Demand - that's why Greggs goes to Iceland

NORTH East bakery giant Greggs is to sell frozen sausage rolls to the retail chain Iceland following a successful three-month trial.

Greggs

NORTH East bakery giant Greggs is to sell frozen sausage rolls to the retail chain Iceland following a successful three-month trial.

The popular branded cook-at-home product, which was originally available at 10 locations, will be rolled out at 700 shops across the UK.

The news came as the Newcastle- based company said that demand for cut-price sausage rolls, and a new range of doughnuts, helped it to buck the gloom on the high street.

The business which has more than 1,500 stores saw like-for-like sales increase 0.8% in the 13 weeks to October 1, up from 0.4% in the previous six months.

Greggs said it was excited about the launch of the new Superstar Doughnuts just five weeks ago.

Around 1.5m had been bought and eaten.

With flavours such as Jaffa Cake, strawberry milkshake and triple chocolate, the company said they had proved to be “extremely popular” with the hope that sales will rise to more than 2m.

Later this month a range of Halloween products will also be launched such as a “slime doughnut” with a bright lime-green filling.

But against the backdrop of a resilient performance in a difficult economic climate, chief executive Ken McMeikan said: “High-street footfall is down, but people are still coming into our shops”.

He said that promotions such as a sandwich and a drink from £1.89, four sausage rolls for £2.30 and two steak bakes for £2 were proving popular in the current situation.

“In a tough environment we have increased our investment in promotional activity, offering a range of outstanding meal deals that help our customers make their money go further. We continue to see a good growth in breakfast sales,” he said.

He admitted investment in promotions would have a “small impact” on the margins but added that it was the right thing to do for customers.

Greggs in the first 39 weeks of the financial year opened 66 shops but closed 13.

The company is also market-testing a new cafe-style store in Newcastle called “Greggs Moment” which offers gourmet square pies and deli-style sandwiches which are enjoyed by shoppers and workers alike.

It thinks it has the potential to compete with big national coffee shop chains by offering cheaper prices. McMeikan said he had already received feedback asking him to open the new concept in cities across the UK.

Greggs also announced that the new £4.5m confectionery bakery in Penrith in Cumbria is now fully operational along with the £16.5m bakery in Newcastle which has started production.

Sales of coffee are up 18% to 12m cups so far this year after it rolled out freshly ground beans to all its stores while the sale of bacon and sausage rolls are up over a third with 10 million sold and eaten so far this year.

McMeikan added: “The trading environment remains challenging with consumers’ disposable incomes under pressure. We will continue to respond to this by offering our customers outstanding value.”

There were some “encouraging signs” that recent hikes in inflation may be easing, with a good wheat harvest set to help the price of flour although this may be offset by rising sugar prices.

He still expects the price of goods to rise in 2012, but at a lower pace than in 2011.

 
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