UK confectioner Zetar plans to grow its “everyday” sales, reducing the firm’s dependency on seasonal revenues.
A significant portion of the company’s revenue is generated during the key trading periods of Easter and Christmas, Zetar CEO Ian Blackburn told just-food today (15 May). However, the company aims to grow year-round sales through a focus on developing new products that feed into these channels, he said.
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“We expect to grow our everyday business… through product development. We are well-known for being very innovative,” he said.
Zetar manufactures branded snack products under character licences and for third parties – including nuts for Premier Foods plc under the Branston brand – as well as producing private-label goods for retailers.
Blackburn said he anticipates year-round sales to grow across all of these segments. He said it was “difficult to say” which area would see the greatest growth but added the company is looking to bulk-up its branded offering through character-licencing deals.
In a trading update released this morning, Zetar said its “everyday” business was “gaining momentum” and revealed it has already confirmed GBP13m (US$20.8m) of new everyday sales this year.
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By GlobalDataLiberum Capital analyst Patrick Coffy said Zetar’s strategy to increase its focus on year-round revenue should result in greater financial stability and reduce risk-factors associated with seasonal products.
“Longer-term, Zetar is reducing dependency on seasonal sales and increasing exposure to low-risk everyday sales. This will de-risk the group and smooth working capital fluctuations over the year,” Coffy suggested.
Blackburn was speaking after the snack group reported a 5% slump in full-year sales, which were dented by a “relatively disappointing” Easter.
Blackburn said Zetar’s Easter sales were hit by an over-abundance of “caution early on” from retailers, which were tightly controlling inventory levels in the face of an uncertain economic outlook and poor consumer sentiment.
However, he added: “Caution was over-done. Many of our products were out of stock when we got to Easter… We expect that this will be a short-term issue… they [retailers] are likely to stock more next year off the back of good sell-throughs.”
The company also plans to grow its sales in Europe, Blackburn added.
Zetar opened its first sales office in France in January, when the firm said it was aiming to make GBP10m in sales in Europe over the next three years. The group expects its continental operation to break-even this year, its first full year of operation.
“Europe is of interest. France and the Benelux markets are our priority. To start with, firstly, we are expanding our character license products, focusing on Christmas and Easter and then year-round. Then… secondly, we look to do private label… confectionery and snacks. Finally, we should be able to produce third-party brands. But you couldn’t do something like Branston. We will need to align with a French brand, but the model should be transferable.”
