Ad campaign boosts Premier sales

Gravy over a Yorkshire PuddingSales of Ambrosia custard and Bisto gravy have received a boost from a TV advertising drive by Premier Foods.

The debt-laden company said a focus on marketing drove branded sales 2.2% higher to £275 million during the first three months of the year.
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Ambrosia adverts returned to TV screens for the first time in more than a decade, while Premier also ran ad campaigns for Mr Kipling cakes, Oxo stock cubes and Sharwood's Asian cooking range.

That helped offset a 5% fall in non-branded sales to £52 million, lifting total sales 1% higher to £327 million during the quarter.

Bread sales increased 0.8% during the quarter, with Hovis bread maintaining its share in a "highly competitive" market. Premier plans to revamp Hovis' packaging by the summer.

But the St Albans-based company is also braced for £75 million of lost bread sales, after opting not to renew a low-margin contract, thought to be with the Co-operative supermarket chain.

The group continues to cut costs and hopes to save another £20 million in 2013, including through previously announced plans to axe 900 jobs by closing two bakery sites at Greenford and Birmingham. Premier said its marketing plans are unchanged for 2013 after it ploughed almost £40 million into an advertising drive last year.

Chief executive Gavin Darby, who recently took over from former boss Michael Clarke earlier this year, said the branded growth showed that the company's investment in marketing and improving customer collaboration was paying off.

He added: "Despite a continued challenging consumer environment, I believe we have the right strategies in place to make further progress this year, with expectations unchanged."

Premier has been selling businesses in recent years in a bid to reduce net debt burden which stood at £950.7 million at the end of 2012. Analysts at Shore Capital believe debt will fall to £850 million by the end of the year and said it was a "sound performance in a tough enough market".
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