Blog: Dean BestPremier sanguine about UK retailers' own-label push

Dean Best | 23 September 2011

Premier Foods, the UK's largest food manufacturer and owner of brands from Mr Kipling cakes to Saxo stuffing, yesterday (22 September) set out its plans for the Christmas trading period.

Before we tucked into a festive lunch, Premier outlined its position in the UK's ambient sector, in which, it said, a number of categories "over-trade" in the run-up to Christmas. For instance, thirty-two per cent of all gravy sales are made in the fourth quarter of the year and Premier pointed to its "leading share" in the sector (Bisto accounts for 75% of sales, it says).

Ambient is the most shopped category in the UK over Christmas. Premier's festive activity includes the addition of new SKUs to certain ranges, notably to its Mr Kipling and Cadbury cakes portfolios.

"Ambient showed great growth in 2010 and there is no reason for that not be the case in 2011. It offers value for the money and the opportunity to spread the cost of Christmas," Bea Avery, head of category strategy at Premier, said.

Premier's brand portfolio should leave it well placed to benefit from added interest in ambient categories at Christmas but, this year, the company, alongside other UK suppliers, is facing retail customers putting more emphasis on their own 'brands'.

As we've reported, Sainsbury's is relaunching its core By Sainsbury's private-label range, while next month, Morrisons plans to announce an overhaul of its own-label portfolio.

Industry watchers have warned that the moves could hit UK suppliers. 

MF Global analyst Andy Smith said last week that the moves indicated there is "no let-up in pressure on mid-cap players" like Premier. He said: "Own-label is an increasing area of focus for UK supermarkets. Last year, Asda re-launched its core own-brand range and Morrisons will extend its own-brand range in October. We see this increased focus as negative for mid-cap branded food players such as Premier Foods."

At Premier's HQ yesterday, however, Avery was sanguine about the investment retailers were putting behind own label. "Consumers want to buy brands they trust. That's where brands provide a really safe choice," she told just-food.

The briefing was held just hours before Tesco announced an overhaul of its promotional strategy. The UK's largest retailer plans to cut GBP500m from the price of thousands of items in revamp of its promotional strategy.

On the face of it, such a major initiative could have an impact on suppliers' margins. Looking at the detail of Tesco's plans, it also indicated that "most of the investment" would be on cutting prices of its own-label lines, another sign of the renewed emphasis UK retailers are putting on private label.

The news would have been read at Premier's HQ in St Albans with interest.


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