Premier Foods cements faith in marketing amid ‘transformational’ growth

Premier Foods plans to ramp up marketing investment behind its six core brands, including launching new creative for Mr Kipling and Bisto, as the company looks to capitalise on a “transformational” year of growth.

The business, which attracted 4.5 million new households over the past year across its portfolio, is putting faith in its branded growth model and wider focus on consumer insight and innovation, supported by TV advertising. Over the past year Premier Foods’s five largest grocery brands – Ambrosia, Batchelors, Bisto, Sharwood’s and Oxo – received an aggregate 58 weeks of advertising on television.

Ambrosia and Sharwood’s both appeared on TV for the first time in four and five years respectively, each with new campaigns designed to build “emotional engagement” with consumers. Sharwood’s, for example, attracted 3.8 million new consumers during the pandemic and saw sales of sauces rise by 40% during the third quarter alone, attracting a younger cohort of customers under lockdown.

“We have a model in terms of how we make our brands grow and we start with great, well-known brands and then we innovate to bring new products to market based on consumer insight,” Premier Foods CEO Alex Whitehouse told Marketing Week on a results call this morning (19 May).

“What we know is if you’re going to keep a brand relevant and contemporary you’ve got to keep nurturing it and you’ve got to keep investing behind it, so it’s very much part of our roadmap. What we’ve been doing for the last few years is investing incrementally behind our brands year on year and bringing more of them into a position where they’re supported. What you’ve seen over the past year is a continuation of that strategy playing out.”

What we know is if you’re going to keep a brand relevant and contemporary you’ve got to keep nurturing it and you’ve got to keep investing behind it.

Alex Whitehouse, Premier Foods

Whitehouse pointed to the fact lower media costs during the first half of the year enabled Premier Foods to accelerate this plan faster than originally planned, although the idea remains to incrementally invest in the brands. This means creating “emotionally engaging” advertising for all core brands, including the new creative planned for Mr Kipling and Bisto.

“All the work we’ve done and all the experience we’ve got suggests that the way in which one builds value in brands over the medium to long term is to create emotional engagement with your consumer base rather than focusing on functional attributes, so what you’ll see across all our campaigns is an effort to build that emotional connection with our consumers,” Whitehouse added.

A combination of innovation, continued investment in marketing and the wider cultural shift to at-home dining under lockdown has seen Premier Foods grow its group revenue by 10.3% to £934.2m in the 52 weeks to 3 April, with branded revenue up 13.6%.

Revenue across the company’s branded grocery portfolio increased by 16.9% to £601.7m, while the branded sweet treats portfolio grew by 4.7% to £199.9m.

Premier Foods’s grocery brands grew in “strong double-digit” terms, with Bisto, Oxo, Ambrosia, Sharwood’s, Homepride, Paxo and Nissin all emerging as “stand out performers”. The shift to cooking at home also resulted in the Bisto, Oxo and Paxo brands each attracting approximately a million or more new households.

The group’s largest brand, Mr Kipling reached revenue of £150m for the first time in its history, benefitting from 25 weeks of TV advertising in the year, as well as increased sales of its reduced sugar slices ranges and expansion of its premium Signature collection.

Digital potential

The company’s online sales through retail partners have also benefitted from the explosion in ecommerce brought about by the pandemic. Premier Foods’s sales from ecommerce rose by 104% in the year to 3 April, equating to a market share gain of 128 basis points.

Whitehouse explained the business has been focused on translating its “well defined and well refined” in-store models of pricing, promotion and display into an online environment.

“Very clearly the toolbox is different and that’s what we’ve been focusing on and since we’ve been doing that we’ve tended to outgrow the overall channel through our retail partners,” Whitehouse explained.

There is a slight difference with the plant-based snacking brand Plantastic, for which Premier Foods has developed a direct-to-consumer model that includes selling via Amazon. Whitehouse confirmed this is currently the only brand in the portfolio to have a DTC model due to the fact Plantastic is in the early stages of its development and has a specific consumer base, which differs from the core ranges.

Sharwood’s ends five-year TV hiatus as customers soar by 3.8 million

The Premier Foods CEO is convinced that the consumer shift to ecommerce will stick, which makes this channel an increasingly important one for the company.

“It’s important we can execute online as well as we can in-store and it’s an ongoing process that we continue to improve. We’ve learnt that the more we focus on it, the better our performance gets, which is clearly good,” said Whitehouse.

“One of the things we know broadly if we look at history is that once consumers move to online shopping they have a tendency to stick with it, notwithstanding top-up shops which tend to take place locally. What will be interesting to see is the extent to which that’s also true for the huge number of new people that have now moved to online shopping due the pandemic as they may have had very specific motivations.”

Space for growth

Over the past year Premier Foods has ramped up the release of new products, introducing 17 new ‘better for you’ ranges. These include Sharwood’s 30% less sugar cooking sauce pouches, the Deliciously Vegan range of Sharwood’s Indian cooking sauces and 30% lower fat Loyd Grossman lasagne sauces.

In addition, the company has launched meat-free beef stock cubes under the Oxo brand for vegan consumers, rolled out Bisto Southern-style gravy and Bird’s custard pots.

“If we look at our innovation pipeline and we look at how it’s developed over the last several years, we focus on a number of key macro trends across all our brands and the most important of those is people wanting to eat more healthily and so as a consequence in our NPD [new product development] pipeline a large proportion is healthier for you options,” explained Whitehouse.

The business is also looking to expand its offering through acquisitions and partnerships. Last year Premier Foods became the sole UK distributor of South African brand Cape Herb & Spice. After launching on Ocado in late 2020, the business is now rolling the products out to mainstream supermarket stores during the first part of the year.

Whitehouse explained that Cape Herb & Spice gives Premier Foods a presence in a new market and category incremental to the existing business.

“We will look to expand into categories we think our brands can stretch into and retain their brand saliency, and where that’s not the case we’ve always got the chance to create a new brand which is exactly what we did with Plantastic,” he said.

“Ultimately, if there’s an area we really want to get into and we don’t think our core brands can stretch into there then we’ve always got the opportunity to acquire.”

Another area the company is targeting for growth is the overseas market, where Premier Foods has implemented a new leadership structure. The idea is to switch from teams based in the UK to small teams in key international markets recruited for their local expertise, who lead on the execution of the branded growth model.

This was the first year, for example, that Premier Foods advertised on TV in Australia, putting out a campaign for Mr Kipling during the fourth quarter. The local team also pushed out product launches for Sharwood’s low-fat cooking sauces and Mr Kipling chocolate and cherry slices.

Similarly, in Ireland Premier Foods launched the Mr Kipling Signature range and Soba Noodle pots into the market last year, as well as airing TV advertising for Bisto and Mr Kipling.

When it comes to the future post-pandemic, Whitehouse believes it’s too soon to understand the impact the reopening of hospitality will have on dining at home. And despite the past 12 months of growth posing a tricky target to live up to, the Premier Foods CEO is confident the brand building model remains robust.

“We’ve delivered consistent growth every single quarter for the best part of four years as a result of that branded growth model,” Whitehouse noted. “It worked very well for us in a pre-Covid world and I expect it will continue to work really well for us in a post-Covid world, notwithstanding this year we’re up against some really tough comparables.”

The aim for Premier Foods going forward is to focus on using core skills in “driving growth from brands” to expand into new categories in the UK, scale up its overseas business and search for appropriate “bolt-on acquisitions” to support the expansion plans.