Patties Foods’ continued focus on the Out of Home channel and its popular Four’N Twenty brand is paying off for the food manufacturer, with it now looking to innovate “outside the pie warmer”.
This week Patties reported an 11.8 per cent drop in first half net profit as the impact of last year’s frozen berry recall still weighs on its bottom line. Patties’ net profit after tax for the six months to December 31, 2015 was $7.3 million, with total company revenue down 8.6 per cent to $126.2 million, mainly due to significant losses from its frozen fruit division.
Patties announced in December it would exit the frozen fruit category following the highly publicised recall of its Nanna’s Frozen Berry products which were linked to a Hepatitis A outbreak in February 2015, electing to focus on its savoury business instead.
Excluding frozen fruit, Patties’ core bakery business performed solidly growing 2.8 per cent. Sales from core brands continued to rise, Four’N Twenty sales were up 3.1 per cent; Herbert Adams increased by 11.2 per cent; and Nanna’s Sweet Pastry grew 15.2 per cent.
Out of Home market
In Home channel sales declined 16 per cent, led by reduced frozen fruit revenues and the exit of two private label contracts, however, Out of Home sales grew 6.9 per cent, with Patties’ core savoury business up 9.6 per cent.
Steven Chaur, MD and CEO of Patties Foods, told C&I Week the company has focused heavily in growing its share of the Out of Home market, particularly petrol and convenience, over the last 12 months. Digital and outdoor activations and promotions such as its ‘Slam Vans’ have been a key component of driving the Out of Home market, especially with Four’N Twenty, according to Chaur.
“A big issue for our company in the past has been that we tend to be very winter focused. Part of our strategy of growing impulse sales has been to drive the summer sales activation with the our vans, targeting the beach, skate parks and music festivals, locations we can link back to our P&C customers. It has really been about getting out and about, using the utes and going to popular locations and P&C outlets to engage with customers and let them sample product.
“We also ran a major consumer promotion with the ‘Punch Above Your Weight’ campaign and that was really targeted at male consumers trying to draw on those classic Aussie colloquialism of mates ‘punching above their weigh’. There was a significant digital promotion that went with that, and it generated a lot of sales in P&C as well.”
Patties Foods holds 28.3 per cent of the hot savoury market within P&C, with Four’N Twenty accounting for 25.6 per cent. Patties Foods’ total combined market share of P&C, including Patties brands and customer brands produced by Patties, currently sits at 58.6 per cent.
Four’N Twenty, which recorded a sales increase of 10.6 per cent in the Out of Home channel, has added five new Slow Cooked Real Chunky Pie products over the last six months. Last year Patties also launched its bite-sized Slams party pies range – which aims to target the after school snacking market and the young female demographic.
New Four’N Twenty promotions are set to kick off ahead of the AFL and NRL seasons including outdoor advertising, TV and joint instore promotional activity with its P&C partners.
“There’s a number of seasonal products launching over the next few months into the P&C channel including our Australia shaped pie, which we will roll out over major Australian public holiday events. We also have some interesting flavours coming out in the next six months,” Chaur said.
“Innovation is a really big platform for Patties at this point in time. We’re looking at everything from prepared meals in not only grocery but also the Out of Home channel and we’re talking to a number of our P&C customers about how Patties, and the Four’N Twenty brand, can play a bigger role both in the pie warmer and outside the pie warmer. We’re looking at opportunities such as chilled, microwavable products and food to go,” Chaur said.