Premier Foods plc

Good morning, everybody. Thank you very much for joining us. And this is our quarter three trading update call, which covers the closing weeks of the purchase December 2023. I'm also joined on the call this morning by Duncan Leggett, our Chief Financial Officer. So as usual, I'll give an overview of the first quarter trading, and then we'll open the call up to questions. So as many of you will know, well, quarter three is our most important quarter. And I'm pleased to say we've actually had our biggest ever Christmas and we've caused the three sales in double-digit growth across the business and with significant market share gains. So the group sales increased by 14.4% and with branded sales of 12.7%. So branded sales are now up 14.6% on a year-to-date basis. And I think this demonstrates the strength and the continued relevance of our brands to our consumers in the current economic environment. And of course, that great brand performance continues to be underpinned by our brand and growth strategy, and that's leveraging our great market-leading brands and bringing highly relevant new products and innovations to market. And that's based on our in-depth understanding of consumer needs and trends. And we also support our major brands with engaging and meaningful advertising and marketing campaigns that keeps the brands relevant and top of mind for consumers. And then we deliver excellent in-store execution through our strong retail partnership. So whilst this is obviously always important, it's especially so in quarter three, which, as I said, is our key quarter in terms of sales. And if you did get a chance to look at any stores on the month of Christmas, I'm sure you'll have seen many of our product displays around the store. Now, this brand building model is actually very similar to that used by the large cap multinationals and the food businesses. In fact, we actually see ourselves as a much smaller version of one of those multinationals in the sense that we use the same brand building model. And the main difference, of course, is that we're still in the early stages of our international expansion. And now, as I've just said, brand investment is key to our brandless growth model. And we, again, invested behind many of our major brands in the course of Bisto, Oxo, Mr. Kipling, Bachelors, and Ambrosia, all benefiting from an overall up-weighted level of advertising support in the run-up to Christmas. In terms of product innovation, we again introduced a number of new products based on our in-depth understanding of consumers, and again, these have helped deliver incremental sales. So, some examples were Mr. Kipling's Best Ever Premium Mint Pines, which has received five-star reviews from consumers, Bisto Best's Mutely Gravy, and Paxo's Chicken and Bacon Stoppings, And Rosie Deluxe Consulate, which did particularly well over Christmas, as we saw people trading up and treating themselves. So this strong performance was notably ahead of the market, and so resulted in strong market share gains. In fact, overall, we gained just over 120 basis points of market share, which really is something that we're very pleased with, and illustrates just how well we're competing in our market. It's worth noting that these share gains were similar in both grocery and sweet treats categories, so a very similar shape to the sales results we've reported this morning. This significant outperformance again reflects the strength of the brand, our proven brand of growth model, and the strength of our customer relationships. The growth was once again pretty broad-based across the brands, and pricing continues to play a significant role in that growth, of course. Although, of course, what's going to happen is that pricing will start to drop out during quarter four as we last made a price increase last year. So we also saw an increase in retail volumes as we went through the quarter with retail volumes up versus a year ago in the key trading week just before Christmas. Looking at our grocery business, the sales increased by 11.9% and by 11.6% for our brands. and many of our brands and products are of course particularly popular over the Christmas period and that includes brands like Pisto Gravy, Oxo Stock, Paxo Stuffing and Bravia Custard and this year was no exception as all of these delivered strong roasters. Not only did the established seasonal favourites do well but we also launched new products to accompany Christmas dinner which included Paxo Chicken Baking Stuffing that I mentioned before. Nissen, Sober and Cotton Noodles again grew strong double-digit as its great progress continued towards what is now rapidly becoming a £50 million retail sales growth and in fact both Nissen and Bachelors have outperformed the category by some distance in the quarter and as a result we continue to cement our position as clear market leader in the Quick Meals, Feast and Snatch category. As you know one of our strategic pillars is to extend our brands into new categories and sales here more than doubled. So leading the way was Ambrevia Porridge Pops and during the quarter for the first time we advertised these on TV and we also added an Apple and Blueberry variant which is performing very well indeed and all we've held market share step forward again now reaching 7.5% of the on-the-go porridge market and up to 14% in our best performing customers. We also achieved new listings for Mr Kipling in the names of the right ice cream in two major retailers and that's given sales significantly higher in the quarter. So we're really very pleased with the progress that we're making in new categories so far this year. And our described retailer which we've now owned for coming up to a few months continues to perform very well and delivering further double digit growth compared to last year and benefiting from distribution gains in the UK and in overseas markets and I'll come back to that overseas rollout of the Spiked Tail assuredly. So turning to sweet treats sales increased by 21.3% and the branded side of the business discerned a very strong growth with revenue up 17.1% and it was great to see Cadbury Cake back in significant growth with strong performance and strong corn mini rolls and cake bars and we last time unshifted those maintenance on the manufacturing line last year if you remember. This Christmas we sold mince pies just as popular as ever, we sold 195 million of them, that's 4 million more than last year, and that was helped by the launch of Mr Kipling's new and best ever premium mince pies. Looking at the non-branded business, sales grew by 22.4%, that's excluding nice and foods of course, Grocery non-branded sales increased by 14.5% while sweet treats non-branded grew by 28.7%. Revenue in grocery non-branded compared to the prior year was due to pricing of a retailer and label contracts. Revenue in sweet treats was a combination of new contracts that we won in pies and tarts and pricing of the growth climbers. So this growth in the quarter is below that seen in the first half of the year as the pricing effects have begun to moderate. Our overseas businesses may serve a good progress. We're in 11% sales growth as we continue to expand distribution of our products in our strategic focus markets. And you might remember we've got three key brands which are our strategic focus for the overseas. So then Mr Kipling and Charles and now the Spice Tailor since we bought that brand. In fact, with the Spice Tailor, we've been making really good progress in rolling it out to new markets. When we acquired the brand, it was mostly present in the UK and Australia. But we are now in, or at least got confirmed listings in a total of 10 countries. And this includes New Zealand, Canada, and our first listing in the United States. And in Europe so far, we've agreed listings in Belgium, Switzerland, and France, as well as a step change in distribution in Ireland. So our future international expansion will continue to be focused on these three brands. And whilst in parallel, we're also exploring the potential for fuel 10K overseas, So looking at Australia, both Charlotte and the Spice Tale were major contributors to the performance and that was driven by strong in-store execution. In North America, Charlotte grew by 20% as we gained distribution in more stores. And in cake, we've also just landed over 800 new store listings in Canada. So on top of what we've already gained in the US, we're now close to 3,000 stores across North America. To put that in context, Mr. Kipling will now be in more stores in North America than it is in Tesco in the UK, which of course is all the Tesco stores in the UK. And of course at this stage this has been a much smaller product range, but that should give you some context in terms of store numbers. Moving on to Ireland, the business enjoys another very good quarter with sales up 27%, and particularly strong growth from the grocery brands. So Oxford and Bixby, they've had really strong purchases with sales of over 50%, and the lack of benefiting from advertising in the months of Christmas. So if we now look ahead, support reform, and as you'd expect, and we've got strong plans in place, including further new product launches, advertising support for our brands, and impact for execution by industrial stores. We do, of course, expect the level of top-line growth to begin to reduce, as the year-on-year impact of pricing falls away during the quarter. And as we move into the next financial year, we expect to see some more normal levels of top-line growth split between the blend of volume and price mix. So maybe think about the top-line growth that we were consistently delivering pre-pandemic. So really just to wrap up then, we've had our biggest Christmas ever with double-digit branded sales growth in grocery and sweet treats for the quarter. underlined by significant market share gains of over 120 basis points. And we've also continued to deliver against the other pillars in our five-colour growth strategy with those new category sales of 108%, led by the Ambrosia Porridge and the Mr Kitten and Angel's Light Ice Cream. Our international business grew by 11%, and Spice Tailor and Fuel 10K continue to progress very well, and the integration of Fuel 10K is running to plan. So all in all, I think we're in good shape for the rest of this financial year and well on track to deliver on the previously upgraded expectations. So with that, I'll just thank everyone for your time. I'll stop there and we'll pass back to the operator and we'll be very happy to take any questions. Thank you.

Thank you. We will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. Our first question today comes from Charles Hall from Pilhar. Your line is now open.

Morning, Alice. Morning, Jonathan. Morning, Jonathan. Well done. Another excellent quarter and great to see the momentum continuing. Can we just chat a little bit more about Q4 and going into next year with much lower inflation in the system and what you're doing in terms of driving volume? And obviously, new product launches is part of it. But what are you doing on promotional activities?

Thank you. Yeah, so you're absolutely right. As we go through this last quarter in the year, all the pricing benefits from that last big price increase a year ago dropped out. By the end of the quarter, we'll be fully back to everything that we deliver from our branded growth model. So I think... you know, we're really confident in that. The model's delivered well for us over a number of years now. If we go all the way back to before COVID, people can remember that far back. You know, the business was delivering really well based on that model. And I have a reason to believe that it will continue to work for us. So that's the usual thing when actually seeing the model. You know, as you say, it's very reliant on new product development. And I'm pleased to say that You know, we've got a really strong MPG pipeline, both the things that have come to market this year, which will continue to grow for us next year, and the products that we'll bring to market as brand new next year. So we're really confident about that. Our install execution is better than it's ever been. You know, our number of displays and groceries that we had out over the Christmas period was double digits up versus the same period a year ago. So our execution machine is working really well. And then I think the final point that you touched on was pricing. So where we've had the space as some of our commodities have come off their peaks, that's given us the space to fine-tune some of our promotional pricing and we've chosen to do that on areas where we've got the greatest anticipated price elasticity. So some of those price points continue to come for the market over the last quarter of the year. And so far, we've seen really strong performance responses and volume responses to those changes. So, you know, the last is right. The pricing will have dropped out as we go into next year, but I think we've got a really strong thought box and we'll expect it to also perform well.

If I can ask one more question. Just on Mr. Kipping's role out in the States, Where does this fit in terms of your expectations? Is 3,000 locations what you're hoping for or is it ahead? And also where are we in terms of those distribution points going live?

Yes, we're actually a bit ahead of where we expected to be for this year in terms of social distribution points in the US. So that's quite pleasing and obviously we haven't finished the year yet so we're ahead of I think they were ahead of the target we had for the full year in terms of total store count. And in terms of go-live dates, I think I'm right in saying that pretty much all the US stores that we've talked about, the nearly 2,000 stores, are live now or about now, and we would expect to Canadian stores at the back end of, by the back end of Courtauld.

Perfect, that's great, thanks very much.

Our next question today comes from Patrick Folan from Barclays, your line is now open.

Hey, good morning, Alex and Duncan. Can you quantify maybe on fuel 10k, how does that do in the quarter? Going ahead, I imagine that will be a bigger part of the top-line algorithm. And then I know you kind of touched on it there in the last question, but just more broadly, just on the consumer environment, are consumers still looking at value? I guess with promotional activity stepping up, probably being more intense next year. That's going to drive, hopefully, the more volume footfall just in the context of pricing fall away. Just kind of comment on that environment and maybe with promo stepping up, do you see maybe further drive of market share from promo? Thanks.

I'll let Jim come pick up on the contribution of fuel 10k, but the consumer environment is an interesting one isn't it? I think having been through what's commonly branded as a cost of living crisis, things like you will say, we're now in a position where we're seeing wage inflation ahead of actual inflation, so people should at least start to feel a little bit better off. but obviously coming from a position where everybody's behind over the last couple of years. I think, you know, from our point of view, it doesn't really have a massive impact on us because the business tends to be relatively resilient to those economic changes. So what we see when, you know, people are feeling the pinch and counting the pennies, what will tend to happen is people will eat out less. and therefore, as a consequence, they buy more of our products because they're cooking more at home. And then the flip side of the coin is when the economy picks up, when we're in the other part of the economic cycle, yes, we can move some volume to people eating out, but we also pick up volume from people who trade up. So in that, it seems to be relatively neutral for us. But as I said to Charles, we will anyway always look to optimise our promotion mechanics and our promotional price points. We've got a lot of modelling capability, economic modelling capability, the look, the price elasticities, the impact that I have on volume, the way that volume translates to factory efficiencies and ultimately profitability. So we're constantly playing teams on optimising those promotional price points to optimise the equation between volume, profitability and cash profit delivery. And that will continue to be the case as we go through this year. Does that answer our question Patrick? Yes, perfect, thanks. Brilliant, thanks Patrick. And then just on Phil saying Kayla, I mean, I think we're really excited now we've got our arms around it. I think we're probably more excited now as we get to know it better and understand opportunities for further growth than we were when we actually announced transactions. I think that's all really positive. It's a great brand and what it's trying to do is trying to be a great accelerator for us. So I think in terms of contribution, we bought it partway through the quarter. We disclosed it's about a £20 million brand in terms of sales last year. We're clearly going to be expecting to be growing

going on for year on year nonetheless. Great, thank you.

Our next question comes from Matthew Webb from Investec. Please go ahead.

Yeah, morning everyone. A couple of questions on international. Growth of 11% is obviously a very good figure, but well down on the H1 growth, particularly if you adjust that to the Australian D-stop. So I just wondered why you've seen that slow down, particularly when it sounds like the distribution gains have continued to be very strong. The third question is still on international. As you've grown distribution of Kipling in the US. I was just wondering whether there had been any change to its performance relative to other brands in that category. You've obviously been very pleased with its relative performance. I was wondering if that's continued. And then also, just in terms of your total distribution in the US, having got to that 2,000 figure that you'd you've been aiming at. I mean, do we pause here to see how the brand performs or does that keep rolling out as we go into next year? And then, sorry, just one final quick question on the UK, on Sweet Troops. Obviously, you've got some very good market share gains there and good revenue growth, but it looks like that's very much led by Cadbury, which is up against a weak comp. I just wondered whether you had any comments on the kickling. range, either in terms of revenue growth or its market share trends. Thanks.

Good morning, Matty. So, yeah, a few bits in there. So, yeah, we're really pleased with the international growth of 11%. It's a business that needs to deliver consistent double-digit growth for us, quarter in, quarter out. If I look at total performance, I think it's Probably two things to think about really. One is there was still a bit of that destocking in the front end of the quarter. We thought we got through all that but it turned out that we hadn't. We're pretty confident that it's all out of the picture by now though. It also tends to be a bit lumpy in terms of shipments because in some markets we're still very small. So we might ship a load of containers in one month and then not for another couple of months just because of the efficiency of transportation. Bear in mind that all our products are either long shelf life on the grocery side or on the food side they're frozen so essentially again it becomes long shelf life. So we do get fluctuations from quarter to quarter but as I say overall we're really happy with it. The focus though I think it's fair to say is actually on building distribution. So what I'm much more interested in as a KPI is not necessarily short-term revenue delivery, it's actually the number of extra stores we get for Charlotte, it's the number of extra stores we get for Kipling, etc, etc. And the progress there is really quite good. And obviously all that leads to growth further down the line. Moving on to the second part of your question, so if you look at... Exactly about growth of distribution and this is Kipling in North America. So performance, I don't know if you remember when we first tested this in a couple of hundred stores and the performance was really very good and we were very pleased with it. As we started to roll out into other customers, you know, the performance seems to have held up. Different stores have got different portfolios, so it becomes a little bit complicated, but overall, as I say, we're really pleased with how it's performing in those additional stores. I'm not thinking that we pause at all at this point. I know we'll continue to push out into more stores. There's an increasing focus on what we call seasonal ranges, so having the right product in for Easter, having the right product in for Halloween and those sorts of things. Those events in the States are really important and that's a great way to get new distribution in new stores. I think we'll see more of that coming as we go through the next financial year. So no taking our foot off the gas there in any way, shape or form. Coming up to the UK Sweet Treats, there's an awful lot happening behind the Sweet Treats great number. So you're absolutely right, you've got the weak cons on Cadbury, because of that manufacturing maintenance we had to do a year ago. But at the same time, there's a number of other things that happen. So this is also the quarter where we've anniversaried, or last, promotional restrictions that came in with the HFFS restrictions, so where you can do promotions in store. So for the first time in quarter three, we were in a position where we got more displays in store than in the prior year, and that's not something that's happened for a year on Sweet Treats. In fact, it's normally where we are, and it's certainly where we are in grocery, but it's not been the case in Sweet Treats for a year because of those restrictions. So, yeah, good to be in a positive position there, and As I've mentioned before, SweetSweets was one of our most, not the most, quite elastic part of the portfolio when we increased pricing to cover commodity costs. And therefore, being it was a first place, we started to adjust promotional pricing as the commodity prices came off their peak. So there were some benefits there across both cabinets. in the quarter and then couple that with some really good new products including that Mr Kipling new men's tie and increased levels of advertising and promotional support there's a lot happening behind that number I've no doubt that the biggest piece of it is probably the it's probably the cavalry comp but there's an awful lot of other stuff on the positive side happening it's just at this stage we're not able to you know, deconstruct exactly which element delivers which part of the growth. But I'm sure we'll get greater clarity on that as you go through the next few months.

Fantastic. That's really helpful. Thanks, Alex.

Our next question today comes from Clive Black from Shore Capital. Please go ahead.

Thank you. Good morning. Yeah, well done. Excellent quarter. A couple of questions, if I may. First of all, you talk about increasing capacity at Ambrosia. Just wondered what that entails in magnitude. And indeed, just across the network, how are you in terms of capacity utilization at the moment? Are you in a good position to cope with growing sales over the next year or two? And then secondly, just in terms of the cost environment, maybe give us a feel for some of the cost movements. You know, the UK national living wage comes in in April. What do you think about energy and commodities? To the extent, are you anticipating disinflation rather than maybe deflation in the next year, if that's a fair question? Thank you.

Morning Christ, thanks for that. Yes, you're absolutely right. We have commissioned increased capacity for our listening day in order to be able to make more of the published parts. The reason behind that is we've obviously done very well with them, probably better than we ever imagined when we started off. We started making them on some existing manufacturing kit that we converted to be able to make porridge and it's now reached a point where it's quite clear to us that if we don't put some more capacity in we won't be able to continue to supply the growth and particularly wouldn't be able to continue or wouldn't be able to start overseas expansion which we do think is a possibility with this product. So that's been commissioned now, you know, obviously these things take a bit of time, but would, you know, quite dramatically increase our overall capacity for porridge pots, which is really encouraging. Broadly, across the sites, Clive, there's nowhere really where I'm looking at it and thinking we've got any immediate pinch points. We've got capacity for what we need to do over... over the next year or two, no significant pinch points. So having said that, as you know, we have got one of our strategic pillars, of course, is investing in manufacturing efficiency. So there are definitely opportunities where we could upgrade some of our existing manufacturing kit with newer, more modern products. production line and therefore you'd have a number of benefits there, you'd be much more efficient, your cost per unit would fall, your product quality would probably improve and there's a whole bunch of opportunities attached to that across the size as we go forward but that's not predicated by lack of capacity, that's more predicated by opportunity and cost out Cost environment, so what's happening? So you're absolutely right on national living wage, but to be fair that was pretty close to what we'd anticipated and is already built into our costing models for next year, so that doesn't really change anything from our point of view. Energy, as you're probably aware, we have a tendency to hedge and buy a long way out so we're pretty secure on that for next year so that's unlikely to be a significant variable for us. On commodities we've seen a bit of blossoming of commodities as they come off their peak we expect that to continue I don't expect that overall though you get into a net deflation in any way shape or form but certainly for that Well, there's two things from a pricing point of view. We saw in the camp where you don't see that we would need to increase our pricing next year and that's something that we haven't anticipated happens.

Yeah, okay. And then just a final follow-on from the previous questions. What's the size of the Mr. Kipping assortment in the States? Is there any particular product that's proving to be taken off? Thank you.

So we started with four flavours of the cake slicers, Clive, and that's what we originally tested in those first 200 stores. Why that format? Because it's pretty easy to understand, you know, pretty widely accepted format. And so that is essentially the rollout portfolio. They keep the flavours and lemons done particularly well, if that's of any interest. And then what we've done in some of the stores where we've been in a little longer, we've now started to introduce some additional products. So I think Chevy Bakewell started to go into some stores as well. We'll be looking to expand that as we go forward. And then in particular, as we come up to different seasons will have seasonal flavors and things but yeah and even though it gives you access to in-store events if they do a big display of Halloween products you know if we've got some you know pumpkin flavor or pumpkin colored cakes then we'll get those on for those display events in a way that you wouldn't be able to do when you call range so and if you look back actually If you look back to how we built the Kipling business to be the number one cake around in Australia, a lot of that initial work actually done through seasonal events and then the range got fleshed out into more all-around byproducts.

Excellent. So it's still quite a tight assortment in the US.

Yeah, and I think that's important at this stage. I think what you don't want to do is put too big a range in too quickly because then you've got to lose some split the rate of sale across the

No, thank you very much. Very helpful. Well done. Thanks, Mike.

Our next question comes from Andrew Wade from Jefferies. Please go ahead.

Morning. Just a couple from me on the same sort of theme. You touched in your opening remarks saying that you'd be expecting to return to sort of a historical rate of growth through a combination of price and volume. So just digging into both parts of that, really. The first part is how confident are you about sort of volume growth and what looks like something that confident? And then the second one is that's not if we're going to be seeing a combination of price and volume um does that mean we're expecting to put through a bit of price at some stage contrast to what you said uh the answer earlier with clive and just trying to square the circle on that thank you very much yeah so um but you're absolutely right you know we'd expect to return to those historic growth levels of that as i mentioned earlier in the call we and

then we just rely on our brand as a roadmap and we've got a lot of confidence in that because it's consistently delivered for us no matter what the external environment seems to have thrown at us. The model of having strong brands, focusing on consumer needs, delivering a new product, supporting the brand as well and executing them when installed works pretty consistently. So we'll continue to do that and you're actually right, we'd expect a transition from or value unit growth to volume growth driven by that model. You know, I think the writer's point about volume and price mix is true. But I think in the immediate period as we go through next year, it's likely that the price element of that price mix will be a negative one because that will be essentially what's driving some of the volume, won't it? So we don't expect that to be a negative part of the equation. Although that doesn't necessarily mean that price mix on aggregate will be because it's a mixture that within our portfolio can make quite a big difference. We've got a few different things in court to take into account actually.

Gotcha, very clear. Thank you very much. Thanks.

If you would like to ask a question on today's call, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. Our next question comes from Ashton Olds from Redburn Atlantic. Your line is now open.

Hi guys, can you hear me okay? Yeah. Cool. Yeah, just following on to your earlier questions on promotional activity, I think you've been quite clear on where and why you are increasing promotions. It would be good to get a bit of perspective on how you balance increased promotions versus, I suppose, maintaining or growing gross margin and, I suppose, increasing marketing instead. And then secondly, just on sort of the overall market, can you give us a feel for whether pairs are beginning to discount more as well, particularly in sort of your chosen categories, or whether retailers are demanding, I suppose, busier promotional schedules? Just those two for me.

Yeah, sure. So yeah, how do we balance the increase in promotions versus margins? It's quite an interesting equation. So I mentioned before, we see ourselves as being quite scientific and analytical in the way we do these things. They're not tourism-based, they're very much hardcore maths-based. And so we do quite a lot of modelling that looks at how will volume respond to a given change in pricing in store. and how that volume will then flow through our factories. Obviously, more volume makes factories more efficient and the ultimate impact that therefore has on our margin position. As you'll be aware, over the years, we've been quite clear that we look to use expanding margins at the greater margin level in order to fund that marketing activity that you mentioned and other things we want to do to expand the business. And that's something that's worked really well for us. So we have a whole basket of measures that we take and a whole number of different activity streams that look at how we expand margin, but not just It's not just about pricing in store. But by quite, I would say, reassurance on gross margins, what we haven't done is fabricate gross margins in order to fund those new price points. What we've done is we've looked at commodity prices coming off their peaks. and we've used that fall in our input cost pricing. It's not a fall versus you again, it's just a fall versus you in the year, but nevertheless, it's a fall. And we've used that to create the space to sharpen those promotional prices without sacrificing any margin. Does that make sense?

Yeah, so I suppose it's sort of, to the benefit of increased volumes as greater than the benefit of maintaining a higher gross margin or growing gross margin, I suppose.

And if we look at, you know, strategically, if we look over the median term, what do we expect to do here? We expect to continue to make ourselves more efficient. That will manifest itself in margins, and we will use some of that margin to invest back into growing the brands, including into marketing. That's something we've been really clear on and something that we've done consistently over a number of years now, albeit with some fluctuations driven by some of the strange market conditions we've had over the last few years, whether it was COVID or a decrease in patients. But the underlying trend is very much part of that strategic plan.

Okay, that's clear. And then just on border discounting activity across peers?

Yeah, to be honest, we've not seen a massive difference in our categories. I know there's been quite a bit written about supermarkets pricing and price competitivity, but I think a lot of that has been happening in non-branded and, you know, the fresh areas of the store. If I look at our product categories, they're pretty intense promotionally. They always have been. I've not really seen a significant shift in the intensity of that promotional activity, but mostly.

Awesome. Thank you, guys.

Our next question today comes from Damian McNeill from Numis. Please go ahead.

Hey, morning, everybody. Well done again. Just one for me. Most of mine have been answered. I couldn't help but notice, as you mentioned in your call, that there's a lot of gondola end exposure for your brands through the festive period. I'm just wondering whether you could give any reassurance about the margin implications of doing that, whether that sort of I know you could have just talked about how rigorous your modelling approach is, but whether you could just sort of add some further colour to that, please, with regards to on the rent?

Yeah, sure. So, I mean, you know, the cost of the business on the rent is basically the price discount. So the pricing that we implemented over Christmas was no different from, you know, our standard promotional pricing over the year, with the exception of of those sharper price points that I talked about, which we funded through the quite full backing commodity cost. So there's no real, there's no noticeable margin impact of all that on the rent activity. In fact, if you were to work it through, you'd probably find this the net benefit for a couple of reasons. One is it drives more volume, puts more volume to the factory. And two, the mixed benefit we tend to get over the winter period and over Christmas these tend to be more beneficial.

Yes, that's very helpful. Thank you, guys.

That concludes today's Q&A portion. I'll now hand you back over to Alex Whitehouse for any final remarks.

Thanks for joining in, everybody, this morning. Hopefully you get the picture. From our point of view, we think we've had a cracking Christmas, a really strong quarter three, overall and that's underpinned by those strong market share gains and we've also made I think this was progress against all the other pillars of that five pillar growth strategy and we can talk about that in more detail obviously when we get the full year results. The new brands by sale until 10k both performing really nicely and looking at the rest of the year I think we're in really good shape and as we said today we're well on track to deliver what was obviously a twice previously upgraded expectations. So, you know, all in good shape, as I say. So thank you very much.