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October 7, 2014

Premier Foods’ smaller brands helped by discount, c-store growth

The growth of the discount and convenience channels in the UK has led to a "renaissance" for some of Premier Foods' smaller brands, Gavin Darby, the company's chief executive, said today (7 October).

By Dean Best

The growth of the discount and convenience channels in the UK has led to a “renaissance” for some of Premier Foods’ smaller brands, Gavin Darby, the company’s chief executive, said today (7 October).

Speaking at the IGD Convention in London, Darby said consumers shopping less often at supermarkets in favour of discount stores and convenience outlets had created an opportunity for Premier outside its largest brands.

“Some of our second- and third-tier brands are having a renaissance in channels growing very fast because actually there’s a match-up with consumer demographics or the cost to serve those small brands in growing convenience and discount stores is much, much lower,” Darby said.

Aldi and Lidl are cited as the two main discount retailers that have caused and benefited from changing consumer habits in the UK. However, the two German discounters have small branded ranges and Premier has turned to the UK’s high street discounters like Poundland – itself enjoying rising sales – to try to capitalise on the changes in the way consumers in the country are shopping.

In an interview with just-food in July, Darby pointed to some of Premier’s initiatives with such retailers. “We have been using Paxo as a brand for a gravy product in that channel. We have been using Bird’s as a brand for ready-to-eat custard in that channel. Those are both examples of brands that are well outside our top tier where we have been working with different and unique propositions just in that [discount] channel,” he said.

The central theme of this year’s IGD Convention – an annual conference attracting UK and international manufacturers and retailers – was the “disruption” within the country’s grocery sector.

Earlier in the day, IGD chief executive Joanne Denney-Finch said the industry was in a period of “dramatic change”, with “huge economic and demographic shifts”, technology and new business models leading to “rapidly-changing shopper behaviour”.

Darby was asked how companies like Premier can be agile enough to adapt to the changes in the marketplace. The Premier chief executive revealed he wanted a more “entreprenurial” mindset within his organisation.

“Entreprenurial skills is a big focus for me. It’s an attitude of mind in terms of idea, speed, decisiveness,” he said. “A lot of brilliant people in our industry have been schooled in a very corporate world – the dreaded matrix. I meet and interview an awful lot of people struggling in that world. In my company, we need a very different breed of individuals. It’s part of our recruitment.”

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