Premier Foods has expanded overseas distribution of The Spice Tailor and the Mr Kipling cake brands as the UK business added to its market-share gains.
The group today (23 January) highlighted its “biggest ever” Christmas performance, helped by sales of mince pies and emphasised it is “well on track to deliver against its previously raised profit expectations”.
Reporting third-quarter results to 30 December, CEO Alex Whitehouse said Premier Foods built on its 113 basis points of first-half market-share wins to deliver a further 121 points in the three months. He added the gains were similar in both the company’s grocery and sweet-treats segments.
Group sales rose 14.4% to £352.7m ($448m), with the branded portion of the business up 12.7%. Grocery branded sales climbed 11.6% and branded sweet treats were up 17.1%.
“Our overseas businesses made further good progress,” Whitehouse said, as international sales increased by 11%, with more overseas listings secured for The Spice Tailor and Mr Kipling.
“When we acquired the brand [Spice Tailor], that was mostly present in the UK and Australia. But we are now in, or at least have got confirmed listings, in a total of ten countries. This includes New Zealand, Canada and our first listing in the United States.
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“And in Europe, so far we’ve agreed listings in Belgium, Switzerland and France, as well as a step-change in distribution in Ireland,” Whitehouse explained.
Building on the 2022 acquisition of meal-kit business The Spice Tailor, Premier Foods struck a deal for the UK cereal, snack bars and milk drinks brand Fuel10K last October.
“We’re also exploring the potential for Fuel10K overseas,” Whitehouse said today as he revealed new gains for Mr Kipling in the US and Canada.
In November, Premier Foods said it was “building distribution” for Mr Kipling in the US, initially with the roll out of four flavours of cake slices in 200 stores. It has also now won around 800 listings in Canada, with shipments expected to start in the final quarter of the year.
“On top of what we’ve already gained in the US, we are now close to 3,000 stores across North America. To put that in context, Mr Kipling will now be in more stores in North America than it is in Tesco in the UK,” Whitehouse said.
After revealing price cuts on some products in November as inflationary pressures continued to ease, Premier Foods said today lower prices will be extended in the fourth quarter to the Loyd Grossman cooking-sauces brand and Mr Kipling bakewell slices.
Trading profit, however, is still envisaged to be around 10% ahead of last year’s £157.5m print, which was up 11.5% on the previous 12 months.
The positive top-line growth effects of pricing levelled last year will, nevertheless, “start to drop out during quarter four”, Whitehouse said.
He added: “We do of course expect the level of top-line growth to begin to reduce as the year-on-year impact of pricing falls away during the quarter. And then, as we move into the next financial year, we expect to return to more normal levels of top-line growth, split between a blend of volume and price mix.
“So maybe think about the top-line growth that we were consistently delivering pre-pandemic.”
Questioned on whether deflation might be on the horizon as opposed to disinflation, the CEO ruled out the prospect.
“I don’t expect that, overall, you get into net deflation in any way, shape or form. But certainly, from where we’re sitting from a pricing point of view, we’re still in the camp where we don’t see that we will need to increase our pricing next year unless something that we haven’t anticipated happens,” Whitehouse said.
During the Q&A, he explained the pricing dynamics as cost inflation starts to abate.
“As some of our commodities have come off their peaks, that’s given us the space to fine-tune some of our promotional pricing and we’ve chosen to do that in areas where we’ve got the greatest anticipated price elasticity.”