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Meat-free is still not problem free for Premier Foods

01-Mar-2010

Firm contracts out more production of Quorn and Cauldron to resolve 'inefficiencies'

Premier Foods plans to contract out production of more of its meat-free products after failing to resolve "production inefficiencies" at its facility at Methwold in Norfolk.

Premier spent £3M last year on "supply chain restructuring initiatives" at Methwold, where some Quorn products are packaged and the Cauldron Foods range is manufactured.

However, further charges would also be incurred in 2010, it has revealed. "There was an increase in costs due to problems in meat-free manufacturing and packing. In the first half of 2010 we intend to address the supply chain issues by contracting out more of the operations. This will result in a further charge for restructuring the supply chain in the first half of 2010."

One analyst said: "They seem to have made an almighty cock-up of this. They have spent a fair bit of money and it hasn't delivered."

Quorn mycoprotein is produced in bulk at fermentation plants in Billingham and Stokesley, while production of finished products has historically been contracted out. Premier has gradually been consolidating production of Quorn and Cauldron products (which used to be made in Portishead) at Methwold. But the process has been dogged by "production inefficiencies"

While sales of Quorn grew by 4.4% in 2009, Cauldron's sales slumped by 20.3%. Meanwhile, sales uplifts from aggressive promotions in meat-free were lower than expected, admitted Premier, which plans to "refresh" both brands this year. There will be new packaging and "product improvements" for Cauldron in the spring and fresh marketing activities for Quorn later this year.

Premier, which posted a pre-tax profit of £47M on sales up 2.2% to £2.66bn in 2009, also renewed calls for the industry to change the distribution model for bread "in the medium term", but would not say how it intended to achieve this. One analyst added: "Premier has been banging on about sharing deliveries for years, and nothing has happened as the companies that could make it happen ABF (which owns Allied Bakeries), Warburtons and Premier are all direct competitors."