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Premier Foods hit by weak supermarket trading

Cake brand Mr Kipling is to be the subject of a major relaunch and marketing push as its owner plots its fight back following a slide in half-year profits.

Premier Foods, which also owns Ambrosia desserts, Bisto gravy and Loyd Grossman sauces, has been hit by the impact of weak supermarket trading and warmer weather over the first six months of 2014.

Profits fell 16% to £17.8 million in the period, with sales 6.1% lower at £364.4 million due to the challenging market conditions and the company's decision to eliminate "deep-cut, loss-making promotions".

St Albans-based Premier said it will double its marketing spend in the current half year as it gets behind the relaunch for Mr Kipling.

This will include a new packaging design, as well as a major television advertising campaign with prime-time slots alongside outdoor and social media.

The second half of the year will see a number of other product launches, including Bisto gravy and casserole pastes, Batchelors deli-box cous cous, Sharwood's mini poppadoms and Cadbury sponge pudding desserts.

There will also be a first major television advertising campaign for Homepride sauces in ten years to support its recent packaging re-design and new flavours.

Price inflation in the company's markets has fallen every month since the start of the year, with consumers switching away from traditional multiple retailers towards "hard" discounters selling 75%-90% private label products.

Premier said the ambient grocery market in the UK decreased in value by 1.3% in the first half of the year.

However it added that the most significant element of the market decline was caused by milder weather, with 20 of the 26 weeks in the first half recording higher average temperatures than their respective weeks in the prior year.

This impacted its Batchelors brand while Sharwood's sales were also lower due to competitive pressures. Loyd Grossman sauces continued their good performance and Bisto grew both share and sales.

Mr Kipling increased its share of the cake market to 26%, helped by increased sales of its Snackpack slices.

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