Tesco and Others Concede to Rising Prices of Hovis
Premier Foods, the maker of Hovis bread and Branston pickle, has successfully convinced Tesco and other supermarkets to increase the price they pay for bread and cakes. This comes in response to the increase in the cost of wheat, which jumped more than 50p between July and September.
“We think we’ll resolve this in the coming weeks”, said Premier’s Chief Executive, Robert Schofield.
Tesco continues to stock 7 of the most popular Hovis products, but has already dropped 12 smaller lines. Premier continues to hope that these will be reinstated.
Premier’s sales fell to £606 million in the third quarter—by about 4.2%—while its volumes fell 1.6%. The products suffering the most were its non-branded ones, sales in which fell by 10.4%.
Adding to this picture is the £1.37 billion net debt of the company.
The company’s financial woes have resulted in the withdrawal of its defined benefit pension scheme to new members, and the movement of existing employees on final salary pensions to pensions based on career average earnings.
Mr. Schofield reported: “We still aim to make progress in the full year, but the slowdown in Q3 means this is likely to be more modest and is, as always, dependent on Christmas trading.”