Mr Kipling faces exceedingly tricky task in revitalising sales

Despite an £8m relaunch earlier this year, sales of Mr Kipling cakes have slumped, leaving owner RHM in a sticky situation.

Despite an &£8m relaunch earlier this year, sales of Mr Kipling cakes have slumped, leaving owner RHM in a sticky situation.

Last week, RHM – which also makes other leading cake brands including Cadbury’s cakes – predicted a 12 per cent drop in the turnover of its cake division in the six months to the end of October. Although Mr Kipling experienced an upturn in fortunes following the January overhaul, the sales boost has not been sustained.

But RHM is not alone. Analysts say that in a crumbling market, all cake brands are coming under pressure from an increase in cheaper own-brand alternatives. Although the Mr Kipling relaunch was well received, it has become harder for the brand to sustain its market position, whatever the long-term future of the sector.

“The cake market is now a harder place to play,” says one analyst. “It will be very difficult to maintain the level of dominance that Mr Kipling has had. There is a lot more choice for consumers.”

Mintel says that the cake market grew in the early part of the decade and estimates that sales amounted to &£1.85bn in 2004. But the company warns that demographic trends suggest tough times are ahead. There are opposing forces according to some observers, who point out that while snacking is on the increase, there are concerns about obesity and healthy eating.

Cakes are also becoming the preserve of the older generation, and whether younger consumers will develop a fondness for cake as they get older is hard to predict.

RHM chief executive Ian McMahon has said that the weather may have added to Mr Kipling’s and the other cake manufacturers’ woes this autumn – a view that is supported by industry experts. They reveal that there is a “definite correlation” between cake and biscuit sales and the weather. In warmer weather, people drink less tea and coffee – the natural accompaniment to cake and biscuits – and instead choose cold drinks that tend to be more palatable with other snacks such as crisps.

RHM is planning a new ad campaign for Mr Kipling and intends to increase marketing spend next year. But whether that will reverse the apparent decline of a brand that is already the most recognisable in the market and dominates the sector’s advertising is another matter.

Ad agency WCRS, which won the Mr Kipling account from Saatchi & Saatchi in 2004, would not comment on its plans for the brand, but RHM confirms that 2006 will see investment in “product quality, packaging and market support”. The company declined to expand, and it is unclear whether the iconic strapline – “Exceedingly good cakes” – created by JWT in the 1970s, will be retained for the new work.

Previous attempts to update Mr Kipling’s image by Saatchi led to the creation of the now notorious ad in which a woman called Mary gave birth during a nativity play. But when WCRS won the account, the agency was keen to reinforce the upmarket image of the brand, concentrating on the cakes’ home-baked style, according to sources. They also set out to rescue Mr Kipling from his growing notoriety, and return him to the role of avuncular master baker.

It remains to be seen if Mr Kipling can retain his place in the hearts, and larders, of the nation.

Jonathan Harwood

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