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Greencore says cost-conscious office workers are replacing lunch with up-market supermarket sandwiches
Greencore, which makes almost one in three sandwiches sold in British supermarkets, has said that cost-conscious office workers are increasingly buying supermarket takeaway sandwiches to eat at their desk rather than visiting higher priced restaurants and sandwich bars.
Despite severe weather disruption hampering deliveries and sapping demand in December, the retail value of Greencore sandwich sales for the half year to 25 March rose by 8.4% in a market up 2.6%.
The company's chief executive, Patrick Coveney, said that despite price rises caused by increased ingredient costs, Greencore had seen stronger demand for its higher-end sandwiches and alternative lunchtime options such as sushi, wraps and salads.
He believes this "trading up" trend is a consequence of more affluent workers choosing to cut down on more expensive lunchtime options such as restaurants and sandwich bars.
Greencore makes more than 200m sandwiches a year for shops including Sainsbury's, Asda, Co-op, Morrisons and Boots. The business also makes other convenience food products but its "food to go" division accounts for 80% of group sales.
The company, which is incorporated in Ireland, posted a half-year pre-tax profit of €2.48m (£2.16m), down from €10.74m for the same period last year. Profits would have doubled if the company had not incurred €17.7m of exceptional costs, primarily relating to its failed merger with Northern Foods.
In March, Greencore abandoned its pursuit of the rival food manufacturer, clearing the way for a £342m bid from the Birmingham-based poultry processing entrepreneur Ranjit Singh Boparan.
Greencore's €13.6m bill for the fruitless merger attempt is equivalent to about 5% of the company's market value, but Coveney insisted that advisers had properly earned their fees, securing a £250m refinancing package and working through the legal complexities of the proposed combination.
"It was a lot of money, I am very conscious of that. But we were pretty comfortable that we got the service."
Coveney said he believed there remained consolidation opportunities in food manufacturing, despite having lost out in the battle for Northern Foods.
