Convenience foods giant Greencore has become the latest supplier to complain that unseasonal summer weather and raw material cost inflation had hit its profits in 2007.
Greencore, which claims to be Europe’s largest sandwich manufacturer, making more than 200 million sandwiches a year, said that, in common with the rest of the industry, it was working hard to offset the impact of high levels of raw material inflation on the division.
Although its convenience foods division, which accounts for 70% of sales, performed well in the first half of the year, with profits up 5%, its profit declined 16% in the second half.
Raw material and packaging prices increased considerably during the year, with increases seen in items such as bread, flour, dairy, eggs, cooked meats, onions, glass, corrugated paper and PET. Inflationary pressures in full-year 2007 were not recovered through customer price increases in the year and overall sales price deflation for the year, including trading terms and promotional support, amounted to nearly 1%, largely due to pricing arrangements carried forward from the previous year.
Despite difficult trading conditions, Greencore said its "summer-weighted" categories - sandwiches, water and quiche - maintained or grew market share during the year. New product development was a major focus, with more than 40% of the convenience division’s products less than one year old, it said.
Greencore said it had removed all trans fats and hydrogenated vegetable oils from its products and made significant progress towards lower salt level targets.