Sales of the Sweet Treats business unit – which includes the Mr Kipling brand as well as the Cadbury products made under license from Mondelēz – rose 6.5% to £78.2m ($110.4m) in the company’s third quarter [13 weeks ending 2 January 2015].
Reporting the financial results, the company also announced it is to expand its branded cakes portfolio in Q4 with two new Mr Kipling ranges.
New snack pack cake slices
Exceedingly Good are cakes slices sold in a snack-pack format in two variants - Cranberry & Orange Oat Slices and Dark Chocolate & Coconut Oat Slices. The range will drive incremental usage for the category by tapping occasions outside of the traditional cake eating times such as morning and evening snacks, claimed Premier.
The company is also launching a range of cup cakes in a variety of pack sizes to tap opportunities in what Premier described as “a higher growth segment of the market”.
Premier said increased branded and non-branded volumes and improved efficiency following capital investment meant the Sweet Treats unit was on track to deliver double-digit contribution margins in the full year.
Cadbury cake had been instrumental in delivering strong growth in Q3, added Premier, particularly the Cadbury Amaze Bites and Hot Cakes products (see box). The manufacturer said Mr Kipling sales also grew, contributing to an overall 6% increase in its branded Sweat Treats business to £53m ($74.8m).
Cadbury NPD success
Cadbury Amaze Bites brownies were launched in the UK last October in two flavors – double chocolate and chocolate & orange. The range has since expanded with a mint flavor.
Sold in a resealable tub, the brownies are covered in Cadbury chocolate and containing choc chip. Premier said Amaze Bites offers a “unique double blended” texture achieved by creating a finished cake that was then crumbled and blended again.
Cadbury Hot Cakes are twin-packs of a sponge sandwich with a choice of two fillings - Butter Scotch and Double Chocolate - designed to be warmed in the microwave and served hot.
Sales of Premier’s non-branded Sweet Treats – own-label products produced for retailers - rose 7.5% year on year to £25.2m ($35.6m). The business said this was primarily a result of mince pie contract gains in supermarkets and discounters channels – with the company selling 185 million mince pies in 2015, up 8% on the previous year.
Strong international performance
Overall group sales at Premier – which produces grocery brands including Sharwood's, Loyd Grossman and Ambrosia – were up 0.1% year on year to £245m ($345.7m). The company’s international sales grew 9.8% year on year in Q3 at constant currency, as a result of a strong performance in Australia and North America.
"Our third quarter Group sales performance was solid, particularly against the background of a broader food sector where top-line growth was negative,” said Premier Foods chief executive officer Gavin Darby. “As expected, our Sweet Treats business performed very well, with sales up due to a strong innovation programme, especially in Cadbury cake.”
Darby added the business had a strong innovation programme in place for the fourth quarter and that the company’s profit and net debt expectations for the full year remain unchanged.
Paul Hollywood baking range
New products set to launch in Q4 include a previously announced range of premium, home-baking products produced in partnership with The Great British Bake Off presenter Paul Hollywood.
Premier is also extending its Ambrosia desserts brand with Deluxe custard including clotted cream, toffee and salted caramel flavors and is extending Ambrosia into the ice cream market with a range of frozen custard ice cream.