Magazine article Marketing

Tomkins Takes a Bigger Slice

Magazine article Marketing

Tomkins Takes a Bigger Slice

Article excerpt

Amanda Richards reports on a recent takeover in the troubled cake market

Tomkins does indeed do exceedingly good deals. As the venerable Mr Kipling might have said, if asked for his opinion on last week's [pounds]35m acquisition of Lyons Cakes from Allied Domecq.

The deal gives Tomkins subsidiary, Manor Bakeries - owner of Mr Kipling and Cadbury cakes - 28% of the [pounds]867m ambient packaged cake market against its current 20% share.

If you include both companies private-label business, Manor's stranglehold on the sector rises to about 40%. The next biggest brand, McVities, is left way behind with just 3%.

Analysts agree Tomkins got Lyons at a "very good price" and that strategically the acquisition makes sense.

Not only does it complement Manor's portfolio with some of Britain's oldest cake brands: Battenburg, Cup Cakes and Swiss Rolls, to name but a few, but it also offers potential for increased resources and cost savings across the board.

Tomkins, however, is tightlipped on the latter until the deal has been given the green light by the Office of Fair Trading.

The challenge for Manor Bakeries will be to revive Lyons staid image and reverse the declining share of its brands.

Part of this decline is due to lack of advertising support; Lyons has not been advertised nationally on TV for more than five years. But like other brands in the sector, Lyons has also been hit by the growth of private label, and a failure to react to the UK's changing eating habits.

Private label now accounts for 38% of the market in value, up 14% on 1993 according to the latest figures from AGB, while brands are up half that at 7%. …

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