THE UK’s biggest food producer today said Hovis continued to make progress after capturing more than a quarter of the branded bread market last year.

With Premier Foods supporting the product through a major advertising campaign, sales of Hovis-branded items rose 13.5% to £370 million and trading profits for the division increased 75% to £42 million. Hovis accounted for 25.8% of branded bread volumes in 2009, up from 22.1% in 2008.

Premier added that its grocery division grew sales by 4.8% to £1.57 billion as growth in ready-to-eat formats and the popularity of "lunchbox treats" helped sustain brands such as Ambrosia, Hartley’s and Mr Kipling.

Across the group, brand-only sales were up 6.5% to £1.68 billion following share gains seen across all its markets. Total sales were up 2.2% to £2.66 billion and trading profit lifted 4.5% to £323 million, it added.

Premier said it was now ready for its next phase of growth after adding a number of well-known household brands to its portfolio in recent years.

Oxo, Batchelors and Homepride were added after the £460 million deal in 2006 to buy Campbell’s UK and Irish business, while that was followed by the acquisition of RHM in a £1.2 billion deal that transformed the business but also saddled it with huge debts. RHM owned Hovis, Sharwood’s, Bisto and Mr Kipling.

Premier reduced its debt pile to £1.36 billion last year after it raised £379 million in an equity fundraising.

Chief executive Robert Schofield today outlined a series of targets for the next three years, including to concentrate investment on areas with the greatest growth potential.

If the chosen categories continued to perform in line with the last three years, it said brands such as Hovis, Ambrosia and Sharwood’s should be able to grow by between 2% and 4% a year in volume terms.