Advertise with

Premier Foods sees positives in supermarket wars - UK
Premier Foods sees positives in supermarket wars - UK

Premier Foods sees positives in supermarket wars - UK


Fin24 - Jan 26th 2015, 10:28

London - The owner of Mr Kipling cakes and Bisto gravy, Premier Foods, could gain shelf space in the intensifying battle for shoppers among Britain's "big four" supermarkets, its chief executive said. 

Big supermarkets including market leader Tesco have lost market share to discount chains Aldi and Lidl. Now they are fighting back with price cuts, improved customer service, and simpler ranges to woo shoppers.

Supermarkets' simplified product ranges will create greater shelf space for products from established manufacturers like Premier Foods and strip out smaller rivals, Chief Executive Gavin Darby said on Friday.

"I am extremely interested in supporting a retailer who wants to take 20% to 40% of their product lines out because it will benefit the faster selling lines and we typically have those," he said, referring to Tesco.

The impact of Britain's changing grocery industry still showed in the company's fourth quarter sales, however, which fell 4.6% year on year, reflecting shoppers' penchant for discounters and more own-brand products.

Full-year trading profit fell 6% as expected to £131m.

Like Tesco, its biggest customer, Premier Foods has spent 18 months simplifying everything from its number of suppliers to recipes and product lines.

It has cut slow sellers in favour of a greater focus on its big seven brands - Mr Kipling, Bisto, Oxo, Ambrosia custard, Batchelors, Loyd Grossman and Sharwoods. Many of its brands are staples in British kitchens.

"The stage is set for the beginning of a beautiful relationship (with Tesco), if Premier Foods plays its cards right," Jefferies analyst Martin Deboo said, reiterating a buy rating on the stock.

Shares rose 8.9% to 40 pence in early trade, boosted by improved sales and market share for its top brands, led by a re-launch of Mr Kipling, and a lower than expected pension deficit. Shares are down 58% on a year ago.

"The environment will be challenging in 2015 but after 30 odd years in this industry I have rarely seen an alignment of the stars in terms of where the big retailers are going and big branded manufacturers," Darby said.

After a costly acquisition spree between 2002 and 2008, Premier Foods has spent the past few years selling assets, reshaping its business and cutting costs to help reduce debt, which fell £263m to £567.6m in 2014.From 

Read more about: tesco | premier foods | london | aldi

Related News

A Woolworths window display wins big in London
18/06/2019 - 11:34
A Woolworths window display that incorporated milk bottles and plastic hangers has snapped up a prestigious global award.

UK retailer Tesco restructuring threatens 9,000 jobs
29/01/2019 - 11:29
Up to 9,000 jobs are at risk as part of a restructuring programme announced by British supermarket giant Tesco.

Record Christmas for Aldi as it steals customers from rivals
07/01/2019 - 14:43
New stores and demand for its premium ranges helped Aldi generate UK sales of almost £1bn in December, its best ever result for the Christmas trading period.

Aldi opens a record number of stores in one day
07/12/2018 - 09:45
Aldi UK has opened a record eight stores on a single day as part of a tranche of 24 new outlets that are opening throughout November and December.

Premier Foods moves to Brexit-proof favourite products
16/11/2018 - 14:09
Premier Foods will start stockpiling ingredients and packaging to ensure Britain doesn’t run out of store cupboard favourites such as Oxo stock cubes and Mr Kipling cakes in the event the country crashes out of the EU without a deal.