Mr Kipling brownies

Source: Premier Foods

Total sales of Premier Foods’ sweet treats brands have fallen by 2.4% compared with the previous financial year.

Own-label sales are driving growth at Premier Foods’ sweet treat division, with a 30.5% increase more than making up for a drop in revenue of its branded products.

In a trading update for the 52 weeks ended 1 April 2023, the business reported total sales for the division have risen 2.7% to £259.6m.

Non-branded sweet treats continued their upwards trajectory due to pricing benefits of existing ranges and contract wins in pies, tarts and seasonal ranges. Full-year sales stood at £50.7m, almost a third better than the £38.8m recorded during the 2021/22 financial year. The fourth quarter experienced the greatest growth in own-label revenue, up by 60% year-on-year.

In contrast, branded sales fell by 2.4%, down from £214m last year to £208.9m this time. Unscheduled maintenance of a Cadbury cake plant line in the second half impacted the divisional contribution in the year (£27.0m), which was £6.4m lower than FY21/22. Although divisional contribution margins of 10.4% were 2.8 percentage points lower than the prior term, they were 1.1 percentage points higher than two years ago.

On the plus side, the launch of Mr Kipling’s non-HFSS ‘Deliciously Good’ cake range was said to have received a good response from consumers. Products are made with 30% less sugar and lower fat, and a higher content of fibre and fruit compared with the standard Mr Kipling range.

It is the brand’s only full range which can be promoted on end of aisles and at front of supermarket stores under new legislation, which came into force on 1 October last year. “This new range is a clear demonstration of how the Group is delivering against the Group’s ‘Enriching Life Plan’ ESG strategy and offers consumers further options to support healthier lifestyles,” said the company.

Other NPD launched in the year included Mr Kipling Signature brownie bites and Plantastic Millionaire Flapjacks. Mr Kipling was also said to have benefitted from a fresh new TV campaign, the ‘Piano’ advert.

The business also revealed product innovation to be launched during the next year includes Mr Kipling Deliciously Good loaf cakes and Cadbury Mini rolls in mint and orange flavours.

Mr Kipling and Cadbury cake brands continued to perform well overseas, supporting the business’ overall revenue growth of 10% (on a constant currency basis) in its target markets of Australia, Canada, Europe, Ireland and the US. In Australia, the brands collectively delivered the group’s highest ever share of the cake market in the year, reaching 15.6% on a full year basis and extending leadership of the category.

Premier reported ‘another strong year’ including an 11.8% increase in sales across the total business, with revenue surpassing the billion pound mark. Despite the dip by brands in the sweet treat division, full year branded revenue was up by 9.1%, including a 15.9% leap in Q4.

“Once again, the business has delivered a year of strong performance in a challenging environment with Group Revenue increasing by 11.8%,” said Premier Foods CEO Alex Whitehouse. “Trading profit increased by 11.5%, maintaining margins versus a year ago, as we successfully offset exceptionally high input cost inflation through a combination of cost efficiencies and pricing.”