Premium Bakery is a growing sector with volume in commodity bakery in decline alongside growth in value as consumers migrate to higher value premium offerings both in home and increasingly out-of-home.
Premium Bakery profile 2016/2017
Divisional sales grew 15% YOY (partly a result of the Chantilly acquisition) though Haydens like for like sales were over 7% higher. Most of the growth came from established customers such as Waitrose and Marks and Spencer. Performance at Chantilly was frustrated by capacity constraints with a delay in the proposed move to a new site nearby. At Haydens a strengthened management team was in place for the final quarter.
EBITDA increased by £0.4 million despite a delay in price recovery on raw materials (butter, Haydens’ biggest raw material by value doubled in price between July and October 2016) so the strong Christmas trading period saw lower margins.
The factory investment plan at Devizes will transform the operation with significant added Yum Yum capacity and freezing capability which will reduce costs and increase flexibility. A number of new products are planned with the first stage of additional capacity coming on stream in September and the second from January 2018. There is increasing interest in Haydens’ product capabilities from a number of new retailers. The Haydens Distribution operation is expected to continue to perform well with Waitrose and growth in third party sales. Following the delay in moving the Chantilly operation, a review of options will be undertaken during the autumn of 2017.
Premium Bakery includes the following businesses:
Haydens bakes premium tarts, pies and crumbles, Danish, sweet buns, yum yums and doughnuts and sells to major retail customers and through foodservice channels. It operates both an ambient and frozen supply chain. It also operates a same day consolidation service for all Waitrose stores for both Haydens and third party products.