Premier Foods announces major restructure to focus on categories over brands

The business is splitting into three new units, which it says will enable a tighter focus on capturing specific category opportunities within the UK market, while ensuring a more strategic approach to developing its brands internationally.

Those units are: “grocery”, which will bring together brands such as Bisto, Loyd Grossman, Sharwood’s, Batchelors, Ambrosia and Birds’s; “sweet treats”, which will include the Mr Kipling, Cadbury and Lions cake brands; and “international”, which will focus on the development of selected brands in a number of strategic markets including Australia, the USA and China.

Previously the company split the quarterly reporting of its sales between “power brands” – which included brands such as Ambrosia, Mr Kipling, Bisto and Loyd Grossman – and “support brands” – such as Paxo, Lyons cakes and Bird’s custard.

Alex Whitehouse, who joined the company in July, has been appointed as managing director of the grocery division. He brings with him considerable marketing, innovation and strategic experience, having worked at Reckitt Benckiser for 18 years, most recently as worldwide head of shopper marketing.

Also joining the company is Graham Hunter, who has been appointed managing director of the sweet treats division. Most recently he served as CEO of Tangerine Confectionery and also spent more than four years as managing director of Fox’s biscuits. Prior to that he served as marketing director for Jacobs Bakery and spent 10 years at Mars Confectionery.

In addition, Premier Foods’ current director of international and private label Peter Ellis has been appointed as general manager of international, expanding his existing responsibilities for the company’s international sales.

Subsequently, the commercial director position, currently held by Ian Deste, has been scrapped.  Premier Foods says Deste will continue on during a transition period to execute the remainder of the company’s 2014 plans – which includes the important Christmas trading period – and supporting the move to the new structure. It is not yet clear what will happen to Deste’s role in 2015.

The changes are the result of a major capital restructure, completed in March, which included an underwritten equity issue of approximately £353m, a new pension schemes agreement, a high yield bond of £475m and a new lending agreement with a smaller banking group. At the time Premier Foods said the new capital structure would “liberate” the company from its past and that it provided a “great platform” to execute a category based strategy.

It also follows a decision in January to spin off the Hovis brand as a standalone joint venture between Premier Foods and US private equity firm, allowing the former company to cede control of its flagship brand in order to focus on the grocery and sweet treats categories. 

Gavin Darby, Premier Foods CEO, says in a statement announcing the company restructure: “Given the major structural changes taking place in the UK grocery market, it is important we stay ahead of the game and re-focus our organisation on the most promising growth opportunities and delivering what our customers and consumers want.

“By implementing a focused and more accountable business unit structure, I believe we will improve our agility and rate of innovation.”

In July Premier Foods announced plans to double its marketing spend in the second half of the year as it looked to spur sales of new products launching in the latter half of 2014. Sales for the first half of 2014 fell 6.1 per cent to £364m, while profit was up 2.1 per cent to £48m, in part due to its decision to move marketing investment to the second half of the year.

The food company has spent a considerable amount of its marketing budget this quarter on a “major” relaunch of the Mr Kipling range that it hopes will “transform the entire cake category”.