Premier Foods sales drop amid Mr Kipling relaunch

Premier Foods, which produces Mr Kipling cakes, has seen sales drop 6.1% in the six months to 30 June 2014 as it plans a relaunch of the famous cake brand.

Trading profit of the embattled company increased 2.1% to £48.1m despite ‘challenging markets’. Mr Kipling also gained market share in the period due to higher sales of Snackpack slices, which improved the company’s share of the cake category to 26%. The increase has been attributed to ‘a more disciplined approach to promotional activity’.

The brand will undergo a major relaunch in the third quarter of the year. It will include new packaging, a major television advertising campaign with prime time media slots as well as outdoor and social media support. In-store marketing campaigns will also take place across all major retailers.

Its half-year results also revealed that support brands Cadbury and Lyons cakes were down due to lower promotional sales and Bird’s custard and McDougall’s also underperformed.

Meanwhile, the business continues to make progress on cost reduction and business simplification with long-term goals of investment in the brands, innovation and a focus on both the supply chain and staff.

"Challenging market"

“I’m pleased to report a modest increase in trading profit in the first half of the year, despite a fall in sales volumes which reflects the challenging market conditions in our categories,” said Gavin Darby, chief executive.

“We are adapting quickly to the changing external environment through retaining a tight control of costs and margins and have a strong programme of consumer marketing and new product introductions planned for the second half of the year. Assuming normal weather patterns, we expect an improved second half branded sales performance and our Trading profit expectations for the year remain unchanged.

“Following an update of our category plans, we remain convinced of the medium and long-term potential for our brands to deliver profitable growth. We plan to continue investing in innovation, marketing, our supply chain capabilities and our people to create long-term shareholder value.”

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