Two great tips from the food sector

Overall demand for food tends to grow slowly - at about the same rate as the population. So any food company that can produce double-digit annual growth is definitely worth a second look.

Premier Food's

First, it's got great branding, says Jenny Wiggins in the FT. Premier has a portfolio of products "that reads like a 1970s pub menu" including Branston, Crosse & Blackwell, Smash, Sarson's, Ambrosia and Sun-Pat peanut butter. These "quintessentially British" brands command higher prices (and higher pricing power) than their own-label counterparts. Not only has Premier been able to run these operations with "very lean" overheads, but it has also added to them successfully with products such as the Lloyd Grossman range of soups and sauces, whose sales have tripled in the past five years.

Second, says PA writer Simon Atkinson in the Birmingham Post, Premier's management has positioned the company to take advantage of the trend towards "healthy foods" via the acquisitions last year of meat-substitute maker Quorn and Cauldron Foods (purveyor of vegetarian sausages, falafel and tofu to the supermarkets) for a combined £199m. Third, it has been canny in its mergers and acquisitions activity refusing to be goaded into overpaying for HP Foods last year.

Finally, says The Daily Record, Premier has the ability to turn a threat into an opportunity, as demonstrated by its launch of Branston beans when it lost a £20m baked-bean contract with HP. Initially done "out of necessity" by the company, Branston beans now have an 11.2% share of the market.

Suddenly, says Tessa Thorniley in the Daily Mail, Premier has a wealth of potential acquisitions to choose from, including Campbell's UK brands and a number of names from United Biscuits, Northern Foods, and even RHM. But whatever the fears that inevitably surround large corporate initiatives, says Investors Chronicle, as long as Premier brings to bear the same solid management qualities it has shown so far, it should do well. Trading on 12 times current year earnings and with a yield of 4.5%, its shares are a "buy".

Investing in food companies: Another tasty tip

Notwithstanding the general trend towards healthier eating, many people still find chocolate simply irresistible, says James Quinn in The Daily Telegraph. That certainly seems to be the experience at Glisten (Aim: GLI, 344p). Recording "exceptionally high" demand at its white-label confectionery arm compared to last year, the chocolate and snacks company recently revealed that like-for-like sales are up 9% in the ten months to the end of April.

But the company isn't resting on its laurels. In December 2004, it acquired Halo Foods, which makes cereal bars, followed by Lyme Regis Fine Foods, which makes cereal and fruit snacks. Both have prospered under Glisten's management, expanding sales and margins. More importantly though, this diversification into healthier food products means that any nanny state' initiatives by the health lobby to encourage people to "tighten their belts" literally, in this case should still result in Glisten's profits continuing to rise. On 12.8 times next year's earnings, says Quinn, Glisten's shares are nothing if not "tasty". Buy.

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