Premier Foods has reported a drop in branded value sales in the third quarter.
The company's interim management statement noted a 4.1 per cent fall in branded sales in the three months to September 30th. The maker of Mr Kipling cakes and Ambrosia desserts conceded that the rise of discount stores such as Aldi and Lidl has hampered its performances with supermarkets performing below par during the period.
Traditional names such as Tesco, Asda, Sainsbury's and Morrisons have been under increased pressure from the discounters as Aldi and Lidl gained market shares. Tesco has particularly underperformed and admitted that it overstated its profits by £263 million. This led to tumbling shares and chairman Sir Richard Broadbent announcing his departure from the company.
Premier Foods has been affected by this shift in the retail market with the firm stating that sales of its 'power brands' had fallen by 5.1 per cent. It comes at a time when Premier is under increasing pressure to grow this division. However the company did confirm that there were signs of improvement towards the end of the quarter.
The company said in a statement: "As a consequence [to the rise of discounters], the larger supermarkets have lost share to these other formats over recent months, which has adversely affected the company's volume and sales performance.
"Additionally, price inflation across the wider grocery market has fallen for the 11th successive month and is expected to soften further.
Overall, Premier saw its sales of power brand fall from £125.9 million for the third quarter of 2013 to £119.5 million 12 months later. Total branded sales dropped to £159.9 million from the £166.7 million recorded a year earlier.
Power brand sales also suffered a five per cent decrease from £379.1 million to £360.3 million over the nine months of the year to September 2014.