With its Fuel10K acquisition, Premier Foods is ready to do serious battle with Kellogg’s, Weetabix and Cereal Partners by taking a bite out of the breakfast market.
The manufacturer announced today its “major entry” into the occasion with the acquisition of Fuel10K, boosting its share price this morning by 1.2%. And the premium will surely grow as the deal sinks in, because it has complementary benefits.
Premier Foods took its first humble steps into the cereal aisles in January 2022, with the launch of ambient Ambrosia porridge pots. However, trademark activity in the same month signalled grander ambitions to capitalise on the protein and sports nutrition categories, as it applied to register the names ‘Nutri:full’ and ‘Nutri-full’ as trademarks with the Intellectual Property Office under class 5, covering protein powder; class 29, accounting for meal replacement bars and granola clusters; and class 30, spanning high-protein porridge pots and flapjacks.
Short-cut to ESG targets?
Several senior industry insiders were stumped by the activity at the time, but it came after Premier Foods unveiled its latest ESG strategy – ‘Enriching life plan’ – in 2021, which set out goals to triple plant-based sales to £250m by 2030, and more than double sales of products that meet high nutritional standards. The plan also set a target for Premier Foods to make all packaging recyclable, reusable, or compostable by 2025.
So Fuel10K could be a short-cut to achieving both these targets, especially as Premier Foods is “only working on extensions of existing brands” rather than launching new ones, according to an industry source.
Take Fuel10K’s porridge sachets, which launched earlier this year: they are both vegan and kerbside recyclable.
With products including Chocolate Chunk Granola and Salted Caramel Oat Cookies in its portfolio, Fuel10K MD Scott Chassels points out “we’re not a health brand”. However, Fuel10K’s active and affluent consumer is still more of a natural fit for Premier Foods’ ESG targets than its traditionally indulgent brands, such as Mr Kipling and Ambrosia.
And like many other cereal suppliers, Fuel10K has already been making efforts to improve the nutritional credentials of its products, doing the groundwork for Premier Foods in the process. While “taste remains the number one driver for purchase”, the brand has reduced the amount of added sugar in its cereals “three or four times”, according to Chassels.
What’s more, its granolas, protein drinks and snack bars appeal to a younger consumer demographic that Premier Foods’ portfolio has previously underserved, but who “spends more in the category every year”, according to Chassels.
Value sales of Fuel10K’s cereals are up
Fuel10K has learnt how to effectively target its marketing at this consumer group, which Premier Foods could learn from. “Younger consumers spend six-plus hours a day on their phones, so we invest to drive and grow awareness through digital campaigns, influencers, and a growing team of ambassadors and student representatives,” says Chassels.
Whatever Fuel10K is doing is working. Value sales of its cereals are up by 46.7% to £20.8m [NIQ 52 w/e 9 September 2023]. Volumes are up too, as The Grocer’s upcoming Top Products Survey 2023 will reveal.
According to Chassels, this performance has been driven largely by distribution gains across the multiples. The brand’s ability to win listings shows it’s offering something disruptive and different in a category dominated by a handful of big-name manufacturers – so Premier Foods’ move to snap it up is canny.
So the first objective for Premier Foods is to scale the brand and help it continue stealing shelf space. But it’s unlikely to stop with cereal brands, and crucially the Fuel10K brand is broad enough to scale up on the meal replacement side too, which takes it easily more easily into the space occupied by the faster-growing Huel to boot.
In short, with Premier Foods as its custodian, an interesting future awaits for Fuel10K.
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