Shares in the embattled food group Premier Foods fell by nearly 10% after the company, which produces Mr Kipling cakes, said it had seen falling sales in its so-called ‘Power Brands’.

Prices dropped off on Premier Foods from 57.5p to 52p by the close on Wednesday, 18 June.

Premier, which had also announced another joint venture to hive off its own-label powered desserts and beverages business, said that a “subdued grocery market” was to blame for an unexpected fall in sales of its Power Brands in its second quarter.

Premier scrapped its earlier forecast for a 2-3% annual sales increase for the brands, which also comprise Loyd Grossman, Batchelors, Oxo, Ambrosia custard and Sharwoods.

In a statement, the company said: “While Power Brands’ sales for the second quarter are anticipated to be negative and below the company’s expectations, due to subdued grocery markets, profit expectations for the 12 months to 31 December 2014 remain unchanged, reflecting the company’s ongoing focus on managing its costs. As a result the company no longer expects Power Brands’ sales to grow by 2-3% for the year to 31 December 2014, as previously indicated.”

Earlier this year Premier also entered into a joint venture for its Hovis brand.