Friday, 20 July 2012

Spectacular Increase in Lamb Eating as Supermarkets Cut Prices - But Still a Premium Meat Needing Premium Marketing

Lamb eating in the UK has grown for the first time in over three years. 

According to KantarWorldPanel data for the 12 weeks ending 10th June volume sales of lamb grew by 16%. This reverses a severe downward trend, with sales at one time looking as if they were in free fall. Indeed, annual sales of fresh and frozen lamb through supermarkets have dropped from around 101,000 tonnes in 2008 to 70,000 tonnes today. (Source: World panel/EBLEX).

Renewed growth is welcome news to sheep farmers for the halcyon days of high lamb prices caused by the weakness of the £ versus the euro are behind us at least for the foreseeable future, and a strong domestic demand is needed to ensure that prices do not fall to unsustainable levels.
Predictably, the main reason for higher consumption is a drop in retail price. In the 12 weeks under review the average price of a kilo of lamb reduced from £8.22p to £8.08p as supermarkets promoted the product over Easter and in the run up to the Jubilee. Sales were also helped by the rocketing price of beef in the shops. The gap between the average price of a kilo of beef versus lamb has narrowed to around £1 a kilo versus £1.92 a year ago.

£8 a kilo is not cheap. Lamb remains a premium priced product out of the reach of many. And there has been sobering news on the premium food front. According to Kantar World panel, sales of supermarket own brand premium ranges, like Sainsbury’s Taste the Difference or Tesco’s Finest, have declined for the first time since 2008. It had seemed that consumers were willing, despite the general price of food rising, to keep buying premium food as long as they felt the quality justified the price. Now they are thinking twice, and in the last 12 weeks sales of premium own brand ranges have dropped by 6%. By contrast, sales of value ranges have soared, up 13%.

Further signs of belt tightening come in the form of below inflation sales through supermarkets – down 0.7% in June 2012 compared with June 2011, and the well documented performance of discounters Aldi and Lidl who continue to grow, up 26% and 11% respectively.

The increase in lamb eating is good news, and it is hoped but not expected that supermarkets will keep the price of lamb at these lower levels to encourage consumption.

What is urgently needed is a total rethink about the way lamb is marketed so that product quality is consistently superb, the type of cuts offered and advice about how to cook them are imaginative and relevant, and lamb becomes a worthwhile buy in the eyes of more consumers.

Monday, 9 July 2012

From Farm to Fork -Ireland's Plan to Brand its Food and Drink Exports

Ireland’s food and drink exports are worth 8.9 billion euros, around 9% of all exported merchandise, and grew 25% in 2011. In an effort to ensure that they remain competitive the country is embarking on a project to sell Ireland’s produce as a premium brand with sustainability as its key selling point, and hard evidence to back up the claim.

Origin Green” is a voluntary scheme  embracing farmers, processors and food and drink manufacturers, run by Bord Bia the government body set up to promote growth in Irish food production. On signing up, participants commit to environmentally friendly actions like using less energy inputs, encouraging more biodiversity and minimising water use.

The idea of branding a country’s food output in order to achieve a premium price is original, ambitious and rather exciting. But will it work? 

Sceptics may say that the project is doomed to failure: that special interests will get in the way of uniting such a disparate band of players, and that it will be a hard sell to the independent minded farming community who must be engaged if the effort is to succeed given that sustainability starts on the farm.

These naysayers are probably adding that the sustainability bandwagon has rolled on and that in the current economic climate few consumers, the ultimate definers of what is worth a premium, are not prepared to shell out for such a nebulous benefit.
They could well be right of course, but here are a few reasons why the Irish approach might fly.

First, the impetus for the strategy comes from the top. The Irish Minister for Agriculture, Simon Coveney wants Ireland’s exports to grow and sees the way to do this as making Irish produce “Recognised globally as a trusted source of high quality, high value foods.”
Second, across the globe greenness and Ireland go hand in hand in the public’s mind. The Emerald Isle has a bigger opportunity than most to claim “greenness” as a point of difference and turn it into a strong reason for people to buy.

Third, the food and drink industry seems enthusiastic about the idea. Several heavy hitters have signed up to pilot the programme including ABP, Dawn Farm Foods, Kerry Group, Marine Harvest and Irish Distillers, and  Irish farmers are already engaged in projects designed to improve their environmental credentials. Since May 2011 Bord Bia has been monitoring the carbon footprint of all its quality mark beef farmers, checking around 500 farms per week. The dairy industry is next in line to take part in a similar programme.
Which leaves sustainability and whether it is a strong branding message. There is no doubt that consumers expect the companies they buy from to act with integrity, and this includes doing the right thing for the environment. Social media means that those who do not are quickly named and shamed. Thus major retailers, restaurant chains and manufacturers are driving the sustainability agenda, because they feel that this is what their customers expect of them. Bord Bia spoke to Marks and Spencer, McDonalds, Sainsbury and Unilever prior to finalising the Origin Green programme, and all confirmed that their suppliers are increasingly being required to adhere to sustainability criteria.

Whether sustainability can command a premium is difficult to say. But where the advantage might show itself is when a buyer looks at two products he is considering stocking, one Irish and one from elsewhere. All other things being equal he might well opt for the Irish version because of its sustainability credentials.
One wonders if countries on the British mainland would be able to develop and implement such a united, focussed approach to developing food and drink exports.