Premier Foods’ branded cakes sales fell in the last quarter of 2016 as mince pies volumes shifted from Mr Kipling to own-label products.
The company reported a 3.4% year- on-year decline in sales of branded products in its Sweet Treats division in the 13 weeks to 31 December 2016. Non-branded sales increased 10.3%, however, contributing to total division sales rising 1% in the quarter.
Although the total number of mince pies sold by Premier rose 17% year on year, some volume manufactured by the business switched from Mr Kipling to non-branded sales.
“This resulted in softer branded sales, offset by a very strong performance across the non-branded range,” reported the company.
Premier also revealed it was in discussions with Mondelēz International about extending its long-standing licence for the Cadbury brand, adding these talks were “making good progress”.
News of the discussions comes six months after Mondelēz acquired the global licence for Cadbury-branded biscuits from Burton’s Biscuit Company, which had produced Cadbury biscuits under licence.
“Cadbury cake continued its strong momentum from the first half of the year, with sales and market share both growing,” reported Premier in a trading statement today (18 January). “The group continues to enjoy an excellent working relationship with Mondelēz.”
Premier will be extending its Cadbury line-up this year with a Cadbury cake Choc Tarts range in Caramel, Crunchie and Flake flavour variants.
Cadbury and Mr Kipling both enjoyed a strong performance in the Australian market during the period, said Premier, contributing to the ninth consecutive quarter of growth for its international business.
Premier last week announced it was seeking higher prices from retailers following ingredients cost increases and weakness in sterling. In today’s trading update, the company said it was experiencing cost hikes in commodities including sugar, chocolate, dairy, wheat and palm oil.
“We take a blended approach to managing these cost increases, managing our own efficiencies, adjusting promotional mechanics and formats where appropriate and, finally, looking at limited price increases where these cannot be avoided,” it stated. “We are working collaboratively with customers to agree these changes and are confident appropriate settlements will be reached, although this is taking longer than originally foreseen.”
Premier total group sales – including household brands such as Bisto and Loyd Grossman – were down 1% year on year to £251.4m. Branded sales were down 3.8%, while non-branded sales rose 11.6%. Bisto, Oxo, Loyd Grossman, Ambrosia and Batchelors all delivered volume and value market share gains in the quarter, it reported.