Premier Foods: Successful Brand Extensions Fueling Growth

Premier-Foods

Premier Foods, the company behind popular brands like Mr Kipling, Batchelors, and Bisto, is excited to report that their expansion into new product categories is showing great success. This move has not only been beneficial for the business but has also become a significant source of growth.

CEO Alex Whitehouse shared with investors today (16 May) the company's results for the year ended 30 March. He mentioned that revenue from new categories had gone up by 72% over the past year.

One of the reasons for this growth in new categories, according to Whitehouse, is Ambrosia. This brand has now become the company's fourth £100m brand and contributes to 7% of its core brand sales.

The growth was fueled by the success of the Ambrosia Deluxe range, especially with the introduction of porridge pots for breakfast. Sales of the porridge pots have doubled since last year, solidifying the brand's 10% market share in this new category.

Premier Foods also expanded its distribution by introducing Angel Delight ice cream and Oxo marinades. The company experienced a revenue increase of over 50% in the ice cream sector, thanks to popular ranges like Angel Delight and Mr Kipling. Looking ahead, they plan to launch handheld Angel Delight ice cream in the coming year to continue this growth trend.

Category agnostic

Whitehouse said it’s looking to add more brands to its portfolio, which it believes will benefit from the company’s “branded growth model”.

He claimed that their branded growth model promotes consistent growth across their brands by introducing new products, advertising, and enhancing relationships with retail customers.

He mentioned that they are not focused on specific categories. Instead, they consider the brand's potential when applying their growth model.

If you were to do a shopping trip today and take advantage of various promotions, many of our products are actually cheaper than they were a year ago

Alex Whitehouse, Premier Foods

In the financial year, headline revenue increased by 15.1% to £1.12bn, with sales in Premier Foods' branded business growing by 13.5%.

The CEO emphasized the importance of brands in the company's success, stating that "sharper" promotional price points are helping drive volume growth.

In November, the company began offering promotional prices. Whitehouse mentioned that the emphasis on promotions has shown results, with branded volumes increasing in the fourth quarter.

He also pointed out that many of their products are currently priced lower than they were a year ago, making them more affordable for customers looking to take advantage of promotions during their shopping trips.

He mentioned that their promotional prices are the most affordable for consumers, making their products more accessible.

Whitehouse mentioned that Q4 was going to be a period of transition for the company. They started the quarter with growth driven by value, with higher prices per unit, and ended the quarter with growth driven by volume, with lower prices per unit.

Whitehouse expressed satisfaction with the company's current pricing strategy and does not foresee a need for any immediate price increases.

In January, Whitehouse emphasized that Premier Foods is adopting a data-driven approach to price promotions, especially after adjusting prices to keep up with inflation. He mentioned that the company is continuously refining its promotional strategies through the use of econometric modelling.

The business is using price promotions in areas where there is a risk of consumers not buying its products due to high prices.

Furthermore, Whitehouse mentioned that all the top brands have seen positive results from higher marketing spending. This includes the continuation of the ‘Best Restaurant in Town’ campaign for a second year, which teaches consumers how to make budget-friendly meals using Premier Foods’ products.

Editor's P/S:

Premier Foods' expansion into new product categories has proven to be a successful strategy, contributing significantly to the company's growth. The success of Ambrosia, now a £100m brand, highlights the potential for innovation in established categories. The company's focus on building strong brands across multiple categories, rather than specific categories, allows for flexibility and diversification. The CEO's emphasis on promotional pricing and the use of data-driven approaches to price promotions demonstrates a keen understanding of consumer behavior and the competitive market landscape.

The company's commitment to affordability, with products priced lower than a year ago, is commendable, especially in the current economic climate. The use of econometric modelling to refine promotional strategies further underscores the company's commitment to data-driven decision-making. The success of the 'Best Restaurant in Town' campaign highlights the effectiveness of innovative marketing strategies in driving brand awareness and consumer engagement. Overall, Premier Foods' positive financial performance and strategic initiatives position the company well for continued growth in the future.