LONDON (Reuters) - Premier Foods (PFD.L), the maker of well-known British brands such as Mr Kipling cakes and Bisto gravy, is looking to raise its prices, becoming the latest food company to react to higher costs and the weak British pound.
Premier is in talks with large retailers - which include Tesco (TSCO.L), Sainsbury (SBRY.L) and Asda (WMT.N) - about price increases, a spokeswoman said on Tuesday, confirming an earlier report in the local City A.M. newspaper.
The size of the increases varies between products but would average a mid-single-digit percentage rate, she said.
Food prices in Britain have been under pressure for years due to intense competition. But economists and analysts forecast prices to rise, as the fall in the British currency has made imports more expensive.
Sterling GBP= is down more than 18 percent on the dollar since Britons voted in June to leave the European Union. The drop in the currency has raised the cost of imported goods and commodities priced in dollars.
Premier Foods, which also makes Cadbury cakes and Angel Delight desserts, said it generally looks at first to manage cost increases with operational efficiencies and adjustments to promotions, but takes price increases when necessary.
“The situation on pricing differs between our different categories and brands and is currently under discussion with our individual retail customers,” the spokeswoman said in a statement. “On average we are considering rises around the mid single digit mark.”
Premier’s increases would follow similar moves by Unilever (ULVR.L) last year that led Tesco to stop stocking its products such as Marmite.
Premier Foods is under pressure to deliver value for its shareholders since it rejected a takeover approach from U.S. spice maker McCormick Foods (MKC.N) last year.
Some of its top shareholders - hedge fund Paulson & Co and Standard Life Investments SL.L - slammed Premier’s board for its outright rejection of McCormick’s advances.
Reporting by Martinne Geller; Editing by Susan Fenton and Louise Heavens