Upmarket sausages to bacon firm Cranswick is predicting strong Christmas trading and has already started production on festive favourites such as chipolatas and pigs in blankets.
Cranswick’s chief executive Adam Couch said: “We are anticipating a strong Christmas although we expect the retail environment to remain tough.
“Over the Christmas period we’ll be focusing on outdoor reared pork. I still think the value of pork makes it extremely popular.”
The Hull-based firm said in a trading update yesterday that trading is competitive although it has seen growth across most of its product ranges, which has helped to offset lower sales of fresh pork.
British pork sales have been hit by cheaper pork imports from Europe, where rearing standards are not as high as in the UK.
“Pork has struggled in the past few months,” said Mr Couch.
“We’ve been paying a huge premium for UK pigs compared with the rest of Europe, but we think we’ll see a decline in prices.
“Pork is still a very good value proposition compared with other meats.”
Despite the high UK pig prices, exports to countries outside Europe have increased by 25 per cent.
“We’ve seen strong growth in China and the Far East and we’ve seen strong business wins in Australia,” said Mr Couch.
Traditionally exports to China have focused on cuts that British people wouldn’t eat such as offal, trotters and ears, but as the Chinese become wealthier there is a growing demand for more premium cuts.
Australian demand has been driven for premium cuts from good provenance.
“Australia is more akin to the UK market,” said Mr Couch.
“They are looking for high welfare and outdoor reared is very strong there.
“While UK pigs are very expensive we can find niche markets,” said Mr Couch.
He was speaking yesterday as the group said trading in the six months to September 30 was in line with the board’s expectations and revenue will be flat on last year.
Operating margins in the first half are expected to be similar to those achieved last year.
Analyst Nicola Mallard at Investec said: “A good first half performance from Cranswick is expected.
“There will be little reported top line progress in the first half, but recent new business wins should drive 2015 revenue growth. The balance sheet is strong and by the year-end we expect the group to have little if any net debt, despite continued investment in cooked meats and fresh pork facilities.
“The backdrop in the UK food sector remains challenging, but Cranswick expects a good Christmas/third quarter period.
“We continue to feel Cranswick deserves its premium rating.”
Cranswick said that pig prices eased during the second quarter of the financial year and are now below the record highs seen at this time last year.
They have fallen from £1.76 per kilo to £1.56 per kilo.
The group is investing £30m this year to increase capacity and improve efficiency.
Cranswick also reported that work to extend the Delico cooked meats facility in Milton Keynes was completed on time and to budget.
A major upgrade to the chilling system at its Norfolk primary processing facility is also nearing completion.
Cranswick said that it remained confident in the long -term success and development of the business.