February 19, 2019 / 7:54 AM / 4 months ago

UPDATE 2-Vegan sausage rolls bring in the dough at UK baker Greggs

* Firm sees 2019 profit ahead of previous expectations

* Vegan rolls drive sales for first seven weeks of 2019

* Analysts say publicity around roll launch pays off

* Shares jump as much as 11 percent to record high (Adds details on vegan trend, analyst comments, shares)

By Tanishaa Nadkar and Noor Zainab Hussain

Feb 19 (Reuters) - Strong demand for Greggs’ new vegan sausage roll prompted Britain’s biggest baker to raise its 2019 profit expectations on Tuesday, boosting its shares to a record high.

Greggs launched the savoury snack, which sells for 1 pound ($1.29), last month to try to tap into the “Veganuary” movement that encouraged Britons to cut down on - or cut out entirely - meat products for health and environmental reasons.

The new snack, made with meat substitute Quorn and backed by a YouTube video that likened the launch to that of a new iPhone, helped Greggs’ sales to surge 14.1 percent in the first seven weeks of 2019, the company said.

A spokesman declined to comment on the number of rolls sold, but said it was one of Greggs’ “top-five performing products”.

One in eight Britons – or almost 13 percent of the population – is either vegetarian or vegan, with a further 21 percent cutting down on their meat consumption, according to the Waitrose Food & Drink Report for 2018 and 2019.

“It seems the publicity surrounding the launch of the vegan sausage roll ... succeeded in its aims of bringing more customers into the stores, resulting in a ramp-up in transactions,” said Edison Investment Research analyst Paul Hickman.

Greggs said 2019 profit before tax and one-off items was now likely to be ahead of its previous expectations, without giving any figures. Analysts’ mean forecast is currently 97.62 million pounds ($126 million), according to Refinitiv IBES.

The company’s shares jumped as much as 11 percent to a record high of 1,780 pence. At 1130 GMT, they were up 8 percent and topping the UK midcap index.

“The difficult question to answer is where trading levels settle to once the curiosity has died down ... However, it is clear that ‘vegan’ is entering the mainstream with alternative dietary trends on the rise,” Canaccord Genuity analysts said.

The upbeat forecast from Greggs, which opened 149 new shops last year to take its total to 1,953, comes less than two months after the company nudged up its 2018 underlying profit forecast to at least 88 million pounds.

Greggs, best known for its meat snacks, launched a vegan Mexican Bean Wrap in June last year.

($1 = 0.7748 pounds)

Reporting by Tanishaa Nadkar and Noor Zainab Hussain in Bengaluru; Editing by Arun Koyyur and Mark Potter

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