Higgidy has fallen into the red during its first full year of control under Samworth Brothers, as the upmarket savoury pastries brand was hit by disruption during a major bakery upgrade and experienced a massive spike in costs.
The pies, quiches and rolls maker invested heavily in the 15 months to 1 January 2023 as it ploughed £10m into the expansion of its Shoreham headquarters. The move has significantly boosted capacity but caused disruption during the build, according to newly filed accounts.
Higgidy sank from a £1.8m profit to a £3.4m pre-tax loss as a result, with soaring raw material costs and energy bills also eroding gross margins by 6.8 percentage points to 27.3%.
The group said the impact of the building work “coupled with the pace and magnitude” of ingredient and packaging inflation – which was not fully recovered in the period – drove it into a loss-making position.
Revenues in the 15-month period jumped 21.4% to £43.3m thanks to a change in the company’s financial year end but fell by almost 4% on an annualised basis to £34.6m.
Higgidy added like-for-like volumes had also dipped as cash-strapped consumers traded down into own label towards the end of the period, with the bakery expansion also constraining unit sales during the peak summer months.
The company – which continues to be run separately from its parent despite Samworth taking full control at the start of 2021 – said it expected 2023 to be “a challenging year”. Losses were forecast to be reduced by an increase in sales driven by a raft of NPD and gross margin improvements from efficiency gains now the new bakery is up and running.
“The site development during 2022 was an exciting year for us,” said CEO Rachel Kelley. “However, the change in the economic climate happened at the same time and inevitably led to some delays and challenges.
“We are now well set to innovate and bake our veggie-led portfolio in future years.”
Despite the economic headwinds, Higgidy continued to launch new snacking products during the period, including its first vegan muffin and a porcini and chestnut mushroom pie. It also took its entire quiche format into sustainable paper trays, which it said would remove more than 50 tonnes of plastic a year.
In January this year, Higgidy also became the first ever non-vegan official sponsor of Veganuary following a pledge by the brand in 2022 to make 75% of its portfolio vegetarian.
The company said it now held a 26.2% market share of vegan chilled savoury pastry, up from 21.5% in 2021 thanks to “robust” value growth [Circana 52 w/e 25 December 2022].
Higgidy also debuted in the freezer aisles over the summer with a range of frozen pies and quiches in Waitrose.