Premier Foods underlines importance of brand as it expands into new categories

Premier Foods has underlined the impact of brands in driving its growth, as the food business sees particular success from its expansion into new categories.

The business owns brands including Mr Kipling and Bisto, as well as more recently acquired names such as Merchant Gourmet and Fuel10K. Speaking during its half year results today (13 November), CEO Alex Whitehouse underlined the centrality of brands in the company’s growth plans.

Premier Foods has a private label business as well as its brands; however, it has been focusing on what it terms its “branded growth model”. Brands now make up 90% of its total revenue, up from around 83% a few years ago. While revenue across the whole business grew 0.7% in the six months ended 27 September, branded revenue saw stronger growth, at 1.9%.

The shift towards revenue driven by brands “reflects [Premier Foods] focus on growing [its] great brands,” Whitehouse told media today.

“It’s what we’re good at, and it’s our area of expertise,” he added.

This vote of confidence in brand comes despite a challenged consumer environment. In September (the last month of the period reported today) private label made up 51.2% of all UK grocery sales, up from 50.9% a year ago, according to data from Worldpanel by Numerator.

In support of its brands, Premier Foods pledged to upweight its marketing spend in the second half. This is in pursuit of a longer-term plan to increase investment behind brands.

We believe that all brands need to pull their weight and they all need to grow, and therefore they’ll all get the appropriate level of support.

Alex Whitehouse, Premier Foods

“We are on a journey of increasing our marketing investment year after year, so over the long term, it’s a journey we’re partway through,” Whitehouse said.

In terms of where that spend would be invested, digital and social channels were highlighted as an increasing priority. The company noted that in recent years it has “focused heavily on employing television advertising” to drive brand equity. While the business still “considers the return on investment of this strategy [as] high”, it is now looking to diversify the media channels it invests in.

“During the first half, we ran a range of digital and social media campaigns aimed at bringing younger consumers into our brands, and we can look to extend this into more brands as we increase our marketing investment in the second half,” Whitehouse said.

He flagged Loyd Grossman and Bisto as brands that had collaborated with “leading food influencers” in the first half.

Premier Food’s marketing team are well-set up to invest behind the right growth opportunities in the business, he said. However, that doesn’t mean not investing in certain brands.

“We don’t de-prioritise any brands within the portfolio,” Whitehouse said. “We believe that all brands need to pull their weight and they all need to grow, and therefore they’ll all get the appropriate level of support.”

The business recently appointed a new CMO, Catherine Lloyd, who has over 20 years experience in various FMCG roles.

Expanding into new territories

Premier Foods is leveraging its brands into new categories as another way to drive growth for the business. It saw 41% revenue growth from new categories in the half, flagging Ambrosia porridge and Fuel10k as particular successes.

Innovation more generally is also a big focus for the company, with Whitehouse stating the importance of insight to growth.

“A key part of our branded growth model starts with consumer insights,” he said. “So this is the emphasis that we place on understanding how consumers shop, how they cook and how they eat, so that we can develop new products which tap into new and emerging consumer trends.”

The example given of how insight is driving growth was the innovation of Mr Kipling Birthday Cake Tarts. This new product was created after the business observed a trend for birthday cake-flavoured treats in the US (that are not actual birthday cakes).

The Mr Kipling brand launched a product in the UK that has “performed unbelievably well”, Whitehouse said, selling over 4 million packs since the innovation was launched.

The sweet treats category overall performed very well in the half, with sales growing 7.4% year over year.