“Tough” grocery market hits ABF’s bakery business

Associated British Foods (ABF) has reported flat sales for its grocery business in the last three months.

Rising costs and promotional activity also squeezed ABF’s grocery margins in the 14 weeks to 23 June. The division includes the company’s Kingsmill and Allied Bakeries businesses.

“Grocery remains tough,” said a trading statement.

“The perennial out-performers – Twinings, Ovaltine, Jordans and Ryvita –  continued to show strong trading in the quarter, but UK bread and George Weston Foods Australia continue to struggle in a tough consumer environment.

“The market remained intensively competitive for Allied Bakeries, with promotional activity reducing margins.”

ABF’s grocery sales were up 3% in the year to date but the company’s ingredients division posted a 2% decline in revenue.

A Jubilee weekend-inspired surge in the popularity of home baking was a highlight for ABF as sales of the firm’s Silver Spoon sugar brand jumped 54%.

Overall, ABF reported a 13% sales increase during the quarter and an 11% rise in the year to date.