ABF plans Kingsmill revamp

By Catherine Boal

- Last updated on GMT

Related tags Bread market Baker

High commodity costs and waning brand support have contributed to a
poor performance in bakery operations for UK food giant Associated
British Foods (ABF) who are hoping a relaunch of its signature
Kingsmill brand can reverse the downturn.

The company is also hoping gains from its sugar operations will go some way towards mitigating a disappointing performance in the UK bread market.

In a trading update announced yesterday, ABF said: "The competitive bread market in the UK delayed the recovery of increased wheat prices last autumn and volumes were lower than expected."

ABF-owned Allied Bakeries has suffered from a variety of setbacks in the past year – not only have sales dampened due to flagging bakery brands but incidents of malicious tampering at the company's Kent plant in the UK specifically targeted the Kingsmill range.

The UK's Food Standards Agency was called in after the discovery of deliberately-planted foreign objects in sliced loaves.

At least five cases of tampering occurred involving bits of glass and sewing needles.

The sabotage will have damaged consumer confidence in the brand which has been slipping over the past year.

In a survey released last week from market analysis AC Neilsen and trade publication Checkout the brand fell from its 2005 position as eighth largest UK grocery brand to ninth this year.

According to the research, sales of the third largest UK bread brand dropped 4.9 per cent from £296.9 million (€441.6m) to £282.3 million (€419.9m).

Allied Bakeries are hoping the line will be able to recoup lost sales with a £14 million (€2.8m) comeback set for this year.

New product formulation, re-sized loaves, segmentation between sub-brands and packaging will be supported by a £10 million (€14.8m) advertising campaign.

Elsewhere in ABF's baking businesses, profits were bolstered by yeast sales from ingredients subsidiary AB Mauri while price increases were introduced in Australian milling and baking operations to recover loss arising from the high wheat and energy costs.

The company said it expected full year profits up to March 3 would be in line with previous forecasts despite the volatility in commodity prices and currency rates.

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