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Premier Foods to compete against Heinz-HP superbrands

By Anita Awbi , 16-Feb-2006

Following a year of restructuring, the manufacturer famous for iconic British brands Sarson's Vinegar and Gale's Honey has announced plans to enter the brown sauce and ketchup sector as a direct rival to Heinz-HP.

Premier Foods said it will launch the products under its flagship Branston range, encouraged by the successful launch of Branston Baked Beans last year.

The company aims to reverse a current stagnation in the table sauces sector, which it claims saw the market decline by 1.3 per cent in value and 3.3 per cent in volume in 2005.

 

Helena Jevons, Premier Foods Branston brand controller, said: "We believe the table sauces category is starved of innovation, and in order to enjoy growth, now needs a second alternative to the brand leader."

 

Last year American-owned Heinz, with five UK factories, announced the success of its £470m (€658m) bid for Danone's HP brand, including rights to leading culinary lines Lea and Perrins Worcestershire Sauce, Daddies sauce and popular HP sauce.

 

The transaction, completed in August, includes three factories - two in the UK and one in the US.

 

Heinz beat rivals Premier Foods and Associated British Foods to buy the iconic food label, after months of speculation that PepsiCo was interested in making an offer.

 

The acquisition of these famous trademarks is consistent with Heinz' plans to concentrate on big brands and large markets, following revelations that they will sell off marginal product lines and concentrate on expansion.

 

But it is feared Heinz may have violated British monopoly law as it now holds rights to all three supermarket 'must haves' (HP sauce, Heinz Ketchup and Daddies Sauce), which are leading brands in more than 50 countries.

 

Premier Foods now hopes to drive into the market to provide an alternative to the Heinz-HP monopoly, predicting it will take 20 per cent of the brown sauce market and 10 per cent of the tomato ketchup market by 2008.

 

Branston's Baked Beans achieved a 6.2 per cent market share within 12 weeks of the product's launch, bolstering confidence.

 

Last year was marked by a series of acquisitions and sell-offs that have seen the Premier Foods balance sheet fluctuate as the company positions itself in the growth areas of culinary staples, meat-free and quality desserts.

 

In November the company paid £27m for Bristol-based Cauldron Foods in a bid to reinforce its position as the leading producer of meat substitutes in the UK, following on from the June acquisition of Quorn for £172m.

 

The firm, which has an annual group turnover of £800m, can now expand its portfolio to tofu, vegetarian ready meals, fresh pates and ethnic snacks, which Cauldron and Quorn used to supply to the UK's major supermarkets.