Hovis set to lose slice of market

PREMIER Foods, owner of dozens of household names including Mr Kipling and Ambrosia, yesterday warned that its Hovis brand would lose market share in the current quarter as rivals step up promotional activity.

While Hovis boosted share in value terms to 25.6 per cent in 2010's first three months, Premier said the trend was under pressure due to competition in a market that includes Warburton's and Kingsmill, owned by Associated British Foods.

The firm said it expected a fightback by Hovis in the second half of 2010 as a result of its own marketing and promotional activity, backed by the recent conversion of the entire Hovis range to 100 per cent British wheat. Elsewhere in the business, the group said trading conditions were difficult due to "elevated" levels of promotional activity across its markets. Sales volumes of branded ranges improved 2.2 per cent in the quarter, but the ongoing focus on price meant the figure in value terms was down 0.3 per cent.

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This was despite the company's portfolio of key brands, such as Mr Kipling, Ambrosia and Sharwood's cooking sauces, achieving growth of 3.4 per cent by value and a 6.6 per cent increase in sales by volume.

Non-branded sales were sharply lower due to promotional activity and lower flour prices, Premier added.

The firm is looking for its next phase of growth after adding a number of household brands to its portfolio. Oxo, Batchelors and Homepride were added after a 460 million deal in 2006 to buy Campbell's UK and Irish business. That was followed by the acquisition of RHM, which owned Hovis, Sharwood's, Bisto and Mr Kipling, in a 1.2 billion deal.