Greggs looks to new strategies to compete in tough market

By Catherine Boal

- Last updated on GMT

Related tags Sandwich

UK bakery chain Greggs is looking forward to a year of management
restructuring, increased investment in promotion and greater
innovation in the on-the-go snacking sector in order to recoup
sales after a disappointing performance last year.

The bakery giant, which produces pasties, cakes, sandwiches and baguettes aimed at the convenience snacking market, posted a 19.7 per cent drop in pretax profit in its preliminary results announced yesterday. Greggs is blaming high energy costs, flat sales and tough trading conditions for the slump but looking ahead to new strategies to compete in what it termed a 'progressively more competitive'​ market. Managing director Sir Michael Darrington said: "We are taking clear steps to address the difficulties we encountered in 2006 and have initiated a programme of change that will build on the enormous fundamental strengths of the Group." ​ Sir Darrington pointed to the growth of major supermarket outlets and specialist takeaway chains as factors in the increasingly competitive nature of the high street market. Greggs has wrestled with high energy costs over the past year. The group's energy bill rose by £4.5 million (€6.6m) and a wage inflation of just under 4 per cent contributed to higher labour expenditure. In order to ensure a more optimistic profit in 2007, Greggs has embarked on an internal overhaul with a new unified management structure replacing the eight virtually autonomous UK divisions. In addition, market research has been undertaken to allow the company to exploit consumer preferences in terms of taste, format and lifestyle. The company plans to extend its range of Healthier Options wraps and rolls alongside the traditional sausage rolls and doughnuts. The healthy range includes seven lines and accounts for over 10 per cent of sandwich sales. A new campaign to strengthen brand awareness is also in the pipeline. Also on the agenda for the coming year is the opening of two more shops to extend the group's operations in Belgium which presently consists of six shops in Antwerp and Leuven.

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