Baker Greggs reckons deep freeze will fire up profits

Photo / Thinkstock

The economic chill has prompted the bakery foods chain Greggs to jump into the freezer.

The British company is moving into frozen foods after striking a deal with the retailer Iceland to sell frozen versions of its sausage rolls for home-baking.

Greggs is trialling the idea at 10 Iceland shops in the Merseyside area which will sell packs of the pastries.

They will be rolled out across Iceland's nationwide chain of shops if they prove popular with shoppers.

The baker, a favourite of comfort food lovers but rather less popular with the health lobby, has been aggressively expanding and boasts more than 1500 outlets with a target of 80 new openings this year.

But despite its reputation for competitive pricing, it has not been immune to the tough economic climate.

Its like-for-like sales grew by a sluggish 0.8 per cent last year and in May the chairman, Derek Netherton, warned the company was facing "significant" cost increases because of global commodity price increases.

These have forced the company into an efficiency drive to maintain its margins.

Trialling the new strategy would add a new string to Greggs's bow and see it joining a growing trend as companies struggle to hold up sales during the consumer squeeze.

Pizza Express pizzas can now be found in supermarkets, for example, as can Starbucks coffee.

Greggs said the company would closely monitor the performance of the trial before "determining the long-term viability of its participation in the frozen ready-to-bake market".

- Independent