Consumer Support for Farmers

This is Arthur with one of his beautiful White Park cattle. We feature Arthur today to highlight new market research from the Institute of Grocery Distribution where consumers were asked what the food trade could do better in 2008. Encouragingly, the biggest number of mentions, 43%, said that the trade should do more to support producers in Britain. This number was higher even than that for cutting back on unnecessary packaging which has long been a consumer bugbear, and came in at 41%. These findings support a trend which has been seen for over a year now where consumers views of farmers have changed from highly critical to being very sympathetic to their plight. Its a feeling that has been picked up by the grocery trade who are spending alot of money advertising their support for British farmers.(See blog post " Morrisons latest to support British Farming on 6th November). Interestingly the research shows how stong is the Fair trade message with 24% of consumers saying that the food trade should do more to support producers in developing countries.

This support for British farmers is excellent news. However those in farming have to work hard to maintain this support. One risk is that with all the talk of higher food prices, grain being at a record price, and dairy farmers at last getting better prices, consumers think that everthing is ok in the farming world now, not realising the huge pressures that livestock farmers face. Every one in farming, especially leaders such as the NFU, needs to communicate clearly that yes, some farmers are doing better but alot are barely surviving.

For the more on the research go to http://www.igd.com/

Quality Critical

More figures today, this time in the shape of a survey undertaken by the Times about what's important to consumers when it comes to choosing where to eat and drink away from home.

In response to the question "On a scale of 1 to 5, what are the key factors when deciding where to eat and drink on the high street?", people rated quality as far and away the most important reason for their choice, with ethical issues and availability of organic/fairtrade options coming fourth and seventh respectively. The actual numbers are:

Quality - 4.54
Customer service - 4.33
Healthiness - 4.30
Price - 3.95
Ethical issues - 3.95
Restaurant environment - 3.79
Availability of organic/fairtrade options - 3.67
Speed - 3.37

Once more we have a reminder that no one can get away with inferior quality.

No Slowdown in Food and Drink Sales

The credit crunch does not seem to be having any effect on food and drink sales so far.Taylor Nelson Sofres, the market research company which records what consumers purchase in retail shops, has just released figures for the 12 weeks to 2nd December. They show that total food and drink sales grew by 5.1% versus the same period last year. The "big four",

Asda, Tesco, Sainsbury and Morrisons grew by more than this, further tightening their grip on the market, whilst the Coops, Somerfield, and independent stores lost share of sales.

The latest share of sales for each retailer are as follows:

%
Tesco - 31.7

Asda - 16.6

Sainsbury's - 16.1

Morrisons - 11.3

Coops - 4.3

Somerfield - 4.0

Waitrose - 3.8

Aldi - 2.6

Lidl - 2.3

Iceland - 1.7

Netto - 0.7

Other

multiples - 1.6

Independents - 2.5

Animal Welfare Action

Virtually every day in the last week or so has seen a story supporting better animal welfare.

It started with Jamie Oliver denouncing battery chicken farming on Channel 4, closely followed by Hugh Fearnley Whittingstall on the same topic. As we know, where these two go today public opinion tends to follow tomorrow.

Then we had the introduction of "faux gras", a goose friendly way of producing foie gras where the birds are not force fed but rather have access to a rich diet to fatten naturally. The product has been launched in Waitrose which stopped selling foie gras 6 years ago, as well as Fortnum and Mason.

Monday's Times featured the launch of a campaign by farmers and industry figures to develop the British veal market, based on calves raised in first class welfare conditions, either outdoors and fed grass and milk, or grass only until the animals are about 16 months old. The industry is keen to see whether consumers will respond if they are reassured about welfare, as a veal market in the UK would stop the controversial export of live calves, and help find an outlet for dairy beef.

And radio 4's British Food and Farming Awards gave the top prize for Best Campaigner/Educator to Compassion in World Farming for their work in improving conditions for farmed animals.

All in all a good week for those committed to raising their animals in the best possible conditions.

Will pressure on disposable income hit premium food prospects?

The media seems full of gloomy news affecting consumers willingness to spend on luxury goods, what with high interest rates, falling house prices, and petrol at over £1 a gallon. Many food prices are also on the rise, for reasons well known to farmers. So the question is whether the trend towards buying premium food will falter as consumers face pressure on disposable income, and become more cost conscious.

Justin King of Sainsbury does not think so. In his view, consumers needing to cut back on bigger ticket items treat themselves by spending more on inexpensive luxuries such as food. He is backing this view with advertisements stressing Sainsbury quality food, and Waitrose and Marks and Spencer are also majoring on quality. Possibly more surprisingly, Morrisons attributed good third quarter results to a boom in their premium "The Best" range and they are advertising this range in the run up to Christmas. Tesco too are advertising top of the range products including one poultry advert for goose, pheasant and duck.

Yes, there will always be a proportion of consumers who have to work to a budget, but according to Tesco, only 16% of people are in this position. Even if difficult times mean that this number doubles, it still leaves 68% prepared to spend more on products they really feel are worth it.

The Institute of Grocery Distribution estimates that the Premium sector will be worth £14.6 billion in 2007, about 9% of the total market, and is growing at 7% versus the total market at 4%. It defines premium as local foods, supermarkets own brand expensive ranges, fair trade, organic, and brands sold with top quality indulgent ingredients. It suggests that the two sectors with most growth potential are locally sourced foods and organics, the former because they reassure about where the food comes from, down to a particular farm or field, and the latter because of media attention.

Free Range Butter - udder madness?

Here's the latest Anchor butter advertisement. The small print at the top says "Merry Christmas from The Free Range Butter Company".

Now why would Anchor advertise itself as free range, something we instinctively associate with animals which can be intensively farmed, not milk based products. The guess would be that Anchor have done market research and discovered that consumers, many of whom are increasingly concerned about animal welfare don't like the idea of milk from cows which are kept indoors all year round and never get to roam grassy pastures. Of course this does not happen in New Zealand, Anchor's home, but it does in the UK. So, Anchor now has a point of difference from British butters that they can use to build their brand.

And the moral of the story? All milk is not the same, and thinking about the link between production systems and consumer trends can point up opportunities to grow a business.

Food and Health - the consumer votes with their purse

News has just come in from TNS, the firm which monitors consumer sales. Far from shunning bacon as recommended by the World Cancer Research Fund, sales of bacon in the week the report was published were up by 4%. British consumers are showing their usual good sense, and choosing a balanced diet.

What Makes a Food Premium?

There is much talk of consumers buying more premium food.

Producing a premium, added value product can deliver bigger profit simply because the higher amount that consumers pay means more money to be distributed through the food chain. Research published by the Institute of Grocery Distribution (http://www.igd.com/) in spring this year provides useful data for farmers wrestling with the problem of how to add value to their produce. So what makes a food premium? Here are some figures.

% consumers saying what makes a premium product:

High quality ingredients used - 41%

Well known brand - 33%

Free range - 23%

Organic - 21%

Locally produced - 19%

Fair trade - 17%

Added health benefits - 17%

Packaging looks good - 13%

Environmentally friendly - 12%

Retailers best own brand - 10%

Quality assurance standards - 10%

High animal welfare - 8%

The figures highlight that many consumers feel that ethical standards also mean premium, whether high animal welfare, environmentally friendly, free range or fair trade. It is also clear that locally produced and organic also equate to premium, and it is likely that ethical considerations influence this also. Other research indicates that consumers buy local because it is better for the environment (less food miles), and they can check for themselves that the farmer is committed to high welfare standards. Organic research also indicates that people buy for ethical reasons.

However two factors stand out as reasons that consumers see a food as premium. First, the product has to be made from high quality ingredients. This means that however ethical the product is it will not be seen as premium unless it is top quality. And second, the product has to be strongly branded, and stand for something consumers can trust. Which means a consistently good eating experience, wrapped up in good looking packaging, with a crisp name and a persuasive reason for the consumer to buy again and again.

Food and Health - confusion reigns

Last week the advice for avoiding cancer was to be thin, according to a study published by the World Cancer Research fund, and the American Institute for cancer research.This week the Centres for Disease Protection and Control Atlanta, in a paper published in the respected Journal of the American Medical Association, tell us that there is no correlation between carrying a few extra pounds (stress few, obese is not good), and cancer risk. Last week's study said the target Body Mass Index to aim for is 25, this week's says up to 30 is ok. Indeed the evidence here is that a bit of a bulge means a longer life. Hmmm.



As far as red meat eating and avoiding bacon butties like the plague is concerned, the Sun (about 3 million readers) comes out today in favour of a middle ground approach. It quotes Karol Sikora, professor of cancer Medicine at Imperial College School of Medicine and advisor to the World Health Organisation stressing that the risks of moderate meat eating are "very, very low". Even the head of the World Cancer Research Fund, Martin Wiseman, is back-pedalling on the bacon issue, saying "its not a question of all or nothing", and if you eat two bacon sandwiches a day now, then aim for one.



Looks like common sense and Granny's maxim of everything in moderation will win the day.

Organic food is better for you......or is it?

To the casual reader last week the headlines were clear - an EU funded study had concluded that orgainic food is healthier because it contains more nutrients. But read behind the headlines and the picture is less definite.

The claimed improvements were limited to a small number of vegetables - antioxidants in tomatoes, potatoes, cabbage, onions and lettuce, and minerals in cabbage and spinach. Milk showed higher antioxidant levels, but more in summer when the cows are eating fresh grass than in winter.

The Times and BBC among others were careful to point out that the results showed significant variations, and the leader of the study, organic enthusiast Prof Carlo Leifert, was forced to admit that some conventionally grown crops have larger quantities of vitamins than organic.

Findings were released to the press, but the detail has not been published, nor have findings been peer reviewed by independent scientists. This will not happen for another 12 months.

Fortunately consumers should get a more balanced picture of organic nutrition levels when the FSA, who have undertaken to review data, publish their findings.

So what are consumers likely to take from last week's publicity? Those already into organic food will be pleased. The well informed will have read the detail and are likely to await further findings. And the headlines may have improved some people's feelings about organic, although whether it tempts them to purchase is another matter, given the cost of organic food versus conventionally produced.

Morrisons latest to support British farming

Morrisons supermarkets have followed up their recent commitment to stock only British pork with a promise to sell only British fresh lamb from now until at least the end of next year. Their advertisement for pork says that they want to support pork while feed prices remain high, and highlights that British pig farmers have the highest animal welfare standards in the world. The advert for lamb also talks about high animal welfare standards.

Waitrose have also been active in their support for farmers "the hardiest breed of all" with an advert on TV. Sainsbury is advertising "British Conference pears. Found on British trees".

The publicity should make consumers think about buying British .