Nielsen data to the end of Q1 shows growth in monitored categories up 3% ahead of the year end on 19 May, which has raised the group’s “comfort level” in forecasts. Price deflation in cakes had been a concern in February, but improved from -8% to -2% in March. A statement said: “Price deflation of this sort of magnitude feels containable to us, given commodity and other cost savings.”
“Star” performer Mr Kipling was relaunched in September 2014 with new branding and a ‘Life is better with cake’ tagline, resulting in its best sales performance in two years in the run-up to Christmas 2014 with a 21% year-on-year rise in December. Growth for the brand, which accounts for 15% of the Premier Foods business, has now slowed but continues to gain market share. According to Nielsen, Mr Kipling was 7% ahead year-on-year in March and 12% ahead in Q1 as a whole.
Martin Deboo, equity analyst at Jeffries, said this was to be expected. He told British Baker: “You wouldn’t expect the initial growth rate in the early stages of a relaunch to persist. Inevitably things will come back to some sort of equilibrium. It will dip when they lap the relaunch in September.”
Premier Foods is investing £20m in a new production line for its growing Snack Pack slices range at its manufacturing site in Barnsley, which will double capacity. Deboo said the group was “doing the right thing”.
“The new Snack Pack line will take them into single-serv, an area not traditionally exploited by them. My view is that they are doing the right thing with Mr Kipling in the medium term in a competitive market.”