Innovation and extension are the best way to reinvigorate brands in mature categories.

Take Premier Foods. Its greatest success has come from stretching established brands into new areas.

After redesigning the core Branston pickle packaging and introducing new varieties, such as smooth or chunky, Premier Foods has moved seamlessly into new categories, most notably baked beans.

Fuelled by such extensions, Branston sales increased from £22m in 2002 to £52m in 2006. "Premier Foods set the standard with Branston," says Luke Jensen of OC&C.

"It turned a pickle brand into a range of sauces and in doing so more than doubled the size of the brand.

"With its new acquisitions it can drive innovation into them and grow even further."

Innovation is as much about adding value as growing volume. The classic example is the repackaging of Heinz Tomato Ketchup, which addressed both customer need - an easier way to get all the sauce out of the bottle - and gained a price premium.

The old bottle costs shoppers the equivalent of 18p per 100g, while they pay 25p per 100g for the new shape.

The trend for trading up is a sign that food companies willing to develop more premium products will survive the pressures of rising costs, says Clive Black at Shore Capital.

Bread is a good example: a sector that has seen an innovative turnaround through premiumisation, with significant share gain by the leading brands. The days of the 7p loaf are now long gone.

Premium loaves costing more than £1 and changes in loaf sizes have modernised the market and led to companies such as Warburtons growing profits.

"Health, convenience and premiumisation are three major factors," says Sarah Miskell, Warburtons' category director, "with the largest growth in the grains and seeded sector, up 22% year-on-year."

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