Premier Foods plc, the UK group, has renewed its licence to produce and market Cadbury-branded cake and ambient dessert products, replacing a 12-month rolling deal with a five-year agreement.
Commercial terms have not been disclosed but Premier said the new contract lasting until 2022, with an option to extend the agreement until 2025 “subject to meeting certain performance criteria”.
Premier’s CEO Gavin Darby said the new partnership “will give us a great platform to invest in developing the Cadbury cake brand in the UK and around the world and represents a major boost to our fast-growing international business”.
According to Premier, new potential markets include South Africa, Canada, China and India. The company said it is “already developing plans to launch Cadbury cake in two new significant markets in 2017/18”.
The company said the new deal could lead to it using more Cadbury sub-brands such as Flake, Crunchie, Caramel and Marvellous Creations, as well as Oreo.
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Details of the partnership are set out in a “heads of terms agreement” which Premier said is “expected to be finalised in definitive agreements in the coming weeks”, the company added.
Premier said IRI research data indicates Cadbury cakes have an estimated 8.3% share of the GBP1bn (US$1.3bn) ambient cake market in the UK “and have grown sales value 19.5% in the last two years.
Analysts had been asking Premier about the prospects for the contract with Mondelez, with the UK group seeing pressure on sales and profits and with the US group in August buying the licence to make Cadbury-branded biscuits from Burton’s Biscuit Co.
In a note to clients this morning, Shore Capital analysts Clive Black and Darren Shirley wrote: “There is a clear sense of relief on our behalf that these negotiations have been seemingly effectively concluded albeit we do not know what commercial terms have been agreed; we note no new guidance, which hopefully augurs well.”
Premier is set to announce its annual financial results on 16 May.