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"Also driving our improved results are the significant investments we have made over the last couple of years in improving the efficiency and capacity of many of our businesses," added Mr. Paleologou.

"We are also very pleased to have completed the acquisition of C&C Foods subsequent to the quarter and are now working with their management team to capture cost synergies and to accelerate the growth of their business through organic initiatives and by acquisition. I have no doubt that once again we have partnered with a very talented, best-in-class management team," said Mr. Paleologou.

"In terms of future acquisitions, we are looking at a wide variety of opportunities and I fully expect that we will be announcing additional transactions in the coming months," said Mr. Paleologou.

SECOND QUARTER 2016 DIVIDEND

The Company's Board of Directors approved a cash dividend of $0.38 per share for the second quarter of 2016, which will be payable on July 15, 2016 to shareholders of record at the close of business on June 30, 2016.

Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2016 or a subsequent year is an eligible dividend for the purposes of the Enhanced Dividend Tax Credit System.

ABOUT PREMIUM BRANDS

Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio and Washington State. The Company services a diverse base of customers located across North America and its family of brands and businesses include Grimm's, Harvest, McSweeney's, Bread Garden Go, Hygaard, Hempler's, Isernio's, Quality Fast Foods, Direct Plus, Harlan Fairbanks, Creekside Bakehouse, Stuyver's Bakestudio, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso's, Maximum Seafood, Ocean Miracle, SK Food Group, OvenPride, Hub City Fisheries, Audrey's, Deli Chef, Piller's, Freybe, Expresco, C&C Packing and Premier Meats.

RESULTS OF OPERATIONS

Revenue

Specialty Foods' revenue for the first quarter of 2016 as compared to the first quarter of 2015 increased by $46.7 million or 21.7% primarily due to: (i) $18.5 million of sales resulting from the acquisitions of Isernio's Sausage and Expresco Foods in the third quarter of 2015; (ii) $15.4 million of organic volume growth across a range of products with a significant portion coming from convenience food initiatives; (iii) a $12.1 million increase in the translated value of its U.S. based businesses' sales due to a lower Canadian dollar as compared to the first quarter of 2015; and (iv) approximately $0.7 million in net selling price increases that were implemented in response to rising raw material costs. Excluding the impact of acquisitions, exchange translation and net selling price increases, Specialty Foods' organic volume growth for the quarter was approximately 7.1%.

For 2016, the Company expects (see Forward Looking Statements) Specialty Foods' organic volume growth to be at the top end or exceed the Company's long-term targeted range of 4% to 6% (6% to 8% after including net selling price increases) due to a range of factors including a variety of consumer trends that are benefiting many of its businesses.

Premium Food Distribution's revenue for the first quarter of 2016 as compared to the first quarter of 2015 increased by $6.0 million or 5.3% primarily due to approximately $4.8 million in net selling price increases that were implemented in response to rising raw material costs. In volume terms, Premium Food Distribution's revenue grew by approximately 1.0% relative to the first quarter of 2015 as strong growth in its sales of seafood and a variety of new highly differentiated protein products were partially offset by the impact on its Alberta and Saskatchewan foodservice operations of the economic slowdowns in these regions.

For 2016, the Company expects (see Forward Looking Statements) Premium Food Distribution's organic volume growth to be at or slightly below the bottom end of the Company's long-term targeted range of 4% to 6% (6% to 8% after including net selling price increase) as solid growth from a variety of new product initiatives, including seafood and antibiotic free protein products, as well as stronger foodservice sales in southern British Columbia, are expected to be partially offset by the impact of continuing weakness in the Alberta and Saskatchewan economies.

Gross Profit

Specialty Foods' gross profit as a percentage of its revenue (gross margin) for the first quarter of 2016 as compared to the first quarter of 2015 decreased primarily due to: (i) operating inefficiencies in its two U.S. sandwich plants which were the result of start-up costs associated with the launch of a large number of new products; and (ii) a significant increase in certain turkey raw material costs resulting from a temporary supply imbalance in the Canadian market. Normalizing for these two factors, Specialty Foods' gross margin for the quarter was 19.7%.

Premium Food Distribution's gross margin for the first quarter of 2016 as compared to the first quarter of 2015 was relatively stable as favorable raw material cost benefits resulting from a strengthening Canadian dollar were largely offset by an unusually large spike in certain beef raw material costs.

Over the last number of quarters Premium Food Distribution's gross margin has been below its historic level of approximately 17% due to unusually significant increases in raw material beef costs which, in the latter part of 2015, were further exacerbated by the weakening of the Canadian dollar. Looking forward (see Forward Looking Statements), Premium Food Distribution expects raw material beef costs, in Canadian dollar terms, to begin decreasing in the coming months and, correspondingly, is projecting an improvement in its gross margins for the remainder of 2016.

Selling, General and Administrative Expenses (SG&A)

Specialty Foods' SG&A as a percentage of sales for the first quarter of 2016 as compared to the first quarter of 2015 decreased primarily due to: (i) the fixed nature of a variety of costs relative to its organic revenue growth; (ii) reduced discretionary employee compensation associated with growth in the free cash flow of certain businesses; and (iii) the timing of discretionary marketing and promotion costs.

Premium Food Distribution's SG&A as a percentage of sales for the first quarter of 2016 as compared to the first quarter of 2015 decreased slightly mainly due to the fixed nature of a variety of costs relative to its organic revenue growth.

Corporate SG&A for the first quarter of 2016 as compared to the first quarter of 2015 decreased by $0.9 million mainly due to unrealized exchange gains on U.S. dollar denominated liabilities.

Adjusted EBITDA

The Company's targeted EBITDA margin for 2016 is expected (see Forward Looking Statements) to be within the range of 8.0% to 8.5%. This target was set several years ago when its EBITDA margin was approximately 6.5% and since then the Company has made steady progress with its adjusted EBITDA margin improving to 7.5% in 2015. With the continued improvement in the Company's adjusted EBITDA margin in the first quarter of 2016, its adjusted EBITDA margin for the trailing twelve months is 7.7%.

Looking forward (see Forward Looking Statements), the impact of the Company's acquisition of C&C Foods subsequent to the quarter is expected to result in a decrease in the Company's adjusted EBITDA margin due to C&C Foods, as a distribution business, generating lower margins relative to the Company's current adjusted EBITDA margin. However, the Company still expects to be within its targeted range for 2016 based on: (i) expected improvements in the operating performance of its U.S. sandwich plants, which were impacted in the first quarter by the launch of several new products; (ii) a general improvement in operating efficiencies in a number of the Company's businesses resulting from projected organic sales growth; (iii) a reduction in certain raw material beef costs which, due to their historically high levels, are impacting Premium Foods Distribution's gross margins; and (iv) the continuing positive impact of its recently acquired Isernio's Sausage and Expresco Foods businesses.

Interest and other financing costs

The Company's interest and other financing costs for the first quarter of 2016 as compared to the first quarter of 2015 decreased primarily due to reduced debt levels resulting from: (i) the conversion of convertible debentures into common shares throughout 2015 and in the first quarter of 2016; and (ii) principal payments made on the Company's senior debt.

NON-IFRS FINANCIAL MEASURES

The Company uses certain non-IFRS financial measures including adjusted EBITDA and free cash flow, which are not defined under IFRS and, as a result, may not be comparable to similarly titled measures presented by other publicly traded entities, nor should they be construed as an alternative to other earnings measures determined in accordance with IFRS. These non-IFRS measures are calculated as follows:

Adjusted EBITDA

Free Cash Flow

FORWARD LOOKING STATEMENTS

This press release contains forward looking statements with respect to the Company, including its business operations, strategy and financial performance and condition. These statements generally can be identified by the use of forward looking words such as "may", "could", "should", "would", "will", "expect", "intend", "plan", "estimate", "project", "anticipate", "believe" or "continue", or the negative thereof or similar variations.

Although management believes that the expectations reflected in such forward looking statements are reasonable and represent the Company's internal expectations and belief as of May 12, 2016, such statements involve unknown risks and uncertainties beyond the Company's control which may cause its actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward looking statements.

Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include: (i) changes in the cost of raw materials used in the production of the Company's products; (ii) seasonal and/or weather related fluctuations in the Company's sales; (iii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iv) changes in the cost of finished products sourced from third party manufacturers; (v) changes in the Company's relationships with its larger customers; (vi) access to commodity raw materials; (vii) potential liabilities and expenses resulting from defects in the Company's products; (viii) changes in consumer food product preferences; (ix) competition from other food manufacturers and distributors; (x) execution risk associated with the Company's growth and business restructuring initiatives; (xi) risks associated with the Company's business acquisition strategies; (xii) changes in the value of the Canadian dollar relative to the U.S. dollar; (xiii) new government regulations affecting the Company's business and operations; (xiv) the Company's ability to raise the capital needed to fund its growth initiatives; (xv) labor related issues including potential disputes with employees represented by labor unions and labor shortages; (xvi) the loss and/or inability to attract key senior personnel; (xvii) fluctuations in the interest rates associated with the Company's funded debt; (xviii) failure or breach of the Company's information systems; (xix) financial exposure resulting from credit extended to the Company's customers; (xx) the malfunction of critical equipment used in the Company's operations; (xxi) livestock health issues; (xxii) international trade issues; and (xxiii) changes in environmental, health and safety standards. Details on these risk factors as well as other factors can be found in the Company's 2015 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.

Unless otherwise indicated, the forward looking statements in this document are made as of May 12, 2016 and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward looking statements in this press release.