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Mr Kipling cakes boost sales at Premier Foods

Emma-Lou Montgomery

Emma-Lou Montgomery - Fidelity Personal Investing

Our Stock Watch series provides investors with what they need to know about companies hitting the headlines. This time: Premier Foods


Why is Premier Foods in the news?

As one of the UK’s leading branded food suppliers, it is always good to get a flavour of what the nation has an appetite for - especially at times of political and economic crisis like we’re in now. Premier Foods owns a stable of household names that will most likely be found in every kitchen from Land's End to John O’Groats, so first quarter figures, while not a definitive snapshot of the UK’s eating habits, make for interesting reading.

So how is Premier Foods faring?

Well “Let them eat cake” may be the now infamous phrase commonly attributed to Marie Antoinette, but today it seems to be just what Brits want. Sales of Mr Kipling cakes have gone up 10% in the first quarter.

It seems it’s not so much Mr Trump, Mr Johnson or Mr Hunt who Britons’ thoughts have turned to in times of national or international strife, but good old Mr Kipling.

The cake brand, and owner Premier Foods’ top-seller, has seen a 10% jump in sales of late, as consumers have sated their appetite for sweet treats.

Premier Foods said in the first quarter of the year, both the Sweet Treats and Grocery divisions have delivered market share gains, with notably good performances seen from Ambrosia, Sharwood's, Bisto and Cadbury cakes. Overall, sales for the group came in 1.1% higher over the first quarter, with branded goods up 2.9%.

And aside from cake?

Premier’s Bisto gravy and Paxo stuffing brands both delivered strong revenue growth and market share gains in the quarter and helped the Flavourings & Seasonings division turn in a strong performance. Revenue grew over 10% compared to the year before when sales of ‘comfort food’ staples slid during the exceptionally warm weather of summer 2018.

In this year’s first quarter Grocery reported sales of £123.1 million in the quarter, up 1.3% up on the previous year. Showing how weather (as well as politics) -related the nation’s appetites are, Ambrosia custards benefitted from the relatively cooler weather in June.

In cooking sauces, Sharwood's and Loyd Grossman saw double-digit growth reflecting improved promotional plans, distribution gains and range expansion of curry pastes. The group also saw growth in the Quick Meals, Snacks & Soups category as Nissin Soba noodles continued their very strong trajectory from last year, more than doubling sales and volumes, while Batchelors sales were slightly lower due to the phasing of promotional activity.

Non-branded Grocery sales grew 2.2% as contract wins in cooking sauces and stuffing were partly offset by Knighton Foods which saw some contract exits and customer de-stocking.

So what’s the outlook going forward?

It’s all looking positive. The strategic review continues and hopes are for a positive end to the full year.

With a new premium range of 'Signature' cakes set to be launched in the second quarter - and still no real end in sight for the political turmoil to finish - this year might even turn out to be an ‘exceedingly good’ one for Premier Foods.

More on Premier Foods

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