In its interim management statement for the first three months of 2014, as it announced a fall in total sales compared with the same period last year, the firm stated: “A strong programme of additional new product launches are planned for the second half of the year in line with the company’s strategy of driving category growth through marketing and innovation.”
It said it intended to build its consumer marketing, particularly during the second half of the year in line with timings for new product launches.
Commenting on plans for its Mr Kipling cakes brand, Premier Foods added: “Mr Kipling increased its leading market share position in the quarter with further brand activity planned for the rest of the year.
“The Company’s major investment in the new Mr Kipling Snackpack line at its factory in Barnsley is also developing well, with production expected to commence in early 2015.”
Cadbury cake launches
It was planning more Cadbury cake launches for the second half of the year to bolster sales, it said.
Ceo Gavin Darby said Premier Foods had “a strong programme of new product launches and consumer marketing planned for the second half of the year”. These would be “supported by continuing initiatives to reduce costs and complexity and improve efficiency”, he added.
The company stated it was looking at a number of capital projects across its portfolio, which it expected to improve efficiency and deliver strong return on investment.
“While the input cost inflation environment is relatively benign, the company continues to improve efficiencies with its strong track record in reducing manufacturing controllable costs,” it stated. “Additionally, further innovative opportunities are currently being reviewed to maximise value and efficiencies from the grocery infrastructure.”
Reduced supplier numbers
Premier Foods was also making considerable progress on reducing supply chain complexity, having reduced supplier numbers by 38% since 2013 to 2,040. As a result, it was on track to reach its target of just 1,660 suppliers by the end of this year, it confirmed.
Among the brands performing well within its portfolio, the firm singled out sales of Loyd Grossman sauces, which it said had grown in the quarter, and Mr Kipling, which it claimed had increased market share.
Sales of Sharwood’s sauces fell during the quarter, which Premier Foods attributed to a competitive cooking sauces and accompaniments category.
Non-branded sales fell 12.9% as a result of contract withdrawals in lower margin desserts and powdered beverage contracts and the disciplined approach taken in that area, the company said. However, Premier Foods expected that effect to be less marked in its second quarter, reflecting the anniversary of these contract withdrawals.
Premier Foods reported total grocery sales down 6.2% in the three months to March 31, from £198.7M in the same period last year to £186.3M. The company attributed this to the tough grocery retail environment, a later Easter and the impact of milder weather.
Sales of its power brands fell 3.5% in the three months to March 31, 2014, from £128.2M to £123.7M, comparing the same periods. Sales of support brands fell by 10.4%, from £47.8M to £42.8M.
Total branded sales dropped by 5.4%, from £176M to £166.5M. Non-branded sales fell 12.9%, from £22.7M to £19.8M.
Earlier this month, Premier Foods was praised for completing a lengthy renegotiation of lines of finance, comprising a £353M equity issue, a £500M high yield bond and a £272M revolving credit facility.