Tunnock’s, the beloved Scottish company known for its tea cakes and caramel wafers, has reported a significant increase in profits despite facing challenges with rising raw material costs. The family-owned firm saw its pre-tax profit quadruple to £4.1m for the 52 weeks ending on 24 February 2024. This was a substantial improvement from the previous year’s profit of £1m, although slightly below the £5.5m profit generated in FY22.
The company’s turnover also experienced a healthy 15% growth, reaching £87.1m, while the gross profit margin increased from 25.4% to 26.7%. The rise in revenue was primarily attributed to higher prices, although sales volume also grew by 5% to 629 million units.
Despite the positive financial results, Tunnock’s acknowledged that its profit margins were still below pre-2023 levels due to the significant surge in raw material costs caused by events such as the Ukraine invasion and the recent cocoa crisis. The company described these cost increases as ‘very challenging’ and noted that they continued to impact its financial performance beyond the reporting period.
To address these challenges and ensure future growth, Tunnock’s invested £3.4m in capital expenditure at its Uddingston factory near Glasgow during the year, following a £2m investment in the previous financial year. The company emphasized the importance of expanding capacity and staying competitive in the market by upgrading equipment.
Looking back at its history, Tunnock’s experienced a period of innovation in the 1950s, introducing iconic products such as the Caramel Wafer, Snowball, Caramel Log, and Tea Cakes. These sweet treats became instant classics and have remained popular among consumers over the years.
Sir Boyd Tunnock, who received a knighthood in 2019 for his contributions to business and charity, continues to lead the company at 91 years old. The Tunnock’s brand has stood the test of time and continues to capture the hearts of customers both in the UK and internationally.
In a similar vein, other UK manufacturers like Premier Foods have also found success with their branded sweet treats, such as Mr Kiplings and Cadbury Cakes, contributing to a 6.1% increase in revenue for the company in the first half of 2024. The demand for indulgent treats remains strong, showcasing the enduring popularity of these beloved brands in the market.
