Hovis loaf proves a winner as sales on rise

Published on Thursday 15 October 2009 21:47

PREMIER Foods' relaunch of the iconic Hovis brand has closed the gap on the market leader, Warburtons.

Premier, whose other brands include Oxo and Branston, said Hovis branded sales were up 22 per cent on last year in the 13 weeks to 26 September.

Premier splashed out on an advertising campaign celebrating the 122-year heritage of the bread brand last year and has brought out new products, including rolls and a Farmhouse soft loaf.

This pushed its market share to 26.2 per cent in the third quarter – more than 3 percentage points above the same period last year. Hovis stands second behind Warburtons, which has some 30 per cent of the market, while Kingsmill is third with about 19 per cent.

Robert Schofield, chief executive of Premier Foods, said: "Our brands have continued to take market share through a combination of innovation and advertising, supported by strong promotional campaigns.

"Hovis has consolidated its market share gains, and the division is now benefiting from the branded sales growth achieved over the last year."

Despite the success of Hovis, own-brand bread volumes fell as Premier ended unprofitable contracts, while bulk flour sales were 2 per cent down on last year due to lower wheat prices.

Exiting more low-margin contracts in its grocery division also dampened overall group sales, which rose by just 1 per cent in the third quarter, against 3 per cent for the first nine months of the year.

But the company, which employs about 16,000 people in the UK, is on track to meet market expectations of pre-tax profits between 162 million and 186m.

Analysts voiced concern over the decline in own-label business despite stronger branded sales. Investec's Martin Deboo said: "Our concerns over long-term organic growth remain."