Ways to Grow the Beef Mince Market - A Report for Beef Producers

Mince accounts for 52% of all beef sold, and it has come under the spotlight in a new report written by the Institute of Grocery Distribution with contributions from Dunhumby, who analyse Tesco data, and Taylor Nelson Sofres who monitor the total market. The report’s aim is to “help beef producers understand the challenges that the wider beef supply chain faces in maintaining and growing one of the most important and versatile meat products”. The report is endorsed by the NFU, EBLEX and the AHDB.

Some of the data in the report could be guessed, but some is really quite startling. Fairly predictable is the fact that mince beef sales, although down 1% in volume over the past year, have held up better than any other cut. Total beef sales are down around 3%. It’s also unsurprising that premium mince, sold under supermarkets expensive labels such as Tesco’s Finest and Sainsbury’s Taste the Difference, tends to be bought by the more affluent, whilst value mince is bought by the less well off. Smaller 250g packs are bought by pensioners and older families, and bigger packs by bigger families.

Other facts are less obvious. For example, nearly half of all mince is sold on some sort of price promotion, the most popular just now being “buy 2 packs for (say) £4”. This compares with about a third of sales on promotion a year ago. And mince is not just mince. In fact the market is divided up into 4 segments – premium, standard, value and healthy. These are categories defined by supermarkets themselves, and are designed to appeal to different types of consumers. Region wise, the Scots eat most premium mince, value sells best in the North East, and healthy mince appeals most in the south and east.

Most startlingly of all, value mince has grown very fast with sales doubling in the last year, but it still only accounts for a small proportion of mince sold. IGD shows that in Tesco, value mince in the biggest selling 500g pack size, is just 3.4% of sales of all its mince in the 250g to 500g sizes, compared with 4.5% for premium and 11% for healthy. So, contrary to most people’s expectations, consumer choices are not all about lowest possible price.

Looking forward, the report suggests that anyone seeking to grow the beef mince market should bear consumer trends in mind. Chief of these is health, with 57% of people thinking that they can make a difference to their health through the foods they eat. Interest in local foods continues, as does commitment to buying products with high animal welfare standards. And most encouraging of all, 89% of consumers feel that British farmers should be supported.

The last point made by the report is the need for carcase balance. And they are right to point this out. Clearly it makes little financial sense to grow the mince market yet in the process use up cuts which can be sold at a higher price. Although easier said than done, a marketing strategy is needed for the whole animal.

UK Milk Market – Examining Opportunities for Growth

Tetra Pak, multi billion pound maker of drinks cartons, has just published a review of the UK liquid milk market, setting out where growth opportunities might lie.

The company estimates the total market, retail and catering together, to be around 6 billion litres, with sales down 1% year on year. Growth in retail sales is partly offsetting a decline in catering. (For comparison, DairyCo’s latest numbers for retail show the market to total 5 billion litres, up 0.4%).

According to Tetra Pak, functional products with added health benefits are the biggest growth opportunity. They point out that products like Unilever’s Flora Pro Activ which promises lower cholesterol, and Lactofree from Arla are growing strongly, and increasing health consciousness will drive growth still further. This has apparently happened in America where products with added health benefits are booming.

Whilst Tetra Pak are correct to say that keeping healthy is a worry in the UK, launching successful products will not be easy. Health benefits do not trump a poor tasting product, so much research and development will be needed to ensure that the products not only deliver their claims but also taste great, and vast marketing budgets are needed to explain a benefit to a public generally mistrustful of anything which smacks of being modified.

A more straight-forward opportunity identified by Tetra Pak lies in the flavoured milks market, where, helped by the launch of exotic varieties, the market has grown to 200 million litres in 2009. An EU ruling that subsidies for milk now apply to secondary as well as primary schools may encourage teenage consumption. And at the youngest end of the age scale, Tetra Pak has noted a rise in sales of baby and toddler milks.

One of the quirkier facts in the review is that goat’s milk is the fastest growing sector of all.

And so to brands and innovation. The Tetra Pak review shows that the share of branded milks has grown to over 20%. EU regulations whereby milks of varying fat levels can be labelled as milk, rather than milk drink, allowed a new sector to emerge, led by Wiseman’s “The One %". Cravendale filtered milk from Arla with its longer shelf life has been a shining example of innovation. The product is sold at a premium and the sector has come from nowhere to be now worth £229million. Lactofree is another branded success. All demonstrate that premiums and innovation are possible even in a so called commodity market.

Anders Olsson of Tetra Pak reckons that more creative thinking and better consumer understanding would lead to a more dynamic milk market. He says that “The current state of mind is auto-pilot”. It may sound harsh but he has a point. Liquid milk is a huge but static market, and there is a crying need for innovation to reduce dependence on sales of low margin standard milk to major retailers, to get the value of milk sales up, and to return some of the higher value margin to milk producers.

Notes from DairyCo’s consumer sales audit for the 12 months to 1st November 2009
- the liquid milk market is up 0.4% in volume and 6.7% in value
- filtered milks grew by 10%
- organic milk sales are down 2%
- Jersey and Guernsey are doing well off a small base, up 13%
- UHT milk is down 2%, but a new sector, sterilised milk, is growing rapidly albeit is still very small. DairyCo thinks this is because it offers a longer shelf life.
- soya milk sales are down 5%

Prices Down, Consolidation and Cooperation Up – Key Messages from Royal Agricultural College Conference

At the Cirencester annual conference, Christine Tacon of Co-operative Farms and John Shropshire of G’s Marketing addressed the theme of “Business strategies for the next decade”. With a turnover of £50million, and running 60,000 acres of their own and partner companies’ land, the Coop is the largest arable, vegetable and fruit farmer in Britain. It supplies the Coop Group, as well as other customers. G’s is a £230million turnover company, supplying major supermarkets, independent outlets and the catering trade with vegetables and salad crops.

Their businesses are different but their messages similar.

Message 1 – Producers profits will be further squeezed

Whilst neither speaker put it quite as baldly as that, Christine said that “these are tough times for growers”. The Farms unit is prepared to take a lower price for produce from its Coop parent in return for security of supply, and acknowledges that Coop buyers would rather not be tied to buying from the Farms but to chase lowest prices by dealing with a number of suppliers. John Shropshire was categoric – “Price is everything”- and cited celery where half of the crop this year was sold on promotion. He says growers are finding it difficult to make money even now, and forecasts that prices will drop in real terms. Perhaps controversially, he does not favour contract prices, believing that producers tend to contract at below the market average, and also that contracts mean businesses lose touch with what is happening in the market place.

Message 2 – Big is beautiful

The notion that producers’ profits are under pressure is not a surprise, but the emphasis these industry speakers put on the need for accelerated and radical consolidation might be.

Christine mentioned Thanet Earth, a veg and salad crop venture in Kent owned by a 4 business consortium, whose website proclaims that the unit has enough glass to cover 80 football pitches. She also said that UK meat and dairy industries are too fragmented and inefficient to compete with overseas companies. John was clear that further consolidation in the supply chain was urgently needed to reduce costs and offset pricing pressure. John, with G’s having farms in Spain as well as the UK, also forecast a “Europeanisation” of the supply chain in an effort to get economies of scale.

Message 3 – Cooperation will be key

Coop Farms either own land or run farms for private landowners so are well used to dealing with farmers directly. G’s is a cooperative of 20 farmers with each farmer having one vote regardless of size. Both are committed to close working relationships, and feel that the more integrated the supply chain the more chance there is to examine costs from end to end and reduce them to offset price pressure. John Shropshire particularly stressed the need for close partnerships where information flowed, and supply chains could react with speed and accuracy.

Perhaps as a reaction to the extremely difficult economic climate, there was less talk of growth producing as opposed to cost cutting strategies. However speakers commented on the need for good customer understanding, and a continued attempt to try new things even when money is tight.

What Will Marc Bolland Do To Revive M&S Food Business?

Marc Bolland’s move to Marks & Spencer has sparked excitement in the City and attracted acres of coverage in mainstream news. The interest reflects M&S’s position as jewel of the High Street, leading purveyor of the nation’s underwear, and reliable backstop when looking for clothing basics - and Bolland’s success at supermarket giant Morrisons.

Marks badly needs someone who can revive it's £4.2bn turnover food business. Performance has been nothing short of dismal with falling margins and severe loss of market share, and the decline cannot be put down to difficult economic times. The problems arose well before the credit crunch, and continue despite a slight loosening of consumer purse strings, and recovery in its rival Waitrose.

Mr. Bolland's experience at Morrisons equips him well for the challenge. So what might he do?

First he has to understand what the problem is. Current management seems to think it is all about price, and has responded with hundreds of offers and deals such as “Dine in for £10”. This might help in the short term as Marks' food is expensive, but it is not a long term fix. Neither is the plan to introduce branded products such as Coca Cola, for Marks has neither the expertise nor the buying power to be a general grocery shop. What Marc Bolland must do is solve the basic problem which is this - as of today there is no compelling reason either to visit M&S on a regular basis, or to spend much when you get there.

How different it was a few years ago. M&S's initial success came because it offered outstanding quality which was unavailable from anywhere else. Then in a brilliant piece of market understanding and pioneering innovation it developed its range of ready meals, offering culinary delights which an increasingly widely travelled public encountered when abroad but had no idea how to replicate at home. Ready meal sales went from strength to strength as time pressed but affluent consumers bought a no-preparation evening meal, not giving too much thought to nutritional content or having to double up because portion sizes were tiny. M&S sandwiches were a leading development too, offering fresh and delicious lunchtime fodder at a time when the only takeaway food was a sausage roll and packet of crisps.

But then the world caught up with Marks. Supermarkets matched them on quality by introducing premium ranges, consumers shunned ready meals preferring instead to do some actual cooking at half the price and twice the goodness, and lunchtime options became available everywhere from the likes of Gregg’s the bakers, or coffee outlets such as Costa and Starbucks.

So Mr. Bolland, what is needed here is a return to the historical ability of Marks and Spencer to see the future with crystal clarity, to anticipate consumer trends, and give us what we want before we even realise we want it.

Supplier Relationships
On the supplier relationship side, we know that Morrisons supported British farmers under Bolland’s leadership, committing to stocking only British beef and lamb. Also that they set up Morrisons Farm, a 700 acre holding on the Dumfries house estate in Scotland where the objective is to be a “leading centre of excellence in applied farming research”. It is to be hoped that he will continue Marks’ constructive approach to farming relationships, and commitment to stocking only British beef, salmon, chicken, pork and turkey. He might even go all British on lamb. Whether he will bring a tougher negotiating stance generally to suppliers remains to be seen, but with slipping margins some changes are likely.

The 10 Most Motivating Advertisements on TV Now – And Why They Work

Businesses spend thousands and sometimes millions of pounds developing and making adverts, yet few ads actually do what they are supposed to – namely persuade people to part with cash to buy the product in question. So its interesting to see some research carried out by Mercury, an arm of TNS WorldPanel which names the top 10 most motivating ads of 2009 so far.

The top 10 are:
1. Dettol Antibacterial Spray
2. Walkers Crisps with Gary Lineker and Cat Deeley on the bike
3. Kelloggs free cornflakes
4. iPhone new version
5. Tesco where Fay Ripley is picked up by her husband in a hot air balloon
6. Premier Inn’s take off of classic film Psycho, starring Lenny Henry
7. Morrisons supermarket fresh fish
8. Compare the Market with the meerkats Alexander and Sergei
9. Currys fridge freezer recycling
10. Jacob’s Cream Crackers

Now why would these adverts work better than the other 190 tested?

The company who did the research say that the top 10 adverts work because “It’s one thing to have an ad that people enjoy, but if you are not addressing a need or feeling it is less likely that they will turn that enjoyment into a purchase”. Or, in other words, there has to be a strong reason in the ad for people to part with their cash. This is particularly true for a business which has limited money to spend on promoting their products.

After a happy half hour watching these ads, I’d offer some more thoughts about why they are especially effective.

Dettol heads the list. It’s an example of “problem/solution” advertising, and in Dettol’s case the problem is both big and topical, namely how to protect your family against swine flu. The advert not only solves a problem, it does so in a very vivid way, showing brightly coloured germs lurking in unexpected places, waiting to pounce on the vulnerable.

Curry’s advert for their fridge freezer disposal service uses problem/solution advertising too, illustrating the sheer hassle of carting the old appliance to the recycling centre, as does Premier Inns who remind viewers of the nasty surprises that can be found in some cheap hotels. Which leads to the next reason why these adverts work – both Currys and Premier Inns commercials get attention because they are funny. Very funny, in the Premier Inn case where Lenny Henry acts out all the parts with enormous enthusiasm.

Walkers Crisps raises a smile as Gary Lineker (a smug but seemingly likeable character) gets his come uppance at showing off. The Tesco advert also raises a smile and is a clever twist, but both of these, alongside Morrisons fish, and Compare the Market .com probably succeed through the sheer amount of money spent showing them on our screens.

It helps to have a big name. Lenny, Gary, Fay Ripley in the Tesco ad and Nick Hancock in the Morrisons ad are all very well known stars. Stars don't come cheap though - Richard Hammond of Top Gear is reportedly being paid £750,000 for his appearance in Morrison’s Xmas advertising. Fortunately stars are not mandatory, as Dettol have shown, and too often are used by advertising agencies as a lazy substitute for good creative thinking.

The last type of advertising represented in the top 10 is informational. This works best when the message is simple. Kelloggs is telling the world that just by collecting three tokens they can get free cornflakes forever, and iPhone is announcing the launch of its new version.

All businesses have to consider how they will tell customers about their products, and not many can afford multi million pound TV campaigns. Whether putting up a flyer in the local newsagents, advertising in the parish magazine, getting a mention in the town newspaper, or deciding what to say on a website, the rules are the same. Grab peoples’ attention, give them a concrete reason why they should buy, and make it as easy as possible to purchase the product.

My Shameful Secret - I'm a Meat Eater

So the hoo-ha about meat eaters destroying the planet has surfaced again, this time via a Times interview with Lord Stern, noted scientist and author of the 2006 review of the cost of tackling climate change. The Times front page headline announced "Climate Chief: give up meat to save the planet", and in the body of the interview Stern reckoned that people's attitudes would evolve until meat eating became unacceptable.

So, is meat eating about to become a shameful secret, admitted, like listening to Country and Western music, only to one's most trusted friends,and undertaken behind closed doors. Will meat eaters, driven underground by public opinion suddenly feel the need to burst out of the closet, shout about their meat eating, and join "Meat Pride" marches through the streets of London? Will, heaven's above, the nanny state actually ban meat eating?

To be fair, on BBC's Today programme Lord Stern started by saying that the Times headline was "unfortunate", and that his message is about global leaders needing to take climate change seriously with meat eating being just one of many factors which need consideration. Too late. The headline writers have roared into action.

The voice of reason needs to speak up.

For starters, sheep and cattle are vital to preserving the character and biodiversity of the British countryside. They graze on moors, hills and coastlines, keeping land that cannot be cultivated for grains or vegetables from becoming brown stretches of dead bracken incapable of supporting plants or wildlife. The National Trust understand this, as does Natural England. Both have been active in reintroducing cattle to ungrazed stretches of the countryside, resulting in more rare plants and bird life. Perhaps they could speak up.

Meat, as the Food Standards Agency on its website and Times nutritionist Amanda Ursell both point out, contains essential nutrients in an easily absorbable form. The FSA says " Meat is a good source of protein and vitamins and minerals such as iron, selenium, zinc and B vitamins".

There's also the very practical issue that if there are no cows then there are no milk and dairy products.


And farming is a voice which needs to shout very much louder, communicating their plan (assuming there is one) to minimise farming's environmental impact.

Tough Times for Butchers

It’s a hard time to be a butcher. TNS* figures for the 52 weeks to August show butchers sales down by 5.2%, which compares to an increase of 5.7% for meat sales through all shops. Whilst the turnover figures are bad, tonnage sales are horrific. Butchers are selling 20% less pork than last year, 18% less lamb, 12% less beef, and 15% less sausages. And year on year declines are getting worse. Tonnage sales in the last 12 weeks show a 24% drop in sausage sales, 18% drop in beef, 16% in lamb and 18% in pork.

Meat sales generally have been struggling, but butchers seem to be suffering especially badly. The comparable numbers for the total meat market in the last twelve weeks are sausages +2%, beef -2%, pork -1%, and lamb -16%.

Price is likely to one of the problems, with many people thinking that butchers are expensive. The price difference between the average butcher and the top 4 multiples is about £1 per kilo dearer on lamb, 54p per kilo on pork, and 26p a kilo on beef.

Another issue might be that you never know when buying from the butcher quite what the bill will be. And it’s a brave person who, confronted with more cost than expected, asks for the piece to be cut smaller. Contrast this with supermarkets where everything is price marked, you know exactly what the cost will be, and can be confident of sticking to your budget.

The meat trade needs strong butchers as they are a way to avoid total domination by supermarkets, and some butchers are a beacon of hope in a generally gloomy picture. The reasons seem to be firstly, a refusal to compromise on quality, secondly a willingness to embrace consumer trends such as selling locally produced fully traceable meat, and thirdly, being prepared to experiment with supermarket type tactics like prepriced joints and promotional offers, all of which helps keep their customers loyal in difficult economic times.

*TNS is Taylor Nelson Sofres.