Premier Foods marketing investment fails to pay off as sales continue to slide
Mr Kipling maker Premier Foods has reported a 4.6 per cent fall in sales despite bumping up marketing spend in the fourth quarter of last year by 80 per cent.
The FMCG manufacturer said sales amongst its power brands, including Mr Kipling and Bisto, dropped 3.5 per cent to £158m, while non-branded sales dropped by 11.5 per cent.
Despite the slide in sales, Premier Foods chief executive Gavin Darby said that performance of its power brands in the fourth quarter showed an "improving trend", and said Premier Foods is "encouraged" by the positive results of the marketing investment to date.
Mr Kipling was hailed a "stand-out performer" in the quarter, after growing share, sales and volumes reflected the outcome of the re-launch of the brand in the second half of year. Retail sales increased year on year by 28 per cent in December and Premier Foods sold more cakes in the run up to Christmas than at any other time in the previous two years.
Further TV advertising is planned for Mr Kipling in the coming months.
Premier Foods said that while near-term market conditions are expected to remain challenging, it is committed to brand investment and is expected to double consumer marketing spend in the first calendar quarter of 2015, and will be funded by existing cost reduction programmes.
Darby commented: "I am pleased with the improved branded sales trends in the fourth Quarter, and particularly our key December trading period, in what continue to be challenging market conditions...While the grocery market continues to evolve, we enter 2015 in a stronger position.
"We will continue to invest behind our innovation, marketing and category based strategies and work closely with our customers to deliver category growth. We are very encouraged by the quality and depth of these relationships."
Net debt at 31 December 2014 was £567.6m.