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November 16, 2016

Premier Foods wants longer-term Cadbury licence deal

Premier Foods has indicated it wants a longer-term deal for the Cadbury cake licence the UK group holds from brand owner Mondelez International on a 12-month, rolling basis.

By Dean Best

Premier Foods plc has indicated it wants a longer-term deal for the Cadbury cake licence the UK group holds from brand owner Mondelez International on a 12-month, rolling basis.

Gavin Darby, Premier’s CEO, said the company was in talks with Mondelez on fresh terms.

The owner of the Mr Kipling cake owner holds rights in the sector to the Cadbury brand in the UK and certain international markets. As well as growing the sales of Cadbury cakes in the UK, Premier has in recent years sought to expand the presence in markets including Australia and the Middle East.

Premier yesterday announced its financial results for the six months to 1 October, numbers the company said included a “strong performance” from its Cadbury-branded cakes, helped by recently-launched products including Amaze Bites. The company said it had more new products planned for the UK market over the next six months, including whole cakes and Choc Tarts.

At a conference with analysts to discuss Premier’s results, CEO Gavin Darby was asked about the terms of the deal with Mondelez on the Cadbury licence, the investment the group is putting behind the brand and whether the business should place more resources behind its own Mr Kipling label.

Darby said: “We’re in a rolling, 12-month contract, which obviously I would like to make longer and those conversations are underway.”

The Premier chief executive, who took the role in 2013, said the sales of Cadbury cakes were declining when he joined the business and the company had since revitalised sales.

“When I joined the business, the Cadbury business was -8 and I remember the first conversation with Mondelez was with a business that was -8. The very obvious challenge from Mondelez to Premier was show that you can grow this business – and we’re growing this business in double digits now,” Darby said. “We’re probably their strongest international licencee in terms of performance in many of their categories anyway. I wouldn’t be investing in all those products unless we were confident that that relationship in various different forms will go forward for some time. Having said that, we are also significantly in new products in Kipling.”

Speaking to just-food, a spokesperson for Mondelez called Premier “a long-term and highly valued partner” and added: “As with all our partners we are in regular dialogue about our commercial relationships and the future. This is normal practice that is part of business as usual, but as you would expect these are commercially confidential.”

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