Nomad Foods, the parent company of popular brands like Birds Eye, Findus, and Goodfella’s pizzas, has experienced a significant boost in sales by implementing an 18% price increase. This comes as the political landscape scrutinizes food pricing. In the three months leading up to June, the company, which supplies major UK supermarkets, recorded an 8.6% increase in sales. Although the number of items sold decreased by 9.4%, profits rose by 6.8% to €210m.
These figures come to light as the UK’s competition watchdog investigates food retailers and their suppliers across 10 product categories, including milk, bread, and ready meals. The investigation aims to ensure that households benefit from competitive prices as cost inflation starts to ease. Although prices continue to rise, the inflation rate has fallen, standing at 7.9% in June.
Nomad has stated that its price increases were solely intended to offset higher raw material costs, and its profit margins have remained stable year-on-year. It reported a boost in sales for the current quarter due to price increases implemented in the latter half of the previous year.
Nomad Foods was established by British-born Martin Franklin, a well-known deal maker, and Noam Gottesman, a prominent hedge fund executive from both the US and the UK. It is listed on the Nasdaq in New York with a valuation of $3.2bn.
Gottesman, the co-chairman of Nomad Foods, commented on the strong performance of the company, attributing it to robust organic revenue growth and a focus on pricing and cost control to protect gross margins.
Last month, the Competition and Markets Authority refuted claims of weak competition among major food retailers causing the historically high food price inflation seen in the past 18 months. Retailers have faced criticism from MPs due to high prices resulting from a combination of factors such as rising energy, labor, and raw material costs influenced by the Covid pandemic, Brexit, the war in Ukraine, and extreme weather caused by climate change. This led to double-digit food price inflation last year.
Major supermarkets argue that their profit margins are less than 4% and highlight the double-digit profit margins of major grocery brand owners like Unilever as household food bills continue to rise.
Speaking on behalf of Nomad, a spokesperson acknowledged the pressure on profitability due to post-pandemic raw material inflation for the past two years. The spokesperson emphasized the broad application of price increases across all categories and markets in response to extraordinary raw material inflation last year, worsened by the conflict in Ukraine.
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