Premier Foods is planning “further investment” behind its brands over the second half of its fiscal year, as customers increasingly turn to dining at home due to the cost of living crisis.
While the business benefited from stronger demand through its B2B out of home division in the first half, as compared to the same period in 2021 when Covid-19 still posed a considerable challenge to bars, restaurants and caterers, consumer demand is now beginning to soften in these areas, CEO Alex Whitehouse has said.
“There’s also emerging evidence that people are already eating out less and ordering fewer takeaways. In fact, many people now find that the best restaurant in town is actually where you can make nutritious and tasty meals more affordably, and of course, the cheapest way to eat is to cook for yourself,” he told press on a call today (16 November) as the business announced its half year financial results.
Premier Foods is therefore doubling down on positioning its brands as “meal-makers”, or foods which bring ingredients together to create an inexpensive meal. Sharwood’s, Bisto and Ambrosia are all considered meal-maker brands.
To support this positioning, the business launched the marketing campaign ‘Best Restaurant in Town’, which includes a dedicated webpage with a range of affordable recipes. The campaign has already reached 20 million people, Whitehouse claimed.
Premier Foods on navigating the cost of living crisis: ‘Don’t assume what you know is true’
The CEO also hailed the success of marketing initiatives such as Mr Kipling’s and Batchelors’ TV campaigns. TV spots for OXO, Ambrosia, Bisto and Sharwood’s are all planned for the second half of the financial year.
In the first half of its 2022 financial year, the business saw group revenue rise 6.2% compared to the same period in the year previous, from £394.1m to £418.6m.
In the second quarter, which ended on 1 October, revenues grew 6.4% year-over-year. Trading profits also rose in the first half by 6.2% to £56.7m from £53.4m in the same period last year.
Growth in Premier Foods’ brands overall has been 5% on average over the last three years. In the first half, branded growth for the business was 3.9%, while non-branded revenue, including ingredients and products sold in the B2B market, was up 22.8%.
Overall, the business plans to emphasise the value its brands bring for consumers during the cost of living crisis, and is doing everything it can to keep prices down, Whitehouse said.
“We work really, really hard to try and minimise [price increases],” he explained. “But with the current levels of inflation, you can’t get away from price increases all together.”
The Spice Tailor
Premier Foods made its first acquisition in 15 years in July, with Whitehouse branding this an “important milestone” for the business. The company is confident its branded growth model can boost its newly acquired brand, The Spice Tailor.
The Spice Tailor is an Indian meal kit brand, which sits towards the premium end of the market. However, Whitehouse said the acquisition does not represent a move towards premiumisation for the group.
“What we were looking for…[were] brands which will fit neatly into our portfolio, will deliver high levels of growth, and which will respond well to our branded growth model,” he said.
“We see significant potential to apply that proven branded growth model to accelerate The Spice Tailor brand’s future growth.”