Missing those Seed Sensations? Premier Foods fights to get Hovis lines relisted in Tesco
Tesco took action when the Premier tried to pass on price hikes for the range, which it attributed to a 50% increase in wheat prices during 2010, where the input currently accounts for around 25% of the cost of a loaf.
Premier chief executive Robert Schofield said this morning: "Tesco has delisted some of our smaller lines and we are talking to them to try to resolve that."
A Premier Foods spokesman told FoodManufacture.co.uk: “When Premier Foods announced its half-year results in August we talked about fires in Russia and everyone saw that wheat prices were due to skyrocket.
“Premier was crystal clear about the fact that this could not be absorbed, and had to be passed on through price rises. As a consequence we announced today that we have successfully renegotiated price increases with retailers for our flour and cake ranges.
“Tesco decided to delist some of our smaller lines in the Hovis range, and as Robert Schofield says, this is a situation that we are trying to resolve.
Just another listings spat?
“But it’s important to point out that you can still buy Hovis in Tesco, and to put this situation in context, it’s part of the constant argy-bargy about competition for shelf space, listings that marks the relationship between manufacturers and retailers.”
“In this case though, what’s a little disappointing is that one of the lines delisted is Premier’s ‘Seed Sensations’ loaf [pictured] where four pence from every sale goes to the Royal British Legion.”
“We perhaps think that it is probably a little disappointing for Tesco customers that they can’t buy this loaf.”
A Tesco spokesman said in response: "We cannot comment on our commercial agreements with suppliers. We always look to provide our customers with great value bread."
Given Premier’s ongoing financial difficulties, Hovis represents a rare success story that the firm can ill afford to jeopardise through major delistings ahead of its key Christmas sales period; Premier reported in a trading statement today that the brand had seen strong year-on-year sales growth.
Analyst Clive Black from Shore Capital told the Press Association that the situation was “a big deal for Premier”, which he said was losing “hundreds of thousands of pounds a week" since Tesco had a 31% share of the grocery market.
“Tesco won't run out of bread but Hovis is missing out on sales in the biggest supermarket in the country. They will also be losing out to their rivals Warburton's and Kingsmill," he said.
