Hovis sales boost after relaunch

By Sarah Hills

- Last updated on GMT

Related tags: Premier foods, Hovis

Premier Foods has announced that the recent relaunch of Hovis bread, which included quality improvements, has resulted in increased market share.

The company said that Hovis sales in 2008 are expected to have increased by approximately 13 per cent compared to 2007, according to its trading statement for the year ending 31 December 2008, which was published today.

It added that Hovis’ market share is now in year-on-year growth, having reached a value share of 24.3 per cent for the four weeks to 27 December 2008. This is an increase of two percentage points since August 2008 which Premier said was“further cementing its number two position in the market”​.

However, Premier said: “Whilst Trading profit for the division for 2008 will be lower than in 2007 due to our investment behind the relaunch of Hovis and the lower volumes seen in the first half of 2008, we believe we have built a platform for sustainable future profit development.”

Robert Schofield, Premier chief executive, said: “We are pleased by the progress we have made in 2008 against the backdrop of an increasingly tough environment for the UK consumer.

“Trading in the second half of the year has been good across a number of our Grocery categories with volume growth of both branded and retailer branded products.

“The Hovis relaunch has been very well received: improvements in quality, a new award-winning advertising campaign and packaging redesign have driven increased sales and market share.”

Premier shot into the top three UK bakers' league last year when it acquired RHM, with products including Hovis, for £1.2 billion (€1.76bn).

A Premier spokesman told BakeryandSnack.com that it had recognized that Hovis was an “outperforming brand asset”,​ which led to the relaunch in September.

As part of this it looked the recipe and aspects of the baking process, which is now slower and longer.

It has also introduced a 400g loaf, which had been missing, and changed the packaging.

In addition, Premier has just completed the manufacturing phase of its transformation programme which it said has resulted in significant improvements in operational efficiency across its supply chain. This included the closing of nine factories last year.

The completion enables the company to shift the focus to brand building with “new product development and innovation”.

Group performance

Premier has three divisions - Grocery, Chilled and Ireland and Hovis – and its brands include Mr Kipling, Lyons and Mothers Pride.

It is anticipated that group trading profit for 2008 will be between £315m and £320m, which Premier said reflected a stronger second half performance. Full year adjusted profit before tax is expected to be between £185m and £190m.

Premier also expects to report increased group sales for the year approximately nine per cent ahead of 2007 with sales in the second half of the year growing approximately ten per cent.

However, it has debts of £1,780m and Premier said it is reviewing "a range of options"​ to cut this.

Related topics: Markets, Premier Foods

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