Premier Foods and the 2 Sisters Food Group have reached a licensing agreement over the sales, marketing, distribution and production of the Hovis Breakfast Bakes range of biscuits.
Under the terms of the deal, 2 Sisters will be required to pay a quarterly royalty fee to Premier over the course of the next five years, starting from August 1st.
The proposal will also allow healthier biscuit options to be developed under the Hovis brand, while maintaining its three current variants; malted crunch, oats and honey, and milk and oats.
The news comes two years after 2 Sisters reached a deal to acquire Northern Foods, a purchase that led to it gaining use of the Fox's Biscuits' factory in Uttoxeter, which is where the Hovis biscuits will now be produced.
The agreement is seen as being a major development in the breakfast biscuits market, which is thought to be worth around £78 million, growing at an annual rate of eight per cent each year.
Commenting on the new licensing agreement, Colin Smith, managing director at Fox’s Biscuits, said: "I’m delighted with this agreement as it will enable both companies to be part of a relatively new and growing category. We see enormous potential to grow one of the nation’s favourite brands, which has such a strong association with natural ingredients and goodness, in the biscuits sector."
Simon Devereux, business unit director, Premier Foods’ Bread Division added: "This licensing agreement is an excellent way for us to extend the Hovis brand into adjacent categories. By working with 2 Sisters Food Group and Fox’s Biscuits, we have a partner with the biscuits expertise necessary to take full advantage of the market opportunities.”
Reports have suggested that it might not be the only deal for 2 Sisters, with an article published by Food Manufacture claiming that the firm is also interested in a deal for the meat processing company Bernard Matthews, a venture that would be more in line with its traditional business interests.