Mr Kipling sales up 8% but own-label cakes fall again

Mr Kipling's signature range launched in Q2 of 2019

Premier Food’s Mr Kipling brand continues to grow, reporting an 8% sales uplift for the first half of the 2019/2020 financial year.

In half-year results for the 26 weeks to 28 September 2019, Premier Foods said the brand benefited from TV advertising, as well as the launch of its premium Signature range in the second quarter, which aligned to one of its key consumer trends of indulgence, as well as targeting evening eating occasions.

To further build on this, the business is set to introduce a new range of Mr Kipling mini cakes in the second half of the year, including mince pies, cherry bakewells and fruit pies.

“The introduction of these new mini versions of some of Mr Kipling’s most popular products follows the significant reconfiguration of an existing manufacturing line at its Stoke bakery. This has vastly improved the flexibility of different cake sizes and types and facilitates the development of more new products that closely match consumer trends,” the business stated.

Cadbury cake sales also grew well within the period, which was attributed to the introduction of three Cadbury Dairy Milk cake slices and also the later timing of Easter. The slices, noted Premier, were on track to be one of the strongest pieces of NPD in the cake category in the past five years.

Strong performances by Mr Kipling and Cadbury helped to bolster revenue for Premier’s Sweet Treats division with overall sales up 0.7%. Own-label sales, meanwhile, fell by 26.6% in the period and 17.2% in the second quarter as the business “continues to focus on building its brands”.

“In Sweet Treats, the sales decline was attributed to the continued effects of contract exits from lower-margin business in fruit pies and the residual impacts from the group’s logistics programme transition in FY18/19,” it stated.

International sales returned to growth in the second quarter, having been impacted by the “unwind of Brexit-related stock in Irish customers’ supply chains” in the first quarter. This effect has since been concluded, but was not enough to offset the initial impact, leading to an overall 6% drop.

Mr Kipling was the standout performer in the International business unit, with strong growth in Australia thanks to NPD including Passion Fruit & Lemon cake, Salted Caramel cake and Chocolate Mint Fancies. The group now has a 10% share of the Australian cake market.

In August, Premier Foods named UK managing director Alex Whitehouse as its new chief executive officer, following the departure of Gavin Darby in January.

Presenting his first set of results since taking up the role, Whitehouse said he was announcing a new executive leadership team structure, which would provide Premier with sharper consumer, customer and operational focus.

“Our operational strategy is unchanged, but we now have increased energy and impetus. We are targeting some largely operational cost savings over the next two years and we are on track to meet our net debt/EBITDA target of 3.0x by the end of this financial year,” he said.

“With a better H1 than planned, we are confident in our expectations for progress in the full year. As we look a little further ahead, and in light of our disciplined and consistent track record of net debt reduction, we start to see options for our future deployment of cash.”

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