New boss Gavin Darby has vowed not to “slice and dice” Premier Foods - and has come in with a brief to grow both the grocery and bakery divisions, he told The Grocer on Thursday.

As Premier reported a 10.6% hike in underlying profits to £123.4m in its full-year results, Darby said the Hovis brand would play a key role in the future of the company’s bread division.

“We believe we have the best brand in the market in Hovis,” he said, adding that it would be getting new-look packaging in the coming weeks. “When a market is under pressure, you focus on the strongest brand,” Darby added.

Premier admitted last year was a challenging one for the bread business. With the loss of a £75m The Co-operative Group contract and the closure of two bakeries, sales fell 0.7% to £497.1m .

But Darby said he was “very comfortable” with last year’s restructure - which divided the grocery and bakery/milling into two distinct divisions - and insisted this was not done to ease disposals. “It is right that milling & baking should be together and not run alongside Oxo and Bisto, for example.

“If the board wanted someone to slice and dice they wouldn’t have hired me, they would have hired an investment banker,” the former Cable & Wireless CEO added.

Darby will continue with the ‘power brands strategy’ introduced by outgoing CEO Michael Clarke, which saw Premier focus on eight key brands, including Hovis, Sharwood’s, Bisto and Loyd Grossman. Sales of the grocery power brands grew 4% from £512.6m to £533.1m.

Darby added that it might be possible to streamline brands to cut costs - a process that could involve reducing the number of SKUs in a brand and making changes to recipes and packaging.

“It is a virtuous circle - if we can take costs out of the business we can reinvest in marketing and development,” said Darby, pointing out that the company had doubled ad spend on its grocery power brands in 2012.

Source

Vince Bamford

Topics