Reducing the weight of some ready meals and reformulating products are among the strategies implemented by Irish convenience food group Greencore to help it and its corporate customers cope with rising inflation.
Chief Executive Gary Kennedy said the group – the UK’s biggest supplier of sandwiches – also believes inflationary pressures will persist into 2023, albeit at a slower pace than in recent months.
That leaves a challenge for new CEO Dalton Philips, who will take over the reins at Greencore at the end of September.
Mr Kennedy said he had “no doubt” that Mr Philips, who currently runs airport operator DAA, will bring “fresh thinking and direction to the journey”.
“Once we’ve overcome some of our key challenges, I think it’s time to lift our heads a little over the parapet and start thinking strategically about where Greencore needs to go as a company,” he said.
In releasing a strong set of first-half results yesterday, Mr. Kennedy noted that pre-Covid, the company typically generated 40 percent of its profits in the first half of the fiscal year and 60 percent in the second half. This fiscal year, it will have made 20 percent in the first half, with the challenge of making the rest in the current half.
The company said it has seen a strong recovery in demand that has continued into the second half of the fiscal year, although many workers have adopted hybrid office-home working models.
Pro forma sales rose 35 per cent to £770.8m (€899m) in the six months to March 25, while adjusted operating profit rose to £17.2m from £200k a year earlier ( €20 million) rose.
Greencore has recovered about 95 percent of the additional costs incurred by last year’s inflationary pressures, while recovering two-thirds of the additional inflation costs recorded since March this year, it noted.
“There is no doubt that the inflationary pressures that we have been struggling with are present at our customers,” said Mr. Kennedy.
He said that Greencore has redesigned many products and introduced new ones.
“We also did category and product management with our clients where we took SKUs [Stock Keeping Unit, or a specific product] out that are less relevant to their future business,” said the Chairman.
“You see different things in terms of the shelf, both in terms of pricing and in terms of food replacements, for example. We are seeing some size reduction in terms of meals. Something that was between 425g and 450g might now be in a 400g offering,” he pointed out.
Supply chain issues have also been a constant challenge for Greencore.
“Some of our suppliers have failed. We had to start looking for new supply chains. If I had spoken to you six months ago, we would have had a bread supplier. Today we have three.”
He said the war in Ukraine will also have a domino effect as bread and pasta prices will rise.
Mr Kennedy said disruptions in chicken supplies have also been a problem.
“It was just one thing at a time,” he added.
https://www.independent.ie/business/irish/greencore-slims-down-the-weight-of-some-of-its-meals-to-beat-input-cost-rises-41685666.html Greencore is reducing the weight of some of its meals to counter rising input costs