew by 2.7%. As cost of living pressures start to ease for some people, analysts expect brands to regain some of the ground lost to own-label over the last couple of years.
NAM Implications:
- It is probable that many branded suppliers are employing this ‘win back from own label’ strategy.
- In which case, there will be intensive in-store activity, competing for share of space/theatre.
- And above all, an opportunity to test the effectiveness of Retail Media…
- …especially given that retailers will need to roll back some of their own label initiatives…
- …in order to optimise the appeal of their RM networks to brands.
