SAUSAGE and bacon firm Cranswick is to expand its presence in the food-on-the-go market to cash in on the rising number of consumers who want hot ‘grab and go’ meals.
The Hull-based firm has identified a gap in the market for hot sandwiches, bacon rolls, sausage rolls, pasties and pies on the go at a time when its traditional supermarket client base is suffering.
Cranswick’s chief executive Adam Couch said: “We have seen an impact from the changing dynamics of UK food retailing.
“The big format retailers are struggling. All their growth is coming from convenience stores and online.
“A lot more food is being eaten on the move and there are real opportunities for us in hot sandwiches, cooked meat alternatives and improving the breakfast offering in coffee shops.”
Cranswick is looking to launch a number of new pastry products this spring, including sausage rolls, pasties and pies for the forecourt sector. Mr Couch said the group is also looking to increase its hot ‘grab and go’ offering in one of its key customers, Marks & Spencer.
He was speaking yesterday as Cranswick reported better than expected profits for the year to March 31 thanks to strong demand for UK meat. Adjusted pre-tax profit jumped six per cent to £52.2m on the back of a 14 per cent rise in revenue to £995m.
Mr Couch said that the recent sunny weather boosted sales of barbecue foods.
“We were up 20 per cent this weekend, with good sales in cooked meats, sausages and we saw a 140 per cent increase in burgers,” he said.
Cranswick, which also breeds, rears and slaughters pigs, was hit by higher costs in the first half to the end of the third quarter.
Pig prices hit a new record high of £1.70 per kilo last July. Prices have since fallen to £1.65 per kilo although Cranswick is prepared for prices to go up again and said it will manage any future rises.
“Despite these price increases the UK consumer appreciates the attractiveness, versatility and low relative pricing of pork compared to other meat proteins, particularly beef and lamb,” said Mr Couch.
“Demand for premium products continued unabated, with premium sausage and bacon sales growing well ahead of their categories.”
Margins were also hit by the start-up costs of a new gourmet pastry facility at Malton in North Yorkshire. The firm has invested £20m in its production facilities in the past year, including the Malton facility.
Analyst Nicola Mallard, at Investec, said: “This is another strong year from Cranswick, with 12 per cent revenue growth achieved against a deteriorating UK retail climate.
“Despite rising pig prices and start-up costs for pastry, profits still improved and net debt was reduced. Revenue progress may be less marked in 2015 without major contract wins, but we should see margins recover, supporting our current forecasts. We make no changes to these, our target price or recommendation. Buy.”
Fresh pork sales grew by 15 per cent over the year following contract wins
Sales were also boosted by strong export growth which increased by 12 per cent with 1,000 tonnes of pork being shipped abroad.
A third of Cranswick’s products are now exported and China accounts for half of this.
Mr Couch said that there is increasing global demand for UK products and interest is growing in charcuterie, bacon and pastry products.
After China, the next biggest export markets are the US and Europe. New markets include Liberia, Korea, Thailand and more recently Cranswick started shipping to Japan.
Cranswick raised its final dividend by 6.8 per cent to 22p per share.