Real Good Food raises prices as cost increases hit margins

Renshaw and Haydens owner Real Good Food has raised prices as its margins come under pressure from commodity price hikes.

In a trading update for its third quarter – a key trading period for the business as it includes the run-up to Christmas – Real Good Food reported an 8% year-on-year increase in group sales.

However, the company, which makes the majority of it profits in the second half of the year, said earning margins had been hit by cost pressures, pointing out that butter had more than doubled in price. 

“As widely reported elsewhere, the overall trading environment for food manufacturers remains difficult with the biggest factors affecting Real Good Food being the short-term impact of high commodity prices, especially butter, sugar and oils, all key ingredients for the group, and a weakening of sterling post-Brexit,” it stated.

Real Good Food added that, despite the pressure on margins, it was confident it would be reporting revenue and EBITDA for the full year in line with “current market consensus” but had had to increase prices.

The move follows businesses including Mr Kipling owner Premier Foods increasing the prices its customers pay, and Finsbury Foods warning it may also have to do so.

“In common with its competitors, Real Good Food, having examined all options to mitigate the impact, has now implemented targeted price increases and expects margins to be largely restored by the start of the next financial year,” stated the company.

The Real Good Food business focuses on three main markets: cake decoration through Renshaw and Rainbow Dust Colours; food ingredients through Garrett Ingredients and R&W Scott; and premium bakery through Haydens and Chantilly Patisserie. 

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