Premier Foods Sees 11.4% Sweet Treats Surge in Q1 as Profit Outlook Holds Firm

• Acquisition Success: Both The Spice Tailor (sauces, kits) and FUEL10K (protein-focused products) delivered double-digit UK sales growth, fuelled by new product development like East Asian kits and protein-enriched noodles.
• New Categories Boom: Sales in this segment skyrocketed by 38%. Ambrosia Porridge pots were a powerhouse, gaining further distribution and market share, while Cape Herb & Spice also posted strong growth.
• Strategic Exits: The decline in non-branded Grocery revenue (-8.8%) was partly attributed to consumers switching to brands, but also to Premier’s deliberate decision to exit lower-margin contracts, focusing on more profitable areas.

Looking Ahead in Grocery: Innovation Pipeline Heats Up

Premier signals an acceleration in Grocery NPD for the second half:

• The Spice Tailor: Expanding into Mexican cuisine kits.
• FUEL10K: Entering the chilled aisle with high-protein yogurt and granola pots.
• Bisto: Launching Peri-Peri gravy to attract younger consumers.

These launches are key to reigniting branded growth momentum in Grocery.

International & The Bigger Picture

• Overseas Growth: International sales grew a solid 5% at constant currency, with particularly strong performances in cake and cooking sauces in Australasia, leading to market share gains.
• Overall Group: Total Group sales edged up 0.3%, with branded sales rising 1.2% – a creditable result given the tough Grocery comps and weather impact. Critically, market share gains continued.

Outlook: Confidence in the Recipe

Management struck a confident, consistent note:

• Branded Revenue Growth: Expected to “build through the year” as tough comparatives ease and the wave of new product development (NPD) hits shelves.
• Profit Steadfast: Full-year Trading profit expectations are unchanged. This is underpinned by the core “branded growth model” and ongoing cost efficiency programmes.
• Medium-Term Strategy: Reaffirmed commitment to progress across all five pillars of their growth strategy.

Bottom Line: Steady as She Bakes

Premier Foods’ Q1 is a tale of two divisions. Sweet Treats delivered a stellar performance, showcasing the power of effective innovation to drive volume and share. Grocery faced weather-related and comparative challenges, but the underlying growth engines – acquisitions (Spice Tailor, FUEL10K) and new categories (Ambrosia Porridge, Cape) – roared ahead. The strategic pruning of low-margin non-branded contracts continues.

The unchanged profit outlook is the crucial takeaway. It signals management’s confidence that the branded growth model, bolstered by a strong NPD pipeline across *both* divisions (especially the exciting H2 Grocery launches), combined with cost discipline, will deliver. While Grocery needs its innovation to counter the weather impact, the overall recipe for FY25/26 seems to be holding firm. Investors will likely savour the consistency, even as they watch for the promised acceleration in branded growth as the year unfolds.