McCoy’s and Tyrrells producer KP Snacks overcame the collapse in out-of-home snacking to grow revenues and hike profits last year.

The crisps and nuts supplier posted a modest 1.1% in revenues to £479.4m in the year to 26 December 2020 as the shuttering of out-of-home markets due to Covid hampered top-line growth.

However, booming sales via traditional grocery retail channels and online mitigated foodservice declines as KP Snacks held market share during the period.

KP benefited from the ‘take home’ snacks category, growing ahead of total grocery market at 15.1% (vs 12.8%) as nuts, multipacks, sharing & popcorn performed strongly throughout the year.

Consumer preference for trusted brands saw KP Nuts grow 20%, multipacks of McCoy’s grow by 21%, Butterkist rise by 17%, sharing Popchips by 13% and Tyrrells by 12%.

These strong performances helped to mitigate the impact on single eat packs that disproportionately affected the Tyrrells, McCoy’s and Popchips brands.

Giles Henderson, KP Snacks CFO, commented: “2020 was like no other year, with significant shifts in where people shopped and where they consumed their snacks, with a significant shift from out-of-home locations, which were shut down, to our grocery customers, in larger stores, on-line and convenience. This resulted in a major shift in the bag formats that were sold, from smaller impulse packs to in-home sharing and multipacks.

“In addition, there were constant supply chain disruptions, especially labour, due to the levels of self-isolation. The health and wellbeing of our colleagues is at the heart of our business and significant additional spend was put towards keeping our employees safe and socially distanced as well as enhancing the amount of cleaning in all our offices and factories.”

The changed sales mix helped gross profit margins increase to 46.4% from 44.7% as branded grew faster than own-label products.

This saw operating profits rise by 36.7% to £46.5m.

Pre-tax profits were boosted by a £37.7m impairment taken in 2019 (which more than mitigated a £20.2m gain from fixed asset investments), meaning pre-tax profits for the year were up 78% to £45.3m.

KP continued to make “major capital investment” in 2020, especially targeted on reducing waste and packaging, which helped mitigate the cost of rising commodity prices and increased costs related to Brexit.

Marketing spend was cut significantly in 2020 given Covid, but has been reinvested in 2021.

Henderson said category growth has continued so far in 2021 at 4.3% with “slightly different shopping and consumption dynamics”.

“Twinned with exciting innovation and new advertising including our multi-brand sponsorship of The Hundred cricket event, we are pleased to continue driving category growth with our customers 7% YTD 2021.”

He said multipacks have seen moderate growth from last year’s surge at 3%, while nuts are holding up well from last year’s sales uptick at 3%.

“The food-to-go (singles segment) is a long-term, resilient growth trend, that we expect will continue to rebound as footfall and frequency returns,” he said.

“Of course, within this context we are not immune to the well-publicised end-to-end supply chain challenges and inflationary pressures that still require laser-focused demand management, whilst we continue to put the safety and wellbeing of our colleagues at the heart of our business.

“We remain committed to being the category growth partner for generations to come, building on our great work to date in our Taste for Good programme, which focuses on our commitment to our people, our consumers, the environment, and our communities.”

Topics