Britain’s largest food brands were the stand-out winners of last year as revenue growth surged ahead of cheaper own-label alternatives, OC&C has found.
Revenues at the UK’s top 25 branded companies grew 19% in 2023, ahead of a grocery average of 9.3%, its analysis of the top 150 UK food & drink suppliers found.
It is the sixth time brands have outpaced own label in revenue growth in the past 20 years, found OC&C.
It attributed the trend to brands passing on most of their price hikes last year, while own label had hiked prices the year before.
“The phasing and, perhaps, the aggression of price increases” was most likely driving branded’s growth, said OC&C global managing partner Will Haylar.
The challenge now for food companies is to grow volumes.
Volume figures were not disclosed by all companies, but the total revenue rise was ahead of inflation – suggesting a rise in unit sales too.
The figures will reassure branded suppliers they can regain market share after own-label sales surged in 2022.
“Historically, when own-label businesses have gone through growth spurts, they’ve managed to hold on to those share gains,” said OC&C partner Nilpesh Patel. “But that’s not a given this time around, with every opportunity for branded players to start stealing share back.”
The biggest revenue jumps were at Skyes Seafoods, Tate & Lyle Sugars owner ASR Group and Monster Energy.
On top of the revenue gains, about two in three companies reported improved profitability last year.
Total profits among the top 150 grew 37% to £4.3bn. This meant operating margins rose to 5.1%. Although that is still short of the 6.3% long-term average, it is still an improvement on the 40-year low of 3.9% the year before.
“Those profits are starting to look healthier in 2023,” said Patel.
But Kevin Moore, UK CEO of Valeo Foods, added: “We need to remember it is volume that is core to returns and economic value.”
No comments yet