Wednesday, 18 December 2013

Genetically Modified Food Labelling - On It's Way to the UK?

The UK observes American trends but usually queries their relevance. There is one trend though that could have massive implications for food businesses over here and that is the drive to label all foods that contain genetically modified ingredients.

To date, here and in the US, the emphasis has been on claiming that foods do not contain GMO’s.

Now the debate has moved on and a head of steam is building up to say that consumers need to know exactly what is in their food, not just what might not be in it, and that means declaring if food has a GM content.

The implications are huge. USDA, (the American DEFRA) estimates that in 2013 some 90% of the corn crop and 93% of the soybean crop were planted with genetically modified seed. 90% of rapeseed is genetically modified. Corn based products go into a wide array of foods, including soft drinks, cereals, and  breads. Rapeseed oil is widely used as are soy bean based products, most notably in animal feed. Consumers doing their grocery shop will find it difficult to avoid buying GM containing food. They may not like this and start demanding non GM versions. 

The implications are huge. 
Should this happen then every player in the food chain will be affected. As Karen Batra of the Biotechnology Industry Organization says “Farmers, food producers, grocers and retailers would have to implement separate and distinct systems to grow, handle, record, process, transport and sell products”. There will be many players in the food chain who simply cannot make a change to non-GMO products for cost reasons.
Many will say that it won’t happen here.
 There is though an interesting straw in the wind. Wholefoods Market, an American premium food retailer with 9 stores in the UK, has committed to labelling all its GM containing foods by 2018, with many labelled before then. Currently the move is confined to the US and Canada, but if it proves a business builder then they may decide to adopt a similar stance in the UK. From there it is but a short hop to the big retailers here implementing a similar policy.
The debate about whether GM products should be allowed in the UK ebbs and flows. It may become obsolete if consumers are forced, through labelling, to confront the issue and decide that GM foods are something they are not prepared to buy.

Tuesday, 10 December 2013

Fever-Tree Mixers - A Masterclass in How to Add Value

Fever Tree mixers are basically a combination of water sugar and flavourings – just like Schweppes or any mixer sold under a retailer’s own brand.
Yet newcomer Fever - Tree retails at over three times the price of old established Schweppes, and as much as seven  times the price of retailer brands.

“Hmm, must be a tiny brand” will be most peoples’ reaction. Not true. Whilst Fever Tree is undoubtedly a niche product , it is a sizeable niche . Turnover in 2012 was £16.4 million, up from £12 million the year before, and this year turnover is predicted to top £25 million.

It is a profitable niche, reporting underlying earnings in 2012 of £5 million before tax, depreciation and amortisation. And it has international appeal with 70% of its sales coming from abroad, mainly Spain and the US.

Charles Rolls and Tim Warrillow who founded the brand attribute its success to outstanding product quality. Fever Tree products contain only fresh ingredients and natural flavourings which are claimed to be unique. Its products are made from cane sugar, and none contain artificial sweeteners like aspartame or saccharin.

The mixers do indeed taste good. But I would suggest that the packaging plays a big part in the brand’s appeal. The bottles are glass, not plastic. The simply designed, shiny labels look classy, as does the outer sleeve. Displayed on supermarket shelves they make everything else look cheap.

And then there is the story behind the brand. It seems that the co founders travelled to the four corners of the earth to source their ingredients. So the quinine comes from a plantation in the Congo that produces the purest form of quinine in the world. Lemon and thyme for the tonic come from Provence, and the three gingers used come from Ivory Coast, Nigeria, and Cochin in India.

There may be psychology at play. After all, if you have shelled out over £26 for a bottle of fancy gin or £36 for vodka (the going rate for Tanqueray and Grey Goose) then you probably want to buy what you believe to be the best mixer available. As the Fever-Tree website says “If ¾ of your gin and tonic is tonic, make sure you use the best”.

It is difficult to break down what adds value. Usually it is a combination of factors, both rational, like product taste and ingredients, and emotional, like how much the story behind the brand appeals, and how buying the brand makes you feel about yourself.

Fever - Tree manages to combine a myriad of factors and turn them into a considerable success.