Allied Bakeries’ £14 million Kingsmill relaunch in February has led to "significant" growth in market share, it said this week.
Marketing director Jon Wilson told British Baker that increases in distribution, promotional activity and heavyweight advertising had boosted sales. Consumer feedback on the new recipes had been very positive. He said: "We have seen a significant increase in Kingsmill’s market share following the relaunch. This has provided us with a strong platform to launch the next phases of our plans."
Sainsbury’s bought-in bread and rolls buyer Ian Cambridge told British Baker that the "massive relaunch" had been implemented well in Sainsbury’s. He commented: "The data I have seen from Allied points to improvement in market share and a clear steal away from Hovis. My gut feeling is that Allied is doing the right thing for the brand. Time will tell."
Allied gave the update after ABF said this week that performance at its UK bakeries in the run-up to the relaunch, rising energy costs and currency lag, led to a £20m drop in operating profit in its grocery division in the 24 weeks to 3 March.
Analyst Richard Workman of Oriel Securities said: "Allied Bakeries’ substantial losses are not insignificant, even in the context of a big group like ABF. The jury is still out on whether Kingsmill can re-establish itself."
Graham Jones of Panmure said: "ABF’s bakeries’ high wheat costs were only recovered with a retail price rise at the end of the half. This was accompanied by disappointing Kingsmill volumes. The relaunch of Kingsmill looks to have gone well in its first month or so. It is still too early to call."
ABF also owns companies Cereform, British Sugar and clothing chain Primark. Operating profit for its grocery portfolio fell from £84 million to £64m, while sales fell from £1.26bn to £1.23bn. Half-year group pre-tax profit rose 5% to £268m on group revenue up 12% at £3.22bn.