Premier Foods has credited its “core skills of brand-building” in helping it boost sales, despite the pressures of inflation and rising prices.
The company, which owns brands such as Batchelors, Mr Kipling and Sharwood’s, saw sales in its most recent financial year, which ended 1 April 2023, exceed £1bn for the first time. This was an increase of 11.8% versus the year prior.
“These results really are a reflection of the strength of our brands and the ongoing success of our branded growth model,” CEO Alex Whitehouse told media on a call today (18 May).
While he acknowledged the past year has been “challenging for the food industry”, he claimed consumer behaviour trends are actually working in favour of Premier Foods’ brands.
Amid the cost of living crisis, consumers have been looking to “affordable meal solutions”, he said, citing Batchelors and Nissin as two examples of the business’s brands that have benefitted from this trend, with the former seeing revenues rise by 20% in the year to become the company’s biggest grocery brand.
Over the medium-term we’ve got a commitment to continue increasing our marketing investment behind our brands.
Alex Whitehouse, Premier Foods
The company expects this trend to continue in the coming months and hailed the ongoing success of its recipe-focused campaign ‘Best Restaurant in Town’ which debuted on TV in the fourth quarter.
Premier Foods’ “branded growth” model consists of a combination of marketing investment, high household penetration, insight driven NPD and retailer partnerships.
“Over the medium-term we’ve got a commitment to continue increasing our marketing investment behind our brands, in order to keep brands resilient, and keep driving the business model,” Whitehouse said. “It’s very much part of our growth model.”
However, the company would not share specific figures for how its marketing spend had changed during the year.
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Increasing prices ‘last resort’
Higher pricing was another factor attributed to helping Premier Foods deliver “strong” results despite inflation. However, Whitehouse was keen to stress the company has been increasing prices “only as an absolute last resort”, with its preference being to save money within the business where it can.
“I do just want to be absolutely clear that the level of price increases that we’ve made on our products over the last year is less than that of the input cost inflation,” he insisted, adding the focus for the company was to “put [its] consumers first”.
The company saw profit after tax rise by 18.2% in its most recent financial year to £91.6m. This rise in profit was something the CEO was challenged on during the call.
He stated the company has responsibility to “a number of different stakeholders” and pointed to the brand’s promotional activities as evidence of its investment in price.
“We invest millions every year in promotional activities and promotional pricing, so you will see most of our brands are available at quite significantly reduced promotional prices for around half the time,” he said.
Volumes have been supported in the year by promotional activity, the company said. It saw a 2.4% revenue decline in its sweet treat brands in the year, something which it partly attributed to lower promotional activity in the segment, particularly in the first half of the year.