I was in the West Midlands yesterday when I spotted a text from a friend asking me when the drop going to stop in PFD . We both bought in at the old 28p and have had to watch the steady erosion of the Share price almost monthly. However ,as I've stated before the former policy seemed to simply sell off 'lines' in order to pay that years debt . The current team have the courage to ask the Share holders for cash to get the predatorsoff their back. Given the finacial position of the company there were few options left other than death by a 'thousand cuts' The current team need time as they are in the eye of a storm with rising world food prises and Supermakets squeezing margins. The current strategy will pay of but time is essential. If the big Share holders hold their nerve the company will pick up, but as I have stated before we are in for a long winter and a long haul.
If you started out by saying you want to drive the overall profits of the category in the interests of both the retailer and the brand then that is the way we think."
Premier is working to tap into two other significant shifts in UK shopping behaviour - the growth of online and convenience channels.
"Online is really more of a marketing thing. We are making sure that our marketing budgets include working with the online retailers and that we save some marketing resources for communicating in partnership with the online offering. We are hiring people in sales who come from a more digital online sales background. That is really about resources and capability.
"I think convenience is about making sure that our production, our supply chain can produce products in smaller cases. An example is we are currently investing quite a bit of money in a new piece of kit in our Carlton, Barnsley, bakery, which produces [Mr] Kipling. That machine can produce the flat packs in various different case configurations. Small retailers don't want so much inventory.
"It is mostly about reconfiguring one's manufacturing to make sure one can serve smaller retailers with different case configurations for the brands so they fit with that channel. That is not something you do in a heartbeat, but it is something we are well on the way to doing."
A longer-term opportunity Premier has identified is expanding its operations overseas. Today, Premier's international sales account for less than 5% of group sales. However, Darby believes Premier can grow from that very small base and the group has made the initial steps to do so.
"It is a three-to-five year strategy. You don't create an international business overnight. Now we are in a ... to start laying the foundations, putting teams of people together carefully hiring them, to build the foundations of an international business. Who knows where it will lead. It is less than 5% today. I'm not committing us to [specific targets] but there are quite a few companies where 15-20% of their sales are in international. I haven't set a public goal but there is a lot to shoot for."
The company has developed a shortlist of high-priority markets, including the US, China, Ireland and Australasia, Darby adds. "Particularly we have chosen the US for Sharwood's, Australasia for Mr Kipling and Cadbury, and China initially for Ambrosia but we have got some other [brand opportunities here] and obviously Ireland as well. We are moving from a model of sporadic export to a model of focusing on a short-list of high-priority destinations."
In spite of recent wobbles, Darby remains confident Premier can grow its sales - both within the UK and further afield. There is clearly much to play for.
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