Premier Foods’s rejig may alter little, says expert

By Rod Addy contact

- Last updated on GMT

Experts agree ceo Gavin Darby has steered Premier Foods through a challenging refinancing deal
Experts agree ceo Gavin Darby has steered Premier Foods through a challenging refinancing deal

Related tags: Premier foods

Premier Foods’s creation of three strategic business units (SBUs) may change little, as the company still faces major challenges if it is to progress, according to one industry expert.

Julian Wild, partner at law firm Rollits, told FoodManufacture.co.uk the creation of an international SBU suited previously stated aims to boost global sales outside of a mature UK grocery market.

“The ‘Power Brands’ on which Premier has pinned its future are only growing at 2.5%, the ‘support brands’ are barely growing at all and own label is declining,” ​said Wild. “So Premier has to look to international sales to try to find some growth. Is that likely?

‘Congested and mature market’

“Part of the problem is that Premier’s branded margins are so high that it is allowing other own label suppliers and other licensed branded players, such as Symington’s, into a congested and very mature grocery market.

“… The new appointments look like a relatively minor reshuffle to put the operations under two UK SBUs – grocery and sweet treats – and then have a focused international SBU to try to grow the business internationally. Probably makes some sense but does it really change anything fundamentally?”

He acknowledged that Premier Foods’s ceo Gavin Darby had successfully steered the firm through a tricky refinancing period. “… The current Premier team under Gavin Darby have done a very good job of turning Premier from a bit of a basket case into a stable business with debt under control.

‘Isn’t going anywhere’

“But it is still financially constrained, can’t make serious acquisitions and the core business isn’t really growing. So it isn’t going anywhere, which is why the share price has collapsed from more than £4 to 39p in the past five years.”

Graham Hunter, newly appointed head of Premier Foods’s ‘sweet’ business unit, Alex Whitehouse, head of its ‘grocery’ unit, and international unit head Peter Ellis are all well-regarded, with experience with high profile brands.

FoodManufacture.co.uk understands the SBUs will operate separately and because of their differences will have separate commercial and new product development teams.

Targeted focus

The approach would enable the business to develop a more targeted focus for each area, but some commentators believe it would need to keep a tight rein on costs and avoid duplicating efforts.

For more on the Premier Foods appointments, click here​.

Darby is one of the candidates for Food Manufacture’s Personality of the Year award​ on account of his achievements to date at Premier Foods.

The accolade is designed to reward the person who has had the most positive impact on the food industry in the past year. Other contenders include Greencore boss Patrick Coveney and Adnams ceo Dr Andy Wood.

Readers can vote for their choice from the shortlist, which is drawn up by Food Manufacture’s editorial team here​. The deadline for voting is September 26.

Related topics: Ambient foods, Bakery

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