Latest research from Mintel reveals that for the first time, in 2011, the proportion of own label new product development (NPD) overtook branded in the UK. Historically, the proportion of new product development within food and non-alcoholic drinks has been higher for brands than for private labels. While brands held a 55% share of total NPD in 2010, the balance tipped in 2011 in favour of own labels as they accounted for 54% of NPD, compared to 46% for brands.

Today, some 57% of consumers think that own label products have improved in taste and quality, while 52% actually prefer them to brands in some cases. Furthermore, some 82% of adults think that own label products provide value for money, compared to just 16% for brands.

Today, some 80% of shoppers buy own label products (compared to 89% of consumers who buy branded goods), and retailers’ own products look set for further growth in 2012 as consumers expect to buy more of them. What is more, as many as 20% of those who buy branded products are set to buy less in the coming year.

Chris Wisson, senior food Analyst at Mintel, comments: “While there are signs that pressure on consumer budgets is slightly easing, 2012 looks set to see the majority of adults remaining watchful and discerning when shopping. Our research suggests that on balance, consumers expect to buy more standard and value own label foods while cutting back on brands.”

Mintel’s research reveals that the market for own label food and drink reached £37 billion in 2011, a 24% increase since 2006. This growth has come at a slightly faster rate in relation to the wider market, which grew by 23% over the same period. The own label market is expected to show similar growth trends in the coming years and is projected to reach £46 billion by 2016.

Today, 69% of British shoppers buy economy own label food and drink products. While there are signs of the recession easing somewhat, its continued impact is still being felt by consumers. Indeed, just 6% of adults who currently buy economy own label products expect to reduce their usage in the coming year, while one in eight (18%) current users expect to buy more in the year ahead.

Premium own labels have also fared well in recent years despite budgetary pressures and today are bought by 71% of UK consumers. Growth also looks set to continue in this segment, with 27% of adults expecting to buy more of these products in 2012 and only 12% to cut back.

The progress of own labels is such that over half (52%) of adults prefer the taste of own label products to branded equivalents in some cases, suggesting that they are increasingly becoming brands in their own right. However, despite over half of adults thinking that own label products have improved in taste and quality, 58% of adults still say that for some foods, only brands will suffice, with premium products in particular offering brands a safe haven.

UK consumers traditionally associate a wider range of positive attributes with brands than own labels, particularly being trustworthy (52%), traditional (51%) and authentic (44%), while just 2% of adults think that they are bland. However, own labels come to the fore for being family-friendly (45% versus 28% for brands) and, in particular, offering value for money (82% versus just 16% for brands). The most likely users to maintain their usage and support the own label market are men (46%), over-55s (49%), retirees (54%) and, surprisingly, ABs (48%) and households with an income of £25,000-49,999 (50%).

“Times have changed and there is no longer a perception about own label equating to lower quality. Our research shows that many affluent consumers do not necessarily dismiss own label products out of hand, but they appear to in fact be keen users in certain categories. The increasing credibility of private label products which, crucially, often undercut brands on price is a warning for brands who are under increasing pressure from consumers who are becoming more open to the idea of buying own label groceries,” Chris Wisson concludes.

Dairy Crest’s cost reduction programme is on track to deliver annual savings in line with the £20 million target set at the start of its financial year year. These savings have partially offset higher input costs including milk at the UK dairy group. Dairy Crest will continue to focus on reducing costs into the new financial year and expects to achieve a further similar level of annual savings.

Strong performances from Dairy Crest’s foods businesses are compensating for more challenging trading in its dairies division. However, despite the progress made in identifying and delivering efficiency savings, profits in the dairies business remain under pressure. Consequently, Dairy Crest is looking at a range of options to restore this business to a satisfactory level of profitability.

Dairy Crest’s strategy is to grow sales of its brands and other added value products, control costs and generate cash. Value sales of its five key brands (CathedralCity, Country Life, St Hubert Omega 3, Clover and Frijj) have increased during the financial year. Although sales volumes of these brands fell in the first half while Dairy Crest recovered higher input costs from its customers, a strong performance in the second half means that full year sales volumes will have increased compared to last year.

Dairy Crest will announce preliminary results for the year ending 31 March 2012 on 24 May 2012.

PepsiCo has expanding its portfolio of brands, which each generate more than $1 billion in annual retail sales, to 22 with the recent addition of Diet Mountain Dew, Brisk and Starbucks ready-to-drink (RTD) beverages. The US-based beverages and snacks giant has doubled the size of its billion-dollar brand portfolio since 2000, adding five new billion-dollar brands in the past five years.

First introduced in 1988, Diet Mountain Dew became the company’s eighth carbonated soft drink brand to reach the billion-dollar annual retail sales milestone. PepsiCo has manufactured and distributed Brisk and Starbucks RTD beverages through successful joint venture partnerships with Unilever and Starbucks, respectively, since the early 1990s.

Brisk is sold under the Pepsi Lipton Tea Partnership, a successful joint venture formed between PepsiCo and Unilever in 1991 focused on manufacturing and marketing ready-to-drink tea beverages. PepsiCo, through the Pepsi Lipton Tea Partnership, is the RTD tea category leader in several markets around the world, including the US and Western and Eastern Europe. 

PepsiCo and Starbucks largely created the North American RTD coffee category in 1994 when they formed the North American Coffee Partnership, a successful joint venture under which PepsiCo manufactures and distributes Starbucks RTD, single-serve coffee beverages.

The growth of Diet Mountain Dew, Brisk and Starbucks RTD beverages gives PepsiCo 14 billion-dollar beverage brands.

“Our ability to accelerate the growth of our billion-dollar brand portfolio with Diet Mountain Dew, Brisk and Starbucks reflects the success of our product marketing and innovation initiatives, the strength of our joint venture partnerships and the power of our distribution systems,” says Indra Nooyi, chairman and chief executive of PepsiCo. “We remain laser focused on continuing to strengthen and grow our entire global brand portfolio.”

PepsiCo also has eight billion-dollar food brands, the largest of which is Lay’s. The growth of the Lay’s portfolio has been driven by expansion in many international markets, including several key emerging economies like Russia, where Lay’s is getting ready to celebrate its 20th anniversary.

The company’s billion-dollar brand portfolio is comprised of: Aquafina, Brisk, Cheetos, Diet Mountain Dew, Diet Pepsi, Doritos, Fritos, Gatorade, Lay’s, Lipton, Mirinda, Mountain Dew, Pepsi, Pepsi Max, Ruffles, Quaker, 7UP (outside the US), Sierra Mist, Starbucks RTD beverages, Tostitos, Tropicana and Walkers.

Premier Foods expects to more than double the original £20 million cost reduction target, set last year, to over £40 million by 2013 by creating a stronger and more efficient business that will help release funds to invest behind driving the group’s recovery and growth plans. To achieve this target, every aspect of the company’s costs is being reviewed and a series of cost saving programmes will be initiated throughout the year that will result in reductions in the workforce, mainly from overhead functions. These reductions are expected to amount to approximately 5% of the company’s current workforce of around 12,000 employees.

Under the direction of a new leadership team, detailed plans have been put in place to focus investment behind growing the group’s eight ‘power brands’ of Hovis, Ambrosia, Mr Kipling, Sharwood’s, Loyd Grossman, Bisto, Oxo and Batchelors. Premier Foods is planning to double marketing spend behind these brands in 2012 and six of the ‘power brands’ will be back on TV with advertising in the first quarter, spearheading a full programme of new product innovation, promotions and marketing throughout the year.

To support the new focus on ‘power brands’, Premier Foods has accelerated the divestiture of non-core businesses, completing the sale of its Brookes Avana chilled food business and announcing the agreement to sell its four Irish grocery brands in recent weeks. Further selected businesses are expected to be divested in 2012 increasing the company’s brands focus and helping to deleverage the business.

Tangerine Confectionery, the largest UK-owned sugar confectionery and popcorn manufacturer, has acquired the Wham and Highland Toffee brands from Millar McCowan, which recently entered administration. The acquisition of both brands is part of an ongoing growth strategy for Tangerine which has seen its turnover quadruple to more than £160 million in the last five years.

Tangerine now has six out of the top ten chew bar brands, expanding a category-leading portfolio which includes, Barratt Refreshers, Sherbet Dip Dabs, Sherbet Fountains, Black Jacks and Fruit Salads. Highland Toffee will add to Tangerine’s more traditional confectionery offering alongside brands such as Taveners, Lion and Jameson’s. These sit amongst a broader portfolio which includes the market leading brands Butterkist popcorn, Princess Marshmallows and Henry Goode’s Soft Eating Liquorice.

Alison Lewis, marketing director of Tangerine Confectionery, says: “To have secured the Wham and Highland Toffee brands and to be adding them to a portfolio which includes some of Britain’s best loved sweets is a significant step for the business. They both retain such a strong appeal for adults and kids alike and have a natural place amongst our family favourites.”

The global market share of private/own label food products is set to double from the current 25% to 50% in 2025. However, A-brands will retain their importance for retailers to anchor categories’ price levels and give consumers choice and familiarity, according to a recent global research report titled ‘Private label vs Brands – an inseparable combination’ from Rabobank’s Food and Agri Research division.

The report shows that smaller secondary brands (B-brands) will have to strategically reposition to avoid being squeezed out of the market. Two strategies are open to B-brands suppliers – either invest in quality and target the premium market, or specialise in private label. A consolidation spree among private label specialists is inevitable to achieve economies of scale and to reduce the cost base.

Rabobank’s conclusion that global private-label penetration will reach50% by 2025 is based on assumptions about food retail market structure. The report lists 11 drivers for private-label growth including:

* Continued industry consolidation in developed food retail markets (Western Europe, the US and Australia).

* Adoption of modern retail in developing markets (CEE, Russia and Turkey).

* Increased consumer acceptance of private label following the recession.

* Further growth of the hard discount segment.

* Professionalisation of private label supply.

Author of the report Sebastiaan Schreijen, associate director processed food & retail at Rabobank, comments: “Our research shows that private label and A-brands are an inseparable combination. Like love and marriage, you can’t have one without the other. But where two’s company, three’s a crowd. This report is an early warning to B-brand suppliers to adapt their strategies to survive.”

Benefiting from an improvement in the global economic environment and favourable currency factors, Pernod Ricard has achieved strong sales and profit growth in the first half ended December 31st last. Net sales increased by 13% to Eur4.28b – up 7% organically – and group share of net profit from recurring operations rose by12% to Eur726m.

Pernod Ricard increased advertising and promotion spend by 11% organically to Eur765m; raising it from 17% to 17.9% of sales. The French and international drinks giant improved its operating margin (profit from recurring operations/sales) by 30bps to 28.3% and also significantly reduced debt by Eur864m during the period.

Pierre Pringuet, chief executive of Pernod Ricard:

The group’s 14 strategic spirits and champagne brands grew 8% in volume and 13% organically in value, reflecting a very favourable price/mix effect. These 14 strategic brands represented 59% of group sales in the first half of 2010/11, compared to 55% in the first half of the previous year: Indeed, eight of 14 brands posted double-digit organic sales growth: Martell (+32%), Royal Salute (+31%), Perrier-Jouët (+21%), Jameson (+18%), Ballantine’s (+13%), The Glenlivet (+12%), Chivas Regal (+11%) and Havana Club (+10%).

Pernod Ricards sales in Europe (excluding France) showed a marked improvement in the first half, growing 2% organically against a 5% decline in 2009/10. This came from strong growth in Central and Eastern Europe and moderate growth in Western Europe.

According to Pierre Pringuet, chief executive of Pernod Ricard: “This strong performance enables us to revise upwards our guidance for organic growth in profit from recurring operations to a level close to 7% over the full 2010/11 financial year. We will pursue our policy of sustained investments in our strategic brands and markets.”

Premier Foods has agreed to sell its East Anglian canned grocery operations to Princes for £182m. The sale is in line with Premier’s strategy of reducing debt and follows the proposed disposal of its meat-free business.

The canned operations are part of the Premier’s grocery division and have two manufacturing sites in the UK at Long Sutton, in Lincolnshire, and Wisbech, in Cambridgeshire. The business being sold employs approximately 1,600 people and manufactures a wide range of canned foods including baked beans, pasta, vegetables, soup, meat and fruit.

Included in the sale are the Crosse & Blackwell, Farrows, Fray Bentos and Smedley’s brands and certain other minor brands which are used on canned products. Premier has agreed a long-term licence with Princes to enable it to use the Branston brand on baked beans and pasta in cans and the Batchelors brand on vegetables, wet soups and pasta in cans, and a short-term licence to use Hartley’s on canned fruit. The sale excludes Premier’s Ambrosia branded canned desserts operations in Lifton, Devon, which are being retained.

Robert Schofield, chief executive of Premier Foods.

For the year ended 31st December 2010, the disposed business is expected to have revenues of £334.2m, EBITDA of £31.7m and a trading profit of £27.8m. As at 31st December 2010, the gross and net assets being sold were £167.1m. The purchase price represents a multiple of 5.75 times EBITDA.

The sale will reduce Premier’s average debt/EBITDA ratios by around 0.2x, making a further contribution toward reaching the target leverage ratio of below 3.25x.

“We are pleased to have reached an agreement to sell our canned grocery operations. As a predominantly non-branded business, it has not been an area of focus for us. Selling the business simplifies our operations and allows us to concentrate our efforts on our current portfolio of great British brands,” says Robert Schofield, chief executive of Premier Foods.

Combined with the proposed disposal of its meat-free business, Premier will have delivered total gross proceeds of £387m, significantly accelerating the delivery of its financial strategy and easing its debt burden.

“This proposed acquisition is an excellent strategic fit for our group and will enable us to further grow our business in the UK and continental Europe by offering our customers a broader range of ambient food products and brands,” remarks Ken Critchley, managing director of Princes. The transaction is expected to complete in late March 2011.

Heineken UK has been appointed as official lager supplier and sponsor of the London 2012 Olympic Games As part of the deal, the company’s flagship premium beer, Heineken will be the branded lager served at the Games and Heineken UK will have exclusive pouring rights for its portfolio of beer and cider brands at all London 2012 venues where alcohol is served

As an official supplier of the London 2012 Olympic Games and Paralympic Games, Heineken will be able to utilise exclusive hospitality and marketing opportunities associated with the event. It will also enjoy sponsorship and venue supply rights associated with the British Olympic Association, Team GB, the British Paralympic Association and the Paralympics GB team.

“There are no bigger, global or more spectacular events than the Olympic Games and Paralympic Games. We selected this opportunity as it fully reflects Heineken’s global brand position,” explains Alexis Nasard, chief commercial officer of Heineken. “Based on the experiences gained from being a long-term sponsor of premier sporting events such as the UEFA Champions League and the Rugby World Cup we will utilise London 2012 to celebrate with the world in a way that only Heineken can do.”

2011 can be a profitable year for consumer packaged goods brands but they must learn from 2010’s successes and failures. Research by Datamonitor identifies these successes and failures and the key factors behind why 2010 was a bumper year for some brands and the end of the road for others.

Mark Whalley, consumer analyst at the independent market analyst, says: “2011 will be a difficult year for brand innovators, so they can’t afford to make errors and will need to identify exactly what it was which made some brands a success last year. This said, it is equally important to highlight why some products failed or weren’t as successful as expected.”

Key successes are:

* Crabbie’s Alcoholic Ginger Beer – this product has become the number one selling ale in the UK (overtaking established brands such as Old Speckled Hen) – a phenomenal achievement considering it was only launched in 2009. The key to Crabbie’s success has been its versatility: appealing to both young and old consumers, and both males and females. Additionally, being touted as a beer that goes well with food means an increasing number of consumers are drinking it at mealtimes.

* Cadbury’s Biscuits – rather than creating new flavours, Cadbury’s chose to leverage the existing popularity of some of its biggest-selling chocolate bars such as Crunchie and Turkish Delight. This appeals to existing brand fans while also offering something novel and different for consumers who prefer biscuits to confectionery.

* Genius Bread – this offers something new for an important consumer niche. The brand is currently top of the ‘free-from’ bakery segment in the UK because it provides celiacs (ie gluten-intolerant consumers) with the ‘fresh’ option that those without special dietary requirements take for granted. With a growing number of people being diagnosed as having food intolerances, gluten-free is a burgeoning market. Additionally, Genius has benefited from the prevailing trend of non-celiacs purchasing gluten-free products because they believe them to be a healthier alternative to those containing gluten.

Key failures include:

* Galaxy Probiotic – the product attempted to leverage the ‘cross over trend’ which had led to success for brands such as Innocent (which capitalised on the success of its original smoothie by launching it in a convenient carton). However, Galaxy’s Probiotic drink was withdrawn in September. The main reason for the failure was consumers perceived it as being neither completely healthy or truly indulgent and therefore regarded it as somewhat of a ‘compromised indulgence’.

* Pepsi Raw – the drink failed to get the formulation right and did not engage with consumers, resulting in it being withdrawn in September. The trend for natural ingredients has developed over the past few years but Pepsi failed to capitalise. In particular, keeping the Pepsi brand name confused consumers as they were not sure if the beverage was supposed to be healthy or not, given current perceptions of the healthiness of carbonated cola products.

* Grolsch – the beer has sought to retain a premium positioning and price amidst a number of supposedly premium competitors compromising this image in an attempt to battle with regular lagers. Thus far, consumers have failed to respond by trusting in the brand’s high-end credentials and instead have opted for cheaper alternatives. However, Grolsch remains confident that this strategy will pay dividends in the long-term.

While it is always beneficial to learn from what has occurred in the past, Mark Whalley warns: “It is not as simple as looking at a strategy which has worked for other brands and adopting it. Trends change over time and brands must retain their own identity and values. The biggest successes in 2011 will be the products which innovate effectively and genuinely engage with their consumers.”

Diageo, the world’s leading premium drinks company, has opened the doors of its new £40 million distillery in Speyside, Scotland. The Roseisle distillery is the first malt distillery of scale to be opened in Scotland in over 30 years and has been built in response to the high demand for Scotch whisky brands such as Johnnie Walker and Buchanan’s around the world.

The award-winning distillery will be formally opened by Diageo chief executive Paul Walsh on October 11th. The new distillery combines centuries of accumulated distilling knowledge and expertise with cutting-edge design and technology, to produce quality spirit for Diageo’s brands.

The £40 million investment in Roseisle is part of a capital investment programme in Scotland which has totalled £600 million over the past six fiscal years and has focused on building high quality capacity to meet growing international demand for Diageo’s iconic brands.

Coca-Cola has retained its leadership of Interbrand’s 11th annual ranking of the ‘Best Global Brands’ beating off competition from the likes of IBM, Microsoft and Google. This is the eleventh consecutive year that Coca-Cola has earned the distinction of being the world’s most valuable brand. Coca-Cola was valued by Interbrand at $70.45b, up 2% on the previous year.

A total of 16 food and drink brands featured in the top 100. Ranked 23rd overall with a brand value of $14.6b, a rise of 3%, Pepsi was the second ranked food and beverage product. Nescafe, with brand value down 4% to $12.8b, was the next highest, followed closely by Budweiser, up 4% to $12.3b.

Other food and beverage brands to make Interbrand’s top 100 league table in descending order were: Kellogg’s (+6% to $11.0b), Heinz (+4% to $7.5b), Nestle (+4% to $6.5b), Danone (+7% to $6.4b), Sprite (no change at $5.8b), Jack Daniels (flat at $4.0b), Moet & Chandon (up 7% to $4.0b), Corona (static at $3.8b), Smirnoff (down 2% to $3.6b), Johnnie Walker (no change at $3.6b), Heineken (flat at $3.5b) and Campbell’s (up 5% to 3.2b), which was ranked 99th overall.

Only Nescafe and Smirnoff actually declined in brand value.

Interbrand, the leading brand consultancy, publishes the ranking of the top 100 brands based on a unique methodology analysing the many ways a brand touches and benefits an organisation, from attracting top talent to delivering on customer expectation. Three key aspects contribute to a brand’s value – the financial performance of the branded products or services, the role of brand in the purchase decision process and the strength of the brand to continue to secure earnings for the company.

Unilever is acquiring EVGA’s Greek ice cream brands (including Scandal, Variete and Karabola) and distribution network for an undisclosed amount. EVGA, which helped pioneer the Greek ice cream industry, will retain its existing production and warehousing facilities and will manufacture both the current EVGA and some of Unilever ice cream branded products for the Greek market and for export. EVGA’s ice cream turnover in 2009 was Eur32m.

As part of the agreement, approximately 65 employees will transfer to Unilever. The agreement is subject to regulatory approval by the Greek competition authorities.

The deal will strengthen Unilever’s Greek ice cream portfolio and will increase availability of its products to consumers through the expansion of the distribution network and enhanced innovation.

Recent Unilever investments in Greece include the 100% acquisition of ELAIS in 2006, the expansion of its manufacturing capabilities in Rentis and the construction of a warehousing and distribution center in Schimatari.

Pernod Ricard, the world’s second largest spirits and wine group, has reported a 1% increase in net profit to Eur951m on net sales down 2% to Eur7.08b for the 2009/10 financial year ended June 30th 2010. Organic sales growth was 2%, including a significant 9% upturn in the second half, but the results reflect negative foreign exchange factors and the disposal of the Wild Turkey, Tia Maria and Bisquit brands and the impact of the termination of Stolichnaya distribution.

The French drinks group noted a contrasting global economic environment, which improved during the second half, featuring strong growth in most emerging economies, and a very gradual recovery of consumer spending in the US against a continuing uncertain backdrop. The picture was mixed in Europe with some signs of a recovery but also the adverse impact of austerity measures.

Pernod Ricard’s top 14 brands, which account for 55% of group sales, grew by 2% in volume and 4% in value. Martell (+12%) and Jameson (+12%) achieved double digit growth and seven others continued to grow, in particular The Glenlivet (+7%), Absolut (+6%), Chivas (+5%) and Havana Club (+5%). Conversely, Mumm (-7%) reported a decline, due to the difficulties in the French champagne market. Within the priority premium wine portfolio, Jacob’s Creek sales declined by 5%, reflecting Pernod Ricard’s premiumisation strategy for the brand.

Group profit from recurring operations rose by 4% to Eur1.79b but the operating margin slipped to 25.4% of sales, compared to 25.6% in the previous financial year. Group debt was reduced by Eur1.09b, excluding translation adjustment, during the year.

Pierre Pringuet, chief executive of Pernod Ricard.

Europe excluding France was the region most affected by the crisis, posting a 3% decline in profit from recurring operations. The situation remained difficult in Western Europe (Spain and the UK) even though a number of countries achieved growth, such as Germany and Sweden, and Duty Free markets noted a recovery. In Eastern Europe, Russia and Ukraine reported a strong upturn in the second half of the year but the situation was more difficult for local vodka brands in Poland. Pernod Ricard saw satisfactory 7% growth in its domestic market of France.

Despite the economic crisis, Pernod Ricard managed to keep growing in new economies, and continued with its premiumisation strategy. “Our performance over the 2009/10 financial year was a strong and sound one. Our priorities for the 2010/11 financial year remain the development of our premium strategic brands, a continuing strong marketing investment level, and the reduction in group debt,” says Pierre Pringuet, chief executive of Pernod Ricard.

Global brewer Heineken has produced a strong first half performance but remains cautious on the development of beer consumption in Europe and the US due to continued weak consumer spending and planned austerity measures across many countries. Heineken reported a 42% jump in net profit to Eur695 million, partly due to positive exceptional items, on revenue up by 5.2% to Eur7.52b but down organically by 2% for the first half of 2010 as group beer volume declined by 2.3% organically, impacted by the weak economic environment and the effect of excise duty increases, partly offset by strong growth in Africa, Asia and Latin America.

Heineken’s organic net profit (beia) increased 17% to Eur621m, driven by higher EBIT (beia) and lower interest costs. The Dutch brewer’s Total Cost Management programme delivered savings of Eur104m during the first half.

Jean-Francois van Boxmeer, chairman and chief executive of Heineken.

“Heineken achieved strong organic net profit growth in the first half year 2010. Trading conditions remained challenging in Europe and the USA, but we realised strong group beer volume growth in Africa and Asia. The effectiveness of our premium strategy was reinforced by the continued strong performance of the Heineken brand which once again outperformed our broader portfolio and the overall beer market,” comments Jean-François van Boxmeer, chairman and chief executive of Heineken.

In the second half of 2010, Heineken will continue its focus on brand building and increase investments in key brands, which will be largely offset by lower input costs. The TCM programme will deliver further savings in the second half of the year. In addition, Heineken will focus on developing the performance of companies acquired during the last three years, including South American brewer FEMSA Cerveza, and the unlocking of synergies.

“We are well placed for the future. Our expanded footprint in Latin America complements our strong positions in Africa and Asia where we continue to see excellent opportunities for future volume growth. Our focus on cash flow has strengthened our balance sheet and our key brands are benefiting from our increased marketing investments,” he adds.

The recently completed acquisition of FEMSA Cerveza, which is expected to yield annual cost synergies of Eur150m by 2013, consolidates Heineken’s position as the world’s second largest brewer by revenues and third largest by volume, and expands its exposure to developing beer markets. In addition, it creates a platform for future value growth in three of the four largest beer profit pools in the world.

Heineken expects the organic increase in net profit (beia) for the full year 2010 to be at least in low double digits.

2009 was not a good year for multinational spirits companies. Euromonitor International’s ‘2010 Millionaires’ ranking saw total volumes of international brands on the list fall by 5% while domestic/local brands saw growth of 6%, selling over 400 million 9-litre cases. The Millionaires supplement is a ranking of spirits with sales of over one million 9-litre cases across all retail channels. Now in its third year, the 2010 list includes a record breaking 162 brands.

The 2010 listing continues to gain new breadth and depth with 17 new brand entries, including brands from Colombia, Turkey and most notably the soju producers of South Korea. It also shows the strength and power of spirits consumption in Asia-Pacific as domestic/local brands on the list, which are almost entirely sold in the region, accounted for over 40% of total brand volumes.

Suffering International Brands

As predicted in last year’s supplement, international brands performed poorly in 2009. Due to the effects of the recession, consumers’ trading down and the decline of on-trade consumption, total volume sales of international brands on the list has fallen. Pernod Ricard remains the company with the most brands on the Millionaires list despite losing two from the 2009 list – Presidente brandy and, more surprisingly, Luksusowa vodka.

However, two of its stand-out brands were Indian whiskies which continued to benefit from a rapidly growing category and a booming Indian economy. Second-placed United Spirits increased the number of brands on the list up two to 19 with its Bagpiper Indian whisky becoming the leading whisky brand in the world.

Diageo sits in an increasingly distant third place with 14 brands (down one) with only two of its rum brands benefiting from strong growth in its core markets (North America for Captain Morgan, Venezuela for Cacique) along with Bells in the UK. Bacardi continued to suffer from its over-reliance on a limited number of major markets, specifically in the US and Spain, with only two of its brands, Eristoff vodka and William Lawson blended scotch, recording growth.

A More Positive Future

While the picture painted in volume terms in 2009 was relatively bleak for international brands, 2010 is likely to be far more positive, due to the emerging markets of Latin America, Asia-Pacific and Eastern Europe. “Signs of economic recovery in the first half of 2010 will undoubtedly help international brands bounce back,” says Euromonitor International senior alcoholic drinks analyst, Jeremy Cunnington. “However, many core markets for these brands, especially in Western Europe, could still hold back growth as governments and consumers continue to restrict spending to reduce their high levels of debt.”

Premier Foods, the UK’s largest domestic food processor, has increased operating profit by £40m to £67m for the six months to 30th June 2010 following the completion of exceptional integration expenditure in 2009. However, trading profit declined 6% to £110m reflecting £11m of additional pension, marketing and restructuring costs.

Although the group’s brands are trading well in tough conditions, its own label sales declined by 12.7%. Total sales were down 4.5% on a pro forma basis to £1.21b for the period with volumes falling 4% and price and mix contributing 0.5%. Branded sales in the half year were up 0.5% on a pro forma basis at £790m and now represent 65.2% of total sales, up from 62.0% on the first half of 2009.

Gross profit margin improved by 60bp reflecting product mix, procurement gains and manufacturing efficiencies. Operating expenses fell 1.6% despite higher pension, marketing and restructuring costs.

Robert Schofield, chief executive of Premier Foods.

Premier Foods has set a target to generate a net £100m of cash per annum to pay down debt and is on track. Net debt was £110m lower at £1.365b than in June 2009 and average debt on a 12 month rolling basis, the group’s preferred indicator, is £44m less than at December 2009.

“These results reflect the actions we are taking in line with our trading strategy. Our principal brands are growing in both volume and market share and our gross margins have risen as we have improved product mix and delivered procurement gains and manufacturing efficiencies. We are controlling costs tightly and have made good progress in strengthening our cash flow and reducing debt,” comments Robert Schofield, chief executive of Premier Foods. “With the foundations of the strategy in place and delivery on track, we are looking forward to the rest of the year with enthusiasm.”

Global wines and spirits group Pernod Ricard has reorganised its premium wines and vodka businesses. A new brand company called Premium Wine Brands has been created which is responsible for the development and global strategy of the group’s strategic wine brands. The portfolio includes: Australian wines (Jacob’s Creek), New Zealand wines (Montana and Brancott), as well as Spanish and Argentinean wine brands with international potential (Campo Viejo and Graffigna). The new company’s objective is to accelerate the international development of these brands within the Pernod Ricard distribution network.

Jean-Christophe Coutures, who is currently chairman and chide executive of Pernod Ricard Pacific, becomes the chairman and chief executive of Premium Wine Brands. He will report to Thierry Billot, managing director, brands.

Pernod Ricard has also extended the responsibilities of The Absolut Company to include all the group’s international vodka brands, including Absolut, .Friis and Wyborowa. Its objective is to establish the strategy for the entire vodka segment. In addition, The Absolut Company retains the responsibility for the Malibu and Kahlua brands.

Stephane Longuet, currently vice president finance of The Absolut Company, is appointed chief operating officer of the Standard Vodka division of The Absolut Company and therefore will report to Philippe Guettat, chairman and chief executive of The Absolut Company.

Dairy Crest has reported that it has started the year well and trading in the first quarter has been in line with expectations, as the UK dairy group continues to make good progress with its strategy to grow added value sales and reduce costs and borrowings.

The strategy of investing in its five key brands (Cathedral City, Country Life, Clover, Frijj and St Hubert Omega 3) is delivering growth and sales of these brands have increased by 3% compared to the same period last year. This builds on the strong growth that these brands have achieved over the last three years.

Dairy Crest has also reported continued good progress with sales of liquid milk to its major retail customers. Cost reduction projects are going to plan and the recently announced investment in the liquid milk dairies is on track to improve efficiencies and provide additional capacity.

Mark Allen, chief executive of Dairy Crest.

Dairy Crest is also maintaining good progress in managing its cashflow and expects this to deliver a meaningful reduction in year-end debt. The cash proceeds of Eur9m, resulting from the recent reduction in Dairy Crest’s stake in Wexford Creamery to 30%, have been used to repay debt.

“Dairy Crest continues to benefit from being a broadly based business. At the start of the year we set out our objective to increase profits, generate cash and further reduce our borrowings and our performance in the first quarter is in line with our expectations,” says Mark Allen, chief executive of Dairy Crest. “We remain well placed to deliver over the rest of the year.”

The group expects to issue its half-year trading update on 30th September 2010 and its interim results for the six months ending 30th September 2010 on 11th November 2010.

A YouGov SixthSense report into the chilled and frozen foods market reveals that 27% of UK adults rarely visit the frozen food aisle. The report also shows that a considerable number of consumers have not embraced new and non-traditional frozen food products.

Consumers are unhappy with the variety of foods on display in the frozen food aisle. Almost half of consumers (47%) believe that the frozen food section is ‘uninspiring’, whilst over a third think that the choice of frozen food on offer is ‘limited’. ‘Despite 40% of consumers saying they often vary the frozen food products they buy, almost as many (37%) claim that they continually buy the same frozen food items.

The reluctance on behalf of many customers to change their frozen food buying habits may be related to packaging design. 65% of respondents believe that frozen food packaging should be changed so that ‘you can see more of the product’, while 62% think that ‘it is difficult to tell whether frozen food is good quality or not’.

Commenting on the findings James McCoy, research director of YouGov SixthSense, says: “With frozen food aisles located at the back or the middle of most supermarkets, customers are less likely to browse in search of new products and are less suggestible to impulse buys from the frozen food selection.”

Ready Meals

The ready meal market has suffered slightly from the growing trends towards cooking from scratch and healthy eating.

The report also reveals that the ready meals market has suffered slightly from the growing trends towards cooking from scratch and healthy eating. 49% of respondents agree that cooking from scratch is often just as quick as preparing ready meals. Despite this, ready meals still remain a convenient option for many. 35% of consumers say that they eat ready meals as a last minute stop gap, while the same number claim to eat ready meals when they are too tired to cook.

70% of consumers eat frozen potatoes of one variety or another at least once a week. Despite high-profile marketing campaigns by companies like McCain, which seek to open up the market to other frozen potato products, chips are still by far the most popular form of frozen potato, accounting for 70% of the market share.

Convenience is a key driver of frozen potato sales, with over two thirds of respondents describing them as such. Men are most likely to agree that frozen potatoes are convenient, whilst women over 40 are most likely to consider them to be a good standby.

Frozen Vegetables

83% of customers mainly buy fresh vegetables; frozen vegetables are then used to supplement these purchases, with 73% of consumers stocking frozen vegetables as a back up or buying them when a fresh version is not available. On this trend, James McCoy continues: “Companies have a long way to go to convince consumers that frozen vegetables are as healthy or appetising as their fresh counterparts. Consumers are clearly harbouring reservations to do with texture and nutritional value.”

Retailer Own-label and Brands

The report also gives a detailed brand analysis across the UK market. In the chilled foods industry, retailer own-label products account for 95% of sales, with Tesco, Marks and Spencer and Sainsbury the biggest own label brands. Manufacturers such as Weight Watchers and Annabel Karmel focus in on specialised areas of the chilled food market such as health foods, vegetarian options and children’s foods.

In the frozen potato market McCain and Aunt Bessie’s are on top – McCain’s success perhaps owing to high levels of promotion and brand visibility. Weight Watchers remains the largest frozen dessert brand, offering consumers a way to indulge without the need to feel guilty.