Butterkist Cinema Sweet

Sales leaped at Intersnack arm KP Snacks last year on the back of its £57m acquisition of Butterkist.

The crisp and nut specialist saw sales jump 10% to £345.7m, driven by its buy-and-build growth strategy which has continued into 2018.

Despite the booming sales, the popcorn business acquired last year impacted profits as weaker margins in the popcorn category weighed on earnings.

Operating profits slumped 17.9% to £18.5m for the year ended 31 December 2017, down from £22.6m the previous, “primarily” due to the devaluation of the pound, which drove up commodity costs.

Marketing costs and lower margins in own label had also impacted profits, KP said in the strategic report with its Companies House accounts.

“Further erosion was driven by the newly acquired Butterkist which operates at lower margins; the lower margin own-label brands growing faster than the branded business, in line with the market; and increased marketing spend to drive growth in the category and the core brands McCoy’s, Hula Hoops, Pom-Bear and KP nuts,” the directors said.

KP claims it was the “fastest growing branded snack manufacturer in 2017”, with its branded and retail own label strands delivering 5.7% market share growth.

KP Snacks acquires Butterkist to break into popcorn market

Excluding Butterkist, KP had a “very successful year” with organic sales up 6.5%.

The Intersnack arm purchased the Butterkist for £57m in July 2017 from Tangerine Confectionery, as it looked to expand into the fast-growing popcorn category.

The snack maker has continued its buy-and-build growth model in 2018, buying two major UK crisp brands so far this year.

In May, Intersnack announced it had agreed a deal to buy Tyrells from The Hershey Company, in a cut price deal following a drop in performance under US ownership.

It continued its buying spree by acquiring Popchips UK business last month for an undisclosed amount.

Giles Henderson, chief financial officer at KP Snacks, said: “These results reflect KP Snacks’ commitment to invest and drive sustainable category growth with our customer partners by offering consumers great tasting snacks, which has led to a net under recovery in inflationary elements while investing in four key areas.

“They are: acquisitions; consumer value for money; demand generation to drive volume - record advertising levels, activation, pack & case formats; and sites technology, infrastructures and extra capacity required as a result of our growth.”