Cake sales boost Premier, says analysts

Analysts have praised a ‘good uplift’ in the cake category at Premier Foods, while warning of potential delistings depending on actions of Tesco.

Investec, the market analyst company, said that investment in the cake category had paid off- with sales performances increasing for the Mr Kipling (8%) and Cadbury (26%) brands.

The introduction of ‘snap packs’ under the Mr Kipling brand is expected to further boost its growth through 2015/16.

Despite this, the company cautioned that the anticipated reduction of SKUs by 30% at Tesco could impact Premier’s branded lines.

On the other hand, Investec points out Premier could benefit from the SKU trim if it was to secure increased shelf space when competing products were dropped.

Mr Kipling was named as one of the market leaders in its category.

The analysts said: “In recent years, the group has made significant headway in building its relationships with the major multiples and now has a number of category advisory and captain roles.”

What is more, Investec predicts that by 2018 Premier Foods will be turning over revenue of £801m.

They also said that over the last few months, the underlying grocery market had improved.

In April, Premier said the Mr Kipling master brand ‘remains the star’ of the company. 

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