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Premier Foods banks on ramped up marketing spend over Christmas as sales fall 4.7%

Premier Foods is hoping an increased marketing spend in the run-up to Christmas will help turnaround a fall in sales, which dropped 4.7 per cent in the third quarter despite the relaunch of its Mr Kipling brand.

Speaking to The Drum on a call with investors this morning, chief executive officer Gavin Darby said that the company will double its marketing spend in quarter four as Premier Foods puts its “foot to the floor” prepping advertising for its new and current brands.

“In the past we’ve talked about the fact we plan to spend about £30m during this financial year. The big difference is we’ve held back a large proportion of that to the fourth quarter; so that’s why we will spend double the amount on marketing in Q4 in 2014 versus 2013.”

Darby said that Premier Foods had begun to “disproportionately” invest in its brands; and has a number of marketing drives planned around Homepride, Mr Kipling, Bisto and Oxo in “the most important quarter” over Christmas.

The fall in sales and volume at the company was attributed to the “unprecedented structural change” driven by shifts in shopper behaviour from traditional large retail supermarkets to other channels such as value discounter stores, online and convenience.

As a consequence, the larger supermarkets have lost share to these other formats over recent months, which has adversely affected the company's volume and sales performance.

Speaking about the use of digital within advertising at Premier Foods, Darby told The Drum that the recent relaunches of both Mr Kipling and Homepride represented a “significant step up” in terms of digital and social marketing.

“It’s still the minority of the total budget, because despite all the noise about digital marketing you can still move the needle disproportionality with mainstream marketing.

“The relaunches of both of Homepride and Mr Kipling have been kicked off with ads in the X Factor as you may have noticed because TV moves the needle even in the modern digital age. But digital is now an important part of the mix and we’re leveraging it hard.”

Given the current market conditions, Premier Foods now expects trading profit for the twelve months to 31 December 2014 to be towards the lower end of market expectations.

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