After posting robust half-year results, Premier Foods confirmed that it was starting to reduce prices across several of its brands, such as Batchelors and Mr Kipling, after seeing costs begin to ease.
“We know how challenging the past year has been for many consumers, and so it’s good to see the rate of input cost inflation falling,” said Chief Executive Alex Whitehouse.
He noted that on some brands, prices were already back at the level seen in the summer of 2022, with the company looking at more initiatives to reduce prices in the second half of the year.
Over the six months to 30 September, Premier Foods saw its trading profit climb 19.0% to £67.5m on revenue up 19.2% to £484.4m.
In its Grocery division, revenue was 22.3% higher at £372.2m, with branded sales growing 23.1% and non-branded up 18.0%, boosted by earlier price increases. The group noted that Grocery volume trends improved in the second quarter of the period as the elasticity effects of price increases dissipated. Greater promotional investment across a range of products in the second half is expected to further underpin the volume trends.
In its Sweet Treats division, revenue increased by 5.4% to £121.9m, with branded revenue 2.6% lower and non-branded up by 66.0%. After taking a hit during the period, branded volumes are expected to improve in the second half due to “sharper” promotional pricing that reflects the lower levels of input cost inflation.
Premier Foods highlighted that it had made a “good start” to its third quarter. As a result, it raised its outlook for the full year, with it now expecting its annual trading profit to be 10% ahead of last year’s £157.5m.
NAM Implications:
- It’s called the Law of Supply & Demand, folks!
- i.e. if the consumer does not have the capability to pay, the price has to drop…
- …and retailers ‘have done all they can’.
- So, it’s up to the supplier to prevent sales drift…
- That said, Premier Foods is doing well, especially in anticipating a profit rise of 10% in the New Norm.
