Premier Foods sees challenging environment

27th Apr 2010 07:51

Premier Foods, the company behind Hovis bread, Branston pickle and Sharwood's sauces, reported a 5.1% drop in first quarter sales and said it remains cautious about the consumer and trading environment for 2010. The group said promotional activity across the market is continuing at elevated levels, with non-branded sales down 12.9% in value and 8.7% in volume due to promotional activity by brands, the effect of contract exits in 2009 and flour deflation.However, it expects an improving trend for non-branded sales through the year as contract exits and flour deflation drop out of the comparatives and recent contract wins come into effect. Branded sales by value in the first quarter were in line with the prior year while branded volumes were up 2.2%.The Hovis brand posted year on year sales value growth of 4.7% and volume growth of 8.5%. Hovis value market share in the quarter at 25.6% was 0.5 ppts higher than the same period last year, but the group warned that it expects to lose market share in the second quarter. Grocery Drive brands grew sales value by 5.0% with strong performances from Hartley's and Sharwoods. Grocery's Core and Defend brand sales declined by 1.1% and 5.0% respectively, while non-branded sales fell by 7.3%."We remain cautious about the consumer and trading environment for 2010. Assuming no adverse change in that environment, we expect the benefits of our strategy to result in further progress in 2010," the group said.