Real Good Food is to ramp up activity targeting amateur bakers after identifying them as a growth market.
The business – which includes the Renshaw cake decorations brand, ingredients supplier Garrett and premium bakery Haydens – revealed the strategy as it announced its results for the six months ending 30 September 2016.
Real Good Food reported a 5% hike in group sales to £49m, which it said had been driven primarily by the performance of the premium bakery division, alongside the integration of the Chantilly business it acquired this year. Gross profit rose slightly to £13m, while EBITDA fell from £1.2m a year ago to £0.8m as a result of increased investment costs and volatile commodity pricings.
The business pointed out that it made the majority of its profits in the second half of the year, which included its important third-quarter trading period in the run-up to Christmas.
Real Good Food said the cake decorations market had not been as buoyant this summer as in recent years – although sales improved with the return of The Great British Bake-Off to TV screens in the autumn.
Activity in the first half of the year included the relaunch of the UK Renshaw Professional range and the introduction of new product Renshaw Extra, which is targeted at the European market.
Retail sales of soft icings would be a focus for the cake decorating division, group marketing director Andrew Brown told British Baker.
“Our brand has been focussed on professional customers, but we believe there is a lot of growth to be found in the amateur bakery market,” he said. “We believe we can attract a different audience to the brand.”
Renshaw launched new business Renshaw Americas this year, opening a warehouse in Rockaway, New Jersey.
Brown said the business had a US team in place and stock in the New Jersey warehouse, and would be kicking off distribution in the US in the first quarter of next year.
Real Good Food also has big plans for its Renshaw Academy training centre and Development Centre in Liverpool, and will be launching a full range of courses in 2017, added Brown. The company said the Development Centre was “beginning to pay dividends following high-profile” customer visits.
The Garrett Ingredients business and Haydens had been hit by the weakening of sterling, reported the business.
Sugar supplies had become “critically short”, which would constrain Garrett volumes, it said. Brown added the business had sufficient sugar supplies to satisfy its contracted customers.
The company said Haydens faced challenges in the second half of the year, with the price of butter and cream doubling recently as a result of a drop in EU milk production and the weakness of sterling.
It added that the price rises in the sugar and dairy markets would present Garrett’s with a number of opportunities, through its “sourcing expertise”.
Haydens enjoyed a strong year, Real Good Food reported, with good sales through Waitrose and new business gained at Marks & Spencer. It added that growth at Chantilly had been constrained by a delay in moving to new premises, which would now happen early in 2017.
“We have continued to make good progress on developing our growth strategies in each business division,” said group executive chairman Pieter Totté. “With the exception of Garrett Ingredients, where the dairy and sugar markets have continued to be difficult, exacerbated by recent currency fluctuations, trading performance has been broadly in line with the board’s expectations.
“The opening of our own sales and warehousing operation in the US will enable significant sales growth from early 2017. At the same time, we are finalising other investment plans at our sites in Liverpool and Devizes to improve our operational efficiency over the medium term.”