'Anti-competitive' behaviour hits Real Good Food Co

By Nicholas Robinson

- Last updated on GMT

The Real Good Food Company blames British Sugar for a slump in sales
The Real Good Food Company blames British Sugar for a slump in sales

Related tags Pre-tax profit Marketing Profit

Anti-competitive behaviour from Associated British Foods (ABF) has stunted The Real Good Food Company’s (RGFC’s) final year sales, its chairman has claimed.

Although RGFC’s revenue rose from £265.7M to £272.5M for the period ending March 31, pre-tax profit plummeted from £10.4M to £3.3M.

Pieter Totté, RGFC’s chairman, said the drop shadowed the financial progress made in other parts of the business and was down to the row with ABF.

In a third quarter trading update for February, Totté criticised ABF​ for abusing its dominant market position in its supply of sugar to RGFC’s Napier Brown brand.

Competition Markets Authority

RGFC originally submitted a claim to the Office of Fair Trading, which passed the claim on to the CMA when it closed in April this year, a spokesman told FoodManufacture.co.uk. The CMA then contacted RGFC in April, he added.

“We remain in close dialogue with the Competition Markets Authority ​[CMA] and are hopeful that the regulator will take the necessary steps to ensure that competition law is enforced,” ​said Totté.

“We strongly believe in our case and think British Sugar’s actions contravene the requirements of the regulatory authorities.”

Once RGFC had some guidance from the CMA on its complaint, it would respond accordingly, he added.

‘Not appropriate to comment’

An ABF spokeswoman told FoodManufacture.co.uk: “The recent commercial dispute between the two companies is not a matter upon which is appropriate to comment.

The matter was recently considered by the relevant regulator at that time, the Office of Fair Trading (OFT), who had undertaken a preliminary high level assessment, listened to the respective parties and in February 2014 took a decision not to open an investigation.

“We understand that Napier has resubmitted the same complaint to the CMA and we have no reason to believe that the CMA will reach a different view to the OFT.”

A number of new product launches and brand marketing helped the company’s Renshaw baking arm’s pre-tax profit rise from £5M to £5.5M on last year. Operating profit rose by 0.2% to £4.3M.

Transforming its R&W Scott jam brand into a stand-alone business with local financial backing has allowed the brand to make good progress, said the RGFC.

R&W Scott’s pre-tax profit shrunk by £98,000 on last year to £327,000 and operating profit dipped by £100,000, but this was because overheads had been increased, it added.

The company will attempt to boost its sales by launching various businesses to businesses and retail initiatives, it said.

No salvation

There was no salvation in RGFC’s Garret Ingredients arm either, where profits dropped by 3% on last year to £1.1M and pre-tax profit fell from £2.1M last year to £1.2M this year.

However, Garret Ingredients now has new management, which has delivered positive results following a review of the company’s distribution strategy, said Totté.  

A new contract with the retailer Morrisons and increased sales with existing customers Waitrose and Costa provided a boost in sales and pre-tax profit for RGFC’s Haydens Bakery arm, he added.

“Sales increased by 7.6% ​[on last year] and favourable material and labour efficiencies further enhanced margins,” ​he said.

Haydens Bakery saw its pre-tax profit grow by £576,000 on last year to £917,000. The company was also preparing to boost sales further with the launch of new pastry and bread products.

Meanwhile, RGFC is focusing on building its presence in Europe and launched its Renshaw brand in Brussels last year.

It is currently operating at a loss of £391,000, but several sales opportunities in France and a newly leased warehouse on the outskirts of Brussels could soon turn its fortunes, claimed Totté.

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