Only a week after fellow Yorkshire supplier Northern Foods announced it was mothballing a factory in Grantham with the loss of up to 730 jobs after failing to agree a new contract with M&S, Hull-based Cranswick said it was about to start supplying M&S for the first time later this year.

The deal to supply charcuterie to M&S is one of a number of new business agreements with major retailers. Cranswick has also been awarded new contracts with Bradford-based Morrisons, Tesco, Co-Op and Lidl.

Cranswick's chief executive for the food division, Bernard Hoggarth, said the group's decision to focus on the premium end of the market had paid off as more people opt to eat at home as they rein back on spending.

"People are eating out less and as they tighten the purse strings we benefit," said Mr Hoggarth. "Also at the other end of the market we are seeing good growth in value products as budgets are reduced. There's good growth at the top and the bottom, it's the middle market that's being squeezed."

The group has seen good growth in sausages with a higher meat content as well as healthy eating, organic and free range products. It recently launched its new brand "Simply Sausages" in the retail market and is now selling a range of "Weight Watchers" sausages.

Cranswick's focus on premium products has paid off with an eight per cent increase in pre-tax profits to £35.3m in the year to March 31, in line with expectations.

The food business reported a 17 per cent increase, with nearly 80 per cent of its sales coming from contracts with multiple retail customers.

Mr Hoggarth said the group had seen raw material prices shoot up by over 20 per cent over the past year due to sharp increases in the price of pork, bread, cheese and butter.

He said that a large amount of the original increases had been passed onto customers and talks were continuing.

Analyst Nicola Mallard, at house broker Investec, said: "The group is now succeeding in recovering higher raw material costs and is also showing strong top line growth. The majority of costs have now been recovered and the group remains confident of securing the balance."

The group's gourmet sausage range continues to enjoy strong growth with sausage sales rising by over 20 per cent over the past year.

Mr Hoggarth said new product ranges were selling well, particularly a new range of pork and chilli sausages for Sainsbury's.

The chilli lines were proving popular with male shoppers who liked to be adventurous at the summer barbecue – Cranswick hinted that the chilli could help to disguise a burnt taste.

Turnover rose 17 per cent to £599m in the year to March 31 and the group said a 10 per cent increase in the final dividend to 13.4p per share reflected its confidence in the future.

The group is investing £10m on a new pork facility in Preston, east of Hull.

"This will make the site the most technically advanced pork processing plant in the UK," said Mr Hoggarth. "It also ensures the local pig farming community has a modern, efficient facility situated in the centre of the largest pig producing area in the country. This is a vote of confidence in the UK pig industry."

Shares closed 7.5p up at 735p.