Premier Foods has posted a 4.6% rise in half-year revenues, driven by robust volume growth of its core brands, such as Mr Kipling and Ambrosia, after investment in innovation and promotional pricing.
Revenue in its core Branded division rose 6.8% to £444.7m over the six-month period to 28 September. However, its Non-Branded unit saw revenues slide 27.4% to £37.4m following the closure of two manufacturing sites, consumers switching back to brands, and some contract exits.
On the branded side of the business, sales of its Grocery products grew 7.0% to £339.0m after volumes jumped 12%. Premier Foods noted that promotional investment was higher compared to the prior period due to the lower promotional price points, which served to drive volumes. The group’s performance also benefitted from its “branded growth model strategy”, which includes launching new products, supporting the brands with “emotionally engaging advertising”, and “building strategic retail partnerships”.
Meanwhile, branded revenue from its Sweet Treats range advanced 6.1% to £105.7m after gaining volume and value share throughout the half, with both its Mr Kipling and Cadbury cake products contributing “strongly” to these gains.
Premier Foods’ profitability also saw improvement, with headline trading profit climbing 5.5% to £70.2m. Adjusted profit before tax was up 8.9% to £61.0m.
“We’ve delivered another really strong branded performance in the first half, underpinned by double-digit volume growth,” said Chief Executive Alex Whitehouse.
“This demonstrates the success of our proven branded growth model, which was also supported by sharper promotional pricing. We gained both volume and value market share, outperforming the market as many consumers switched into our leading brands from own-label.”
He added: “As inflation has begun to ease and shoppers are starting to feel more confident, we’ve seen consumers treat themselves more, helping sales of both Mr Kipling Signature Bites and Ambrosia Deluxe more than double in the first half of the year.
“We’ve continued to make very good progress against all the pillars of our growth strategy. We accelerated capital investment in our supply chain, continuing to invest in projects to improve automation and increase efficiency, in addition to enabling growth through new product development. Angel Delight ice cream and Ambrosia porridge pots contributed to strong progress in our new categories, which grew 67%, while the international business performed very well, with revenue up 31%8. We continue to be very pleased by the progress of our acquired brands, The Spice Tailor and FUEL10K, and we now have the biggest-selling granola product on the market.”
Looking to the second half, Whitehouse said: “We have exciting plans in place across all our brands, with our best ever Mr Kipling Signature mince pies benefitting from expanded distribution. With this, and our continued branded momentum, we are on track to deliver on expectations for the full year.”
NAM Implications:
- Increased investment in a brand, be it
- Reduced/promo prices
- Or bigger adverting spend
- Helps to reduce the perceived size of the brand premium to a level tolerated by brand loyals…
- Thereby encouraging savvy users to vote with their feet…
- …when they feel the brand has taken a step too far in terms of price increases.
- Key is balancing promo prices on brands vs own-label shelf prices…
- …to achieve volume increases without compromising the bottom line.
- Premier Foods appears to have managed this balancing act…
