Premier Foods serves up Typhoo for £100m

PREMIER Foods, whose brands range from Branston Pickle to Ambrosia rice pudding, has put its Typhoo tea business up for sale at up to £100 million.

The company, which joined the stock market less than a year ago, has appointed Icelandic investment bank Islandsbanki to handle the sale following approaches from a number of potential buyers.

Typhoo is the third-biggest brand in the tea sector which, unlike coffee, is not regarded as a growth market. Competitors include Unilever's market-leader PG Tips.

It is understood that Premier wants to raise funds to add 'quintessentially English brands' to its portfolio. The company is thought to be interested in buying Marmite from Unilever, though sources said the brand was not officially on the market.

Premier is thought to have between six and eight 'ambient' brands - produce other than chilled or fresh food - that it would like to add to its portfolio.

Meanwhile, the company, based in St Albans, Hertfordshire, is believed to be among several major food producers holding talks that could lead to the creation of a global auditing operation to ensure that rogue substances do not enter the supply chain.

The initiative follows scares such as when Sudan 1, a cancer-causing dye, was discovered in Premier's Crosse & Blackwell Worcester sauce in February. This prompted Britain's largest product recall, estimated to have cost up to £100 million. Other recalls have involved the colourant, Para Red.

Companies in the food industry are said to be 'fire fighting' to ensure products are not contaminated. It is understood that most are now reluctant to accept verification of supply from outside the eurozone.

One senior executive in the industry told Financial Mail: 'It is costing a fortune and we are all duplicating effort.

'Somehow we've got to combine to go back up the supply chain. At the moment we are gatekeeping rather than going back to the source.'

Producers who buy huge quantities of a single product will follow the audit trail for their supplies and verify that they are pure. But difficulties arise when producers buy only tiny quantities of some product such as spices.

In these circumstances, producers tend to rely on certification from smaller distributors and weaknesses can be introduced into the system. Sudan 1 entered the UK food production chain, for example, after Premier Foods relied on certification from three suppliers of spices.