Nestlé-branded kids’ cakes revamp planned for 2008

Finsbury Food Group is planning innovative bakery product launches under the Nestlé brand in the first quarter of next year in a bid to revitalise the range.

Finsbury posted an 89% leap in pre-tax profit to £4.4M on sales up 50% to £109.8M in the year to June 30. The company said the performance had been driven by strong growth in its core own-label premium cakes and breads business.

However, sales of Nestlé-branded cakes remained flat at £8m, said chief executive Dave Brooks. “The kids’ market is not growing as fast as the premium cakes market, but it still represents an opportunity, and we need to bring some real innovation into this area if we are going to realise that opportunity. Basically, the products aren’t right. We’ve spent the last three to six months talking to mums about what makes a great cake for kids and while taking out the artificial colours and flavours is important in getting that ‘permission to buy’, there is a lot more that we can do.”

Finsbury was also talking to customers about how best to use 20,000 sq ft of new space at its United Central Bakeries factory in Bathgate. The development was created after the site was rebuilt following last year’s fire, said Brooks. “We’re not going to rush into anything. It could be focused on organic, wheat-free or something entirely different.”

Rocketing prices for flour and dairy ingredients over the past three months had increased input costs at the company by £4M on an annualised basis, revealed Brooks. However, given that Finsbury was focused on the premium end of the market, it was less exposed than players at the commodity end, he said.

“Buyers do know what the pressures are. The price of butter has doubled in the last six months, and they know this because they sell it too. Maybe you’ll get 90% of the price increase you ask for and have to trade your way out of the other 10%. That’s where the skills of the development team really come into their own.”

Finsbury, which operates five factories supplying a range of baked goods to the multiple grocers, has become acquisitive again after integrating recent purchase Lightbody Group and rebuilding its Bathgate bakery, said Brooks.

“We’ve always been clear that when the core business is steady, that’s when we can stick our heads up and see what’s available. We don’t have to buy things just to make the numbers look clever, because our core business is showing excellent organic growth. However, we have the money and the management resource in place if a suitable acquisition opportunity comes up.”