Sales of branded cakes at Mr Kipling and Cadbury cakes supplier Premier Foods have fallen more than 3% year on year.
Announcing its results for the full year ending 31 March, the company reported overall revenues from its Sweet Treats division had risen 1.2% year on year to £230m.
The growth had been driven by sales of own-label cakes, up 16.9%, while total revenue from branded cakes had fallen 3.2%.
Cadbury cake sales had been hit by short-term capacity issues, said Premier, adding it would be looking to increase Cadbury cake manufacturing capacity in the coming financial year.
Premier said branded cake sales had been improving towards the end of the year, with revenues flat in the fourth quarter. It added that this reflected the introduction of lower-calorie Mr Kipling Fruit Slices and TV advertising in the run-up to the Easter period.
The performance of Premier’s cakes business reflects a wider trend in the UK market.
IRI data presented in British Baker’s 2018 Bakery Market Report shows overall sales of own-label bakery products up 5.1% year on year. Subscribers to British Baker can download the full report here.
Across the whole Premier Foods Group, revenue rose 3.6% to £819.2m, with adjusted profit before tax up +5.9% to £78.6m.
“While the wider consumer environment remains a challenging one, the group notes the different trends seen between food and non-food sections of the UK consumer goods market, with food sector sales demonstrating stronger trends through the year, particularly in the second half,” stated Premier in its results.
“Additionally, while there has been a clearly demonstrable gap between the rate of general inflation and average earnings over the past year, this has now shown recent signs of narrowing.”
Cake has been a big success for Premier overseas, particularly in Australia where Cadbury and Mr Kipling were the main contributors to 81% revenue growth. Total international revenue has risen 25% year on year.
“We are pleased to report revenue growth of 3.6%, our strongest performance for over five years,” said Premier CEO Gavin Darby. “After a slower start in the first quarter, performance accelerated during the year as planned.”
“International has been the star performer, with sales growing by 25%, and are almost double the level of three years ago, while the benefits from our [noodles business] Nissin and [Cadbury owner] Mondelēz International partnerships together contributed 55% of our revenue growth.
“In the year ahead, we expect to make further progress on our key priorities, building on the strong momentum we created in 2017/18.”
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