Premier Foods boss Robert Schofield has pledged an end to the problems that saw sales of Hovis, its iconic bread brand, plummet.
When Premier acquired RHM last March, Schofield was shocked to discover it had forward wheat contracts for only "a few weeks" at a time when the price of wheat was showing the first signs of its dramatic increase.
"The silly bastards had done nothing to address the problems," Schofield told The Grocer in a typically frank interview.
In the group's full-year results this week, he revealed that Premier's future wheat contracts now stretched "further ahead than ever before" to protect against the unpredictable commodities market. The contracts are part of Premier's new bread strategy, which includes a new management team and new and improved Hovis recipe.
Schofield admitted that last autumn's price hikes on Hovis prompted a sales decline over a 10-week period because it was forced to put up its prices first. Kingsmill and Warburtons' loaves were 15p cheaper.
Although Schofield warned another price rise was inevitable, he claimed Hovis was now in a better pricing position also because it used less Canadian wheat - which has doubled in price since autumn - than its competitors.
"There is inflation in British as well as Canadian wheat but the primary driver is Canadian," he said.
Hovis's rival Warburtons is most affected by this hike as it uses a blend of two-thirds Canadian wheat and one-third UK wheat in its bread, according to a UK wheat buying source.
But Alex Waugh, director of the National Association of British and Irish Millers, urged Premier to handle future wheat contracts with caution.
"If last year's harvest is anything to go by, there is a risk that poor weather could spoil the quality of the wheat tied up in the forward contract."
The improved quality of the new Hovis loaf will also drive Premier's recovery, according to Schofield. Consumer concerns with the brand's white loaf prompted investment in a new recipe that has already hit the shelves.
"We've used new wheat blends in the recipe and also slowed down the bake. We intend to increase our marketing spend on Hovis and are currently working on the advertising campaign," said Schofield.
Schofield also reorganised the senior management team at the bread and bakeries division. He appointed Tim Kelly to Premier's board as chief operating officer of cakes and customer partnerships last March.
Jon Goldstone, vice president of marketing for Walkers, will take over as marketing director for Premier's bread division this month, The Grocer can also reveal.
Premier's results revealed a pre-tax loss of £73.5m last year, compared with profits of £59m in 2006.
But it gained breathing space for its covenants after securing an additional £125m loan and created an extra £50m by halving its shareholder dividend to 6.5p.
Soaring wheat prices increased Premier's cost base by about 19% to £225m last year but it managed to recover £190m of these costs by December through pushing up prices.