Nestlé has its cake, and eats it!
of cakes and muffins in most of the UK's major retail chains
following a deal aimed at lifting the Swiss group's share of UK
cake sales.
Confectionery brands have been appearing in a variety of different forms for many years, with everything from biscuits and ice cream to soft drinks featuring brand names more traditionally associated with chocolate or sweets.
Baked goods, and cakes in particular, have been a particularly popular form of this brand extension, with, for example, Cadbury in the UK rolling out cake versions of it Dairy Milk, Flake and other countline brands in association with RHM.
But now Cadbury has a major competitor in the cake market, with the announcement today of a deal between Nestlé UK and Finsbury Food Group which will see the chocolate maker's brands appear on a range of ambient cakes over the next five years.
The agreement, which takes effect from 1 January 2004, will allow Finsbury Foods to create cakes and muffins carrying the Smarties, Yorkie, Nestlé Double Cream, Milky Bar, Rolo and After Eight brands for sale through the major UK retailers.
The aim, the two companies said, was to grow Nestlé's brand presence in the ambient cake sector to £50 million per annum over the five years.
Finsbury Food's Cardiff-based subsidiary Memory Lane Cakes will hold the sole licence in the UK to create, manufacture, promote and sell ambient cakes under Nestlé's brand names, with the aim of selling them through Memory Lane's existing client base, including Asda, Morrisons, Safeway, Sainsbury, Somerfield and Tesco, as well as to other retail outlets and distribution channels across the UK.
Finsbury Food has undergone something of a radical career change in the last year. Until its acquisition of Memory Lane in August 2002, the company was known as Megalomedia, a business focused on media, IT and recruitment to those sectors. But now it is completely focused on the food industry, having added premium and speciality bread manufacturer Nicholas and Harris to its portfolio in March this year.
The clinching of the Nestlé deal will clearly give it a major boost, not least as it will expand the company's presence in the premium cake market, one of the fastest growing in the UK grocery market.
