Ella's Kitchen

Sales have continued to boom at babyfood brand Ella’s Kitchen, though double-digit sales growth was accompanied by a fall in profits as currency exchange rates and rising costs hurt margins.

The company’s most recently filed accounts for the year to 30 June 2017 show a 15.5% rise in sales to £65.7m as it sold 133 million portions of babyfood, a rise of 9%.

UK sales were up 15% to £52.9m and international sales, which exclude US and Canada revenues, attributed to parent Hain Celestial, were up 17.5% to £12.9m.

The brand increased UK market share to 39.7% of the wet babyfood market, achieving growth through extra distribution and NPD.

However, operating profits fell 4.5% in the year to £8.5m and pre-tax profits were down 5.2% to £8.4m.

The company said it was exposed to the post-Brexit fall in the value of the pound, noting a significant proportion of its costs are denominated in euros and US dollars while the majority of sales are in sterling.

CEO Mark Cuddigan said: “Our profits have dropped slightly due to investment in our people and NPD, and foreign exchange-related inflationary pressure on product costs.”

But he added: “It’s been a successful year at Ella’s, as we’ve celebrated our 11th year of double-digit growth.”

Ella’s is focusing on growing export sales to Europe to enhance its euro revenues, but warned it remained subject to Brexit-related risks including currency volatility, regulatory changes and customs restrictions or tariffs.

The strategic report states: “The directors have a shared sense of passion and excitement for the future of Ella’s Kitchen, with both entry into new markets and innovative new products on the horizon.

“We are confident in our ability to exceed ever-changing consumer expectations - delivering the heathier food they desire and being a business that operates with a purpose beyond profit alone.”

The accounts also show customer complaints rose by 34.2% during the year, moving from 10.4 complaints per million sales portions to 14 complaints.

Cuddigan said this statistic was due to a “widened manufacturing base”, but that this measure has reduced at the start of 2018 and “is on track to continue this downward trend”.

Ella’s Kitchen was certified as a B Corporation during the year, a collection of companies across the globe which have been recognised as organisations using business as a force for good.

The Grocer revealed last week that Marks & Spencer is axing its entire range of own label babyfood and replacing it with Ella’s Kitchen, which will be the retailer’s only range in the category.