Finsbury Food Group has reported an 11% decline in cake sales in the first eight weeks of 2010, as consumers continue to trade down.
In its interim results for the 26 weeks to 2 January, 2010, the country’s second-largest cake producer reported an 8% fall in like-for-like cake sales to £65.3m, with an 11% decline in the follo-wing eight weeks. The company blamed the downturn on changes in shopping habits caused by the recession, with consumers trading down from Finsbury’s premium cakes to cheaper alternatives and taking advantage of supermarket promotions.
However, chief executive John Duffy told BB he was confident the market for own-label value-added cakes would bounce back in the second half of the year.
"There hasn’t been a lot of activity at the premium end of the market in the past year, but the expectation is that most of [the supermarkets] are planning to do something around their premium cake ranges," he said. "When we get back into a more normal economic period, I’m sure we can introduce more value into the category. After a recession, people do come back [to premium products]."
In preparation for the predicted turnaround, Finsbury has improved efficiency across the whole company in the past six months, opening a new Scottish distribution centre for cakes, investing in a £2m free-from bread line and integrating production of Goswells’ branded breads at its Nicholas & Harris bakery.
It has also undertaken consumer research to help with new product development and appointed a new technical director and marketing team.
Group revenue at Finsbury for the second half of last year was £82.9m, a fall of 7% (£6.2m) on the previous year, while profit before tax was flat, at £1.8m. Sales in its bread and free-from division rose by 14% to £17.6m.