Weetbix’s owner, US group Post Holding, is set to cut costs but invest more in marketing for the brand as UK shoppers swap the cereal for own brand alternatives.
Post Holdings interim CEO Jeff Zadoks said that tough UK trading conditions had led shoppers to swap to own-brand cereal as Weetabix’s adjusted EBITDA fell by almost a third in its last quarter.
He said: “The margin in that business has suffered more than the rest of our portfolio. We attribute that to the fact that the UK environment has been much tougher than the US environment.
“The Weetabix brand is a very premium product in the UK market. If you track that market, cereal has become slightly greater than 50% private label, so a much more dramatic move to value than we’ve seen here in the US.”
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“What we need to do to get it back to closer to where we were pre-pandemic is to simplify the business. We need to have a renewed focus on cost reduction and we need to continue investing in the brand so that we maintain the premium price points that enable us to generate the margins from that business.”
Zadoks said it would kickstart “consulting activities” within Weetabix in 2024 to look at “the effectiveness of our trade promotion…to improve the cost structure of that business”.
In terms of advertising, he said that it was spending “above the normal run rate” for Weetabix in the fourth quarter.
Post Holdings bought Weetabix for £1.4bn in 2017.
