Greencore, the Irish food group, is looking to further expand its business in the US as it looks to build on its “positive momentum” 12 months after it entered the market.
CEO Patrick Coveney said Greencore sees “considerable potential” in the US convenience food market, particularly in food-to-go and chilled prepared foods.
Greencore first entered the US last April with the acquisition of Home Made Brand Foods (HMBF). Speaking to analysts after Greencore reported its first-half results this morning (26 May), Coveney said underlying sales at HMBF had outperformed the category and had jumped 33% over the six-month period.
The Greencore boss said US retailers had been prepared to invest in their private-label convenience food ranges and consumers had “responded”.
Coveney said: “By any metric, it has been a successful first 12 months of operations in the US.”
Greencore plans to continue its as a private-label manufacturer in the US, with Coveney insisting the company is “right at the sweet spot” of where US food retailers are looking to expand their lines.
“We are private label focused. You’re not going to see us building new brands in the US. We don’t have the competence or the resources to do that,” Coveney said.
Since its entry into the US, Greencore has partnered with US retailers Kroger and Delhaize-owned Hannaford to launch chilled food under the Weight Watchers licence. Coveney said Greencore had plans to further roll out the range throughout the second half of its fiscal year.
“We will be expanding our business with both of those customers and adding several new [customers] as well,” Coveney revealed.
However, the Greencore chief executive signalled that the company would have to spend to boost its manufacturing capacity in the US.
“We are going to have a capacity problem in the next 12 months based on current momentum and we are working hard to try and solve that. We anticipate that we will have some news on that by our preliminary results later in the year,” Coveney added.
Greencore is slated to issue its preliminary results in November. Earlier today, the group said “trading held up well” during the first half of its fiscal year despite the company booking a net loss over the six months.
The convenience food maker posted a net loss of EUR7.3m (US$10.2m) for the period to 27 March after a one-off loss of EUR25.1m on disposals and restructuring.