Premier Foods plc today (15 November) outlined three ways in which the UK company and Japan’s Nissin Foods Holdings will join forces in the coming months.
Gavin Darby, Premier’s CEO, said the group would take on the distribution of a Nissin noodle brand in the UK and launch a product under its own noodle brand Batchelors after working with the Japanese company on its development.
Nissin will also start distributing Premier’s Sharwood’s products in the US with a view to doubling the number of stores in which the lines are sold.
News of the initiatives come eight months after Premier and Nissin announced plans to work together in the UK and internationally on distribution and product development. At the time, Premier also announced the possibility of a conditional “relationship agreement” between the two sides if Nissin bought a minimum 15% stake in the UK group.
Premier announced the tie-up on distribution and product development, as well as the chance of the relationship agreement with Nissin, at the same time as revealing it had received – and rejected – a takeover bid from US spices and condiments group McCormick & Co.
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By GlobalData
Days after, Nissin bought a 17% stake in Premier, which prompted criticism of the UK group by two of its largest shareholders. A week later, McCormick upped its offer for Premier, which the UK group also rejected. Meanwhile, Nissin took its stake in Premier to just short of 20%. A fortnight later, McCormick dropped its interest in Premier, insisting the price the UK group’s board wanted was too high.
Darby announced the initiatives with Nissin as he discussed Premier’s half-year results, which were published this morning. “I was very clear there were three big benefits of [working with] Nissin. The potential distribution of their brands in the UK, their technology to support our brands and thirdly support our international strategy,” Darby said.
“I’m very pleased to announce this morning that we will be distributing in major supermarkets Nissin’s biggest European brand, which is Soba noodles. This is an authentic Japanese noodle. They are fabulous products and we’ve made a commitment to Nissin of a very significant increase in their sales in the UK. And they’ll be more Nissin products to come.” Darby said Premier will take on the distribution of Soba noodles in the UK by March next year.
Premier is also aiming to launch its Batchelors Super Noodles brand in a pot format in the UK by March after working with Nissin on its development, Darby said. He admitted the launch was needed to help Premier boost sales of the Batchelors brand in the UK.
“Batchelors is beginning to perform nicely but it has long needed to move from a noodle product in a block to a convenience product in a pot format. We’ve had this on the product roadmap for quite a long time and struggled on our own frankly to match in a pot format the flavour and the texture which is so loved by British consumers of Super Noodles,” Darby said. “The access to Nissin technology has allowed us to crack that particular challenge from a product perspective and we’ll be able to use their facilities in Europe to produce this product, which allows us to get to market perhaps six months earlier than we’d have been able to do otherwise.”
Elsewhere, Darby said Premier and Nissin would work together on trying to expand the presence of the UK company’s Sharwood’s products in the US. Darby claimed Sharwood’s Indian cooking sauces were “equal second” in the US when measured by store listings but said Nissin would be in a better position to try to further increase the distribution of the products.
“We have had a slow-burn success in the US with Sharwood’s, moving up to second-equal in the Indian sauces market, distributed in a large number of stores but overly-centric to the east coast. We’ve agreed with Nissin in the last weeks that they will take over the distribution lead for Sharwood’s products in the US, use their sales force and reach, which is much, much deeper than Premier’s – or Premier’s wholesalers – and we’ve agreed a goal of doubling the number of stores that Sharwood’s will be sold in in the US. We’re already equal number two based on the number of stores we’re sold in and we’re very excited about that.”
During the conference with analysts, Shore Capital’s Clive Black asked Darby what the “materiality” of the relationship with Nissin would be in three to five years’ time. Darby said it was “difficult” to answer that question as the companies are working on further projects but said the tie-up made him confident Premier would hit its target of 2-4% growth in its overall annual sales.
“I think it’s a bit early, candidly, for me to talk to it. We’re still working on multiple different projects with Nissin and workstreams in advance of the three I’ve mostly focused on. It’s difficult for me at this point to be specific,” Darby said. “One way of thinking about it perhaps in the short term is maybe we should be even more confident in 2-4%. That would be my base line. I need to work these projects and workstreams, which are complex and cover lots of different initiatives in various different countries across the world, too, to be able to scythe it. You can be sure that it’s a question that the board will be asking as well.”
