Pladis warns of price rise, set to roll out smaller “on the go” packs

The owner of McVitie’s has warned biscuit lovers that prices may further rise next year as the combination of a volatile wheat market and wider inflationary pressures. 

Salman Amin, chief executive of Pladis, the London-based snacks maker whose brands also include Digestives, Hobnobs and Jaffa Cakes, said he expected prices for the group’s products to rise at least half as much again in 2023 as they have this year, Financial Times reported.  

The upward pressure on prices was partly a result of contracts signed when the wheat market hit highs following Russia’s invasion of Ukraine, Amin said in an interview.  

“Wheat prices are back to pre-pandemic levels but we have contracts that extend well into 2023. We needed to make certain decisions three or four months ago. It was too risky not to.”  

Supply chain hurdles, cost increases and inflationary pressures are also affecting the biscuit-maker. 

“While wheat prices have normalised, other challenges — including in the supply chain — remain,” said Amin. “I believe we will see this [economic environment] for another 12 to 18 months. I’m quite bearish, or realistic, about what 2023 is likely to bring,” he added. 

Pladis was formed in 2016 after Yıldız Holding bought United Biscuits, owner of McVitie’s, from its private equity owners two years earlier. Amin took the helm in 2019. Partly as a result of these conditions, Pladis is putting increasing emphasis on smaller “on the go” versions of its products sold at lower prices than full packs, as it steps up development of new product lines.  

In the UK, these smaller packs, which also cater for impulse snacking, include Jaffa Jonuts, a variant of Jaffa Cakes, sold at about £1.50 for a pack of four, along with small packs of Iced Gems, Mini Cheddars Crunchlets, Mini Gingerbread and Blissfuls. 

“Smaller packaging sizes put us in the same space [in stores] as chewing gum and others,” Amin said “The smaller product size is sometimes constrained by our ability to pack smaller sizes, by the packaging machines, but we are rolling them out across most sites and by the end of 2024 will have that capacity in almost every [country].”  

In the UK, food prices had been stagnant for a decade, Amin said, presenting a hurdle for companies that need to alter consumer expectations in an inflationary environment.  

“The last 10 years of pricing have been absolutely flat in the UK. There have been no real price increases over this period of time and the consumer is used to a certain set of price points — how do you now reset the definition of value?” he said.  

But he said there had not been a “mass shift” from Pladis’s products into cheaper alternatives. Like its rivals, Pladis is also trying to modify its range to make it healthier. 

This year, it reformulated Jacob’s Twiglets to contain 60 per cent less salt and has launched a lower-sugar version of Rich Tea biscuits.  

Amin said that “innovating for lower sugar and lower fat without trading off the taste is an awfully difficult trade-off at the end of the day” and are “multiyear projects”.