The company said that retailers were finally starting to recognise that manufacturers were unable to absorb the rising cost of raw materials.
Finsbury is pumping £1m into driving production and supply chain efficiencies in a bid to tackle interim pre-tax losses.
The losses, forecast in a company statement in January, were blamed on high raw material costs and Christmas staff shortages.
Finance director John Lomer said: “This has forced us to take a hard look at the business. We are planning to invest £1m in the next 12 months.”
Turnover was up 24% to £27.7m in the six months to December 31, with sales boosted by Memory Lane Cakes, especially Christmas lines.
Pre-tax losses ran to £200,000 in the same period.