Premier Foods boss Gavin Darby has promised to return its bread business to profitability instead of obsessing over volume.
Speaking hours before staff worked their final shifts at Premier’s axed bakery plant in Birmingham, CEO Darby said the St Albans company was “getting off the merry-go-round” of chasing volume in bread.
The company is also due to close its bakery in Greenford, West London, and is reducing its distribution operation following the loss of a £75m contract with The Co-op to supply own-label and Hovis bread.
“The loss of 900 people doesn’t make me feel good but we need to build a profitable bread business,” said Darby. “Someone needs to be brave enough to jump off the merry-go-round of trading share by retailer.”
Overall volume sales in the fiercely competitive pre-packed bread market have fallen 2.9% - with Warburtons up 2.6%, Kingsmill down 3.3% and Hovis down 6.3% [IRI 52 w/e 2 February 2013].
These figures do not take into account the loss of The Co-op contract to Kingsmill owner ABF. Premier is trimming back its logistics to take into account the loss of some 3,000 Co-op drop-offs, and is closing two distribution centres.
“In the second half of the year we will be running in line with adjusted volumes,” said Darby, adding that the company was refurbishing its bakeries and would roll out new-look packaging for Hovis this summer.
In an interim management statement issued this week, Premier reported 0.8% year-on-year sales growth in its bread business, with total brand sales (excluding milling) up 2.2% and sales of its eight ‘power brands’ up 3.5%.
“In the past five years, almost every quarter there has been an acquisition, disposal or refinancing,” added Darby. “What we need now is a period of solid trading.”