Riverford and Abel and Cole - The Contrasting Styles of Guy Watson and Keith Abel

The two big names in organic veg boxes have been in the news recently, but their messages could not be more different.

Guy Watson has been explaining that the price of Riverford’s produce is typically 20% less than the supermarket equivalent and that whilst this means low margins (typically 3-4%), he is not overly bothered because this pricing strategy fits with his values of good food, good farming and good business at affordable prices.

Keith Abel’s coverage was all about Keith and how since his return to Abel and Cole two years after he sold it to private equity firm Phoenix netting about £20 million in the process, the business has grown and profitability been restored.

Both companies are of a similar size. Riverford claims to deliver about 47,000 boxes a week, and grew sales by 2.4% to £39.5m in the year to April 2011. Abel and Cole, according to the Sunday Times article of 12^th December, claims to deliver to over 50,000 households a week. It had reported sales of £36m in the year to August 2011, up from £28.7m, and made an operating profit of £1.5m.

The two companies might operate in the same market and be similar in size but the philosophies of their founders are very different.

Keith Abel would probably take great offence if accused of being cash driven despite his windfall from the sale to Phoenix, and despite admitting to the Ecologist in June 2011 that one of the reasons he came back to Abel and Cole was because “they offered me a great package”. Even his barrister friend Jeremy Hall quoted in the Sunday Times said that “Keith likes making money”, although he did qualify the comment adding that he possesses a “strong moral compass”.

Nevertheless, the sudden burst of publicity seems tied into the wish of Lloyds bank, current backers of Abel and Cole in which Keith Abel still owns a 20% stake, to sell the business in the next twelve months on the back of an improved company performance.

By contrast, Guy Watson, in a piece posted on the Riverford website just a day after the Sunday Times Abel interview, says that he would never sell his company to venture capitalists, that he is uncomfortable about "unbridled capitalism", and that whatever the future shape of Riverford it must involve people "who are intimately involved in determining its success”.

Does it matter whether one founder of a business is driven more by wealth and another more by values? Possibly not.  In the case of veg boxes customers perhaps only worry about the quality of the food and reassurance that produce is appropriately farmed or grown.

I would guess though that any customer who trades the convenience of shopping for what they want when they want it for downsides of veg boxes like being tied to a delivery day, never being quite sure what they will contain, and having to polish up cooking skills because something unfamiliar has turned up, might be deeply interested in the whole ethos of a company and those who work in it.

Local Food Gains Ground as Consumers Support Those Closest to Home

The move towards buying local food has been around for several years now and the economic downturn seems to have made consumers even more inclined to support nearby producers.

According to the Institute of Grocery Distribution, the number of shoppers buying locally produced food has grown from 39% in September last year to 43% in September this year. As to future intentions, 41% say they will buy more local food compared with 39% who said the same thing at the start of 2011. This number compares with 31% who intend to buy more welfare friendly food, and 17% who intend to buy more organic.

Supermarkets are responding to the trend by stocking bigger local food ranges. Sainsbury now sells 3000 locally produced foods, and grew their sales by 15% in the last year.

Tesco says that “many customers want to buy locally sourced foods to support their local communities”. In response they have built alo special local foods website, where you can type in your postcode, find the nearest Tesco store and a list of the local foods they stock. In 2010/2011 compared with the previous year Tesco grew their local food sales from £850m to £1billion.

Asda, who can justly claim to be the first supermarket to spot the trend has 6000 local products on sale from 600 suppliers. They are aiming to turnover £500m in local food sales, a 15% increase on where they are now.

A trip north of the border to Scotland illustrates the trend well with a Scotland-produced variant of virtually every fresh food like eggs, milk bread, cheese fruit and vegetables available on the shelves. Imagine if that degree of localness spread to English counties or regions.

The urge to buy local is definitely a trend rather than a fad.  As has been the case for a while it is the 65+ age group who are most supportive of local foods, but the IGD tells us that the 55+ group seems to be the keenest to increase their local food purchase, and if the trend spreads to a younger age group then robust sales growth seems to lie ahead.

Strong Brands Win Again - Dairy Crest Outperforms Robert Wiseman

Half year profit results from Robert Wiseman and Dairy Crest once again show the perils of being a one product, one sales channel company operating in a commodity market.

Wiseman’s who sell only fresh milk saw pre tax profits drop by 42%, from £20.2m last year to £11.8m, on a turnover which climbed by 1%. The profit problems arose because the price they paid to farmers rose three times this year, and energy bills rocketed, but supermarkets, on whom Wiseman depends for nearly all their sales, refused to pass these costs on to consumers. Indeed many will recall that retail prices have been slashed of late.

By contrast, Dairy Crest who sell big brands such as Country Life butter and Cathedral City cheese alongside fresh milk reported a profits rise of 9% on a revenue increase of 2%.

Its just as well that Dairy Crest has these brands.  Profits in their dairy division which sells the milk saw profits plummet by 89%, from £10.9m to £1.2m, a shocking performance which puts the fresh milk supply problem into sharp relief.

By contrast profits in the cheese division jumped by 32% due to higher selling prices, and butters and spreads profits grew by 16.5%.

For whatever reason, Wiseman seems to have held a the difficult milk situation together better than Dairy Crest,  possibly because of scale (Wiseman supplies about a third of all fresh milk). But as previous blogposts have indicated, the Wiseman story continues to be a tale of erratic performance, and it is difficult to see how their current business model of one product and one sales channel can be made reliable and sustainable.

Some investors point to their strong cash position, and much has been made of their new venture with New Zealand company A2 which may deliver innovative products such as a more easily digested milk for those who think they have a lactose intolerance. Then again though, Arla seems to have solved this issue with Lactofree.

Dairy Crest with its brands, its presence in cheese, butter, and spreads as well as raw milk, and its sales through more than just supermarkets seems better able to deliver the steady, predictable performance that suppliers, customers and investors like to see.

Warning Call From EBLEX - More Must be Done to Boost Red Meat Consumption

Hard work is needed to keep consumers buying beef and lamb. That is the message coming from EBLEX’s recent conference, and it is an important one. Farm gate prices are strong just now, helped by a reduction in supply from UK farms, a reduction in imports, and a solid export trade due to the weak pound.

UK consumption though is just about stable for beef and dropping like a stone for lamb. Kantar Worldpanel figures show that in the 52 weeks to October 2^nd, people ate 21% less lamb than in the previous year.

So what are the problems? Price is the big one of course. When asked why they do not eat more beef 32% say it is too expensive, and 27% say they cannot afford to. The comparable figures for lamb are 45% and 33%.

We know from other research that price in general has become more of an issue. %. In 2008 34% of consumers claimed to make a shopping list and stick to it. In 2010 this had risen to 44%. In 2008 28% said they worked to a strict budget when buying groceries. That figure now is 40%.

The other main problem on beef is that 17% of consumers think it is not very good for you.

Lamb has its own issues. 57% of consumers agree that lamb can be fatty, and 14% say that too much fat is left on the plate after eating. 15% say there is not enough meat and too much bone to offer value for money.

What can be done to boost red meat consumption?

No one thinks that consumers will become any less price and value conscious in the foreseeable future.

So as Richard Phelps, now of ABP, pointed out at the EBLEX conference, consumers must be given reasons to eat red meat. He believes that, despite continuing pressures on spend, consumers are becoming more adventurous with ingredients and recipes. They are staying in more rather than eating out, and are prepared to buy premium products, mixing these with value lines as budgets allow. So red meat marketers must respond with new cuts and new products.

Phelps says that quality has to improve. He specifically focussed on age of herds, but as anyone who has forked out for a joint of beef and found it tough and tasteless, or left most of their lamb because it was too fatty, much more attention has to be paid to the eating qualities and presentation of red meat. Nick Allen of EBLEX made the quality point also, particularly on lamb where he feels product must improve to combat consumer perceptions of fattiness and poor value.

The final question therefore is who has to take the lead in this. I would suggest it is the processor, ideally with the backing of the supermarket they supply. It is the processor who has the opportunity to set production standards, to reject the over fatty animal, and to ensure that good butchering means consumers get a product they feel is good value for the money spent.

Connecting with Consumers on Smartphones - Now Key to Business Success

“A nation addicted to smartphones” is how Ofcom summarises its findings from a recent piece of research, saying that 27% of all adults and almost half of teenagers now own a smartphone (a mobile which connects to the internet). Smartphone owning numbers have exploded in the past year, and are set to rise further as annual sales of smartphones are now higher than those for the standard version.

More internet users connect to the web via their mobile than a laptop (45% versus 38%), and the number is even higher among 16-24 yearold where 71% access the internet via phone.

Smartphone usage is definitely here to stay and businesses are thinking through how they tap into the trend, whether it be for advertising their products, providing information, or directly selling goods online.

At the very least, websites must be simple enough to be quickly accessed. Consumers will rapidly lose patience if they have to wait for information to be downloaded. This means either having a site tailored to mobile usage, which automatically comes up when searched via phone, or having a link redirecting users from the main site to a mobile friendly one. Amazon and Tesco are good examples of a speedy tailored link. Asda’s site take an age to download.

The other option is to provide an app, or application, which sits permanently on the phone for easy access to a specific activity.

Although most usage is still for socialising, downloading music,  gaming, and searching for information,  the IGD reckons that smartphones are starting to change the way groceries are bought online. According to their research, 1 in 10 online shoppers are using smartphones to shop. Ocado claims that 15% of customer checkouts during the first half of the year came via their smartphone app. Tesco has a handy app which allows shoppers to scan the barcode of a product on their phone whereupon it is automatically added to their online shopping basket.

As to future developments, the IGD predicts that tailored apps which build a relationship with individual consumers are the way to go.

The time has probably come to view selling and marketing via the mobile phone as a crucial part of any business plan.  The research finds that 81% of smartphone users never switch them off, even when they go to bed, and that huge numbers are happy to use the phone whilst socialising, at the meal table, and even in the bathroom.

Smartphone usage is now a part of life. Those businesses without a smartphone presence may find themselves competitively disadvantaged.  

 

The Top Four Issues Worrying Food Shoppers Struggling with Austerity

According to the Institute of Grocery Distribution’s Shopper Track research the top four areas where cash strapped consumers are seeking help are:

1.       Sticking to a budget

2.      Reducing waste

3.      Making shopping a less tedious experience

4.      Understanding enough about product provenance to make the ethical choice

Joanne Denney-Finch, from IGD, speaking at their annual convention went on to explain what the frustrations are.

What shoppers do not want to see as they grapple with budgets is tinkering around with a product to hit a price point. So reducing weights or quality is a no no.

They are not happy with offers which encourage multiple purchase such as 3 for the price of two, or two for a discounted price.

What they do want are straight price reductions, and more advance notice of offers to enable them to plan better. They would also like to be able to keep a running total of spend as they go round the store to avoid the shock that can often come when the final bill is presented at the checkout.

Shoppers also say that branded budget ranges would be welcome as an alternative to buying a retailer’s own brand.

On the subject of waste, shoppers would like to see re-sealable packs, and a longer shelf life on products, as well as a reduction in the number of multi buy offers which they feel encourage over-purchase and often result in product being thrown away.

Food shopping remains a harassing experience for most, with crowds and a bewildering choice being the main sources of angst. This should point to an opportunity for online shopping but it seems that a half of all online shoppers have stopped buying this way, with a third of those finding the whole experience too tedious.

And so to provenance. Denney-Smith does not actually say that consumers will walk away from a product if they do not understand where it has come from. Rather, that giving information about provenance is a vital way of encouraging brand loyalty. She cites the Patagonia clothing website as a good example of how to do this.

So how much of this shopper wish list are we likely to see during our forthcoming supermarket trips?

It would be a brave supermarket that stopped multi- buy promotions in favour of straight money off, because the multi-buy means that shoppers spend more money in the store which helps boost turnover. This in turn boosts market share, and makes a contribution to covering overheads. Equally, anything which means shoppers limit the number of trips they make to a store is bad news as once in, many shoppers are likely to be tempted to buy something which could be classed as unnecessary.

Shoppers’ requests for budget brands are admirably served by Aldi whose whole reason for being rests on just that, but it is unlikely that major branded manufacturers will move this way. It is too costly to build a separate brand, particularly one with a low price.

The ability to keep a running total of the bill whilst going round the store is already available through Waitrose.

So far no supermarket has cracked the code to a pleasurable food shopping experience despite much effort being put in. In fact Sainsbury and Tesco with their emphasis on self serve checkouts and consequent reduction in checkout operators are merely adding to the stress of shopping.

 I have a feeling that communicating provenance will become more widespread. Certainly the technology is available for consumers to find out where there item has come from, whether through a company  websites, or social media like Facebook, or an app on their smartphone, or even through good old fashioned wording on the pack.

The thrust of Joanne Denney-Finch’s speech was that in an age of austerity which shows signs of being around for years, the winners will be those who listen hard to their customers and who are brave enough to pursue radical innovation in response to their customers’ needs. Quite right.

Being Creative with a Commodity - How Meat Marketers are Adding Value

These beefburgers, with their reference to breed and Britishness  neatly capture some of the ways that marketers are adding value to meat. The British reference is important as consumers continue to seek reassurance about where their food comes from, and buying British becomes more of a consideration.

Breed is increasingly being used as a value adding tool. Aberdeen Angus has for a long time been seen by consumers as a quality breed. McDonalds sells an Angus burger costing more than the standard variant, and Waitrose emphasises meat from Angus as well as Hereford cattle. Now Morrisons are embracing breed differentiation, selling beef from Shorthorns (and paying producers a premium in the process).

At the other end of the breed spectrum Kobe beef from Waygu cattle is gaining a reputation for quality, so much so that at the request of a Japanese chef, an Australian farmer is feeding his Waygus a litre of wine every day.

Making meat meals more convenient to prepare and serve also adds value as many consumers are nervous about cooking meat, and, given its price they want to be reassured that the end product will taste great. Hence the rise of "foolproof" products such as Simply Cook where all ingredients are available in one pack, the size of portion is strictly controlled, and the food just has to be flung into the oven for the specified time.

These cook in the bag products from Maggi are a cheaper solution, but offer the same benefits.

Value can be added through packaging innovation. Some consumers do not like to handle meat, so Tesco's meatballs are packed individually, in a tray like an egg carton so that the product does not have to be touched, and Waitrose sells their roasting chickens in a hard case rather than film for the same reason. Note the saltire and reference to Scotch on the pack to reinforce where the meat came from.

All this innovation notwithstanding, price remains a key part of the value equation. It is no accident that all of the above featured products from Tesco came with a promotional offer - mostly two for a discounted price. It is a sobering reminder that people will not pay if they do not think a product is worth the money.

Speciality Farm Produce Available Online - Former Asda CEO's New Venture

One of the more interesting  news items from last weekend is that Andy Bond, former chief executive officer of ASDA is investing in Farmison.com, an online food retailer which aims to provide home cooks with speciality food ingredients produced by small British farmers and normally only found in restaurants.

The move is interesting on a number of counts. Bond clearly believes that online food retailing has a big future and that Farmison can sort out the problems that stop many from buying fresh food online such as variable quality, and irritating substitutions. He must also believe, despite harsh economic times that super premium food, with a provenance that traces back to the individual farmer has a future too.  And he must believe that Farmison has something unique about its offer which will ensure it succeeds in an increasingly crowded market.

Farmison faces competition from other online retailers, and from grocery stores making increasing efforts to go super premium. Marc Bolland wants to take Marks and Spencer in this direction, Waitrose and Ocado makes strenuous efforts to be special, and all three are investing online, along side every other food retailer. There is also competition from the likes of Riverford Organics and Abel and Cole companies who sell local food from small farms.

Will Farmison be a good financial investment not just for Andy Bond, but for the small farmers who are paying for the privilege of being sold through it? Difficult to say at this early stage, but the business will face challenges. Ocado, after 10 years still has not made a profit, its sales are slowing, and investors are so spooked they have written the share price down to about half of its launch price. Although the supermarkets are happy to talk about growth rates in their online business, no one ever mentions profitability which probably means it is low. On the other hand, Andy Bond has a good track record and will have investigated Farmison’s potential in detail before parting with his money.

Going for Growth - How Marks and Spencer, Waitrose, Morrisons and Aldi are Tackling the Challenge

Growth remains the holy grail for all supermarkets. Here we look at four different approaches -   M&S and Waitrose at the premium end of the market, Morrisons in the mainstream, and Aldi the discount chain.

The discount sector remains an endless source of fascination for supermarket watchers because the business models are so different from the mainstream, but their growth rates are tremendous. In the 12 weeks to September 4^th, Aldi has grown by 26% and LIDL by 13%. This run of growth has been going on for months. Part of it is down to the demise of Netto, meaning that discount fans have had to transfer their allegiance, part of it is a response to rising food prices and shrinking disposable income. Interestingly though, the growth has come for the most part from loyal discount shoppers who previously would divide spend between discounters and say Tesco, but who now choose to spend an increasing proportion in the discount shop. The actual number of new discount shoppers is small.

So the Aldi challenge is to persuade those shoppers who already like much of what they see in Aldi to spend an increasing amount of their grocery budget there. And the key to achieving the objective is to bring the quality of its fresh food up to that of its packaged goods, but maintaining value. Already work is underway and Aldi stand a very good chance of continuing the growth levels already experienced.

Morrisons is one of the “big four” supermarkets, and the only one growing faster than the market average. It is managing to combine growth with increased profits.

Their success so far is down to the quality and value of their fresh food, and they now want to extend this expertise to online shopping. To this end they purchased a stake in FreshDirect,  the New York based company heralded as a leader in online. If Morrisons get this right they could be on to a winner as one of the main gripes about buying food on line is that fresh food is of variable quality, too near its sell by date and often the first choice is substituted for something less acceptable.

Waitrose today published its half year results, and whilst it is achieving sales growth of 9%, profits are down by 14%. Waitrose is chasing growth in a big way, by opening more stores, improving its online business, and promoting more heavily. Its challenge is to expand from its niche without losing the emphasis on quality and service that has made it successful, and the strategy is not without risk. As a privately owned company it has more time than most to get the model right, but at some stage it will need to restore profitability.

The M&S challenge is different. You cannot do your weekly shop there, so what CEO Marc Bolland and the team have to do is develop a food offer that cannot be bought in supermarkets. The answer according to Bolland is to make M&S even more special, putting delicatessens into bigger shops, upping the specialness of the bakery section, and featuring products little known in the UK but acknowledged as outstanding in other countries like Iberico ham and fresh burrata cheese (a mixture of mozzarella and cream apparently!).

These  moves are unlikely to transform performance. Introducing such products is merely a difference of degree – another step along the rarity spectrum. It is not the radical, totally new meeting of a consumer need that has characterised M&S success in food in the past. In bygone days M&S was noted for pioneering, whether it was exotic sandwiches where previously only cheese and pickle was available, or ready meals which allowed a harassed meal provider to put something on the table which not only tasted great but was whipped up in half an hour, or previously unheard of  fruit and veg.

Here we have four different companies all with different growth strategies. All will be convinced that their strategies will be successful. Time will tell who has got it right.

Canny Consumers - Cutting Food Costs Without Cutting Quality or Amount Consumed

Peter Marks of the Coop, trying to explain a 4.6% reduction his first half year food sales, said that “People are spending less on food – that’s a first.”  Kantar Worldpanel confirms the cutback, explaining that in the last three months grocery sales were up 3.8% in value, compared with inflation up 5.2%.

But behind the scary sound bites lies a story of canny consumers shopping and cooking more wisely, cutting expenditure but not sacrificing standards.

Take waste. Consumers recognise that waste is a big issue. In a recent Institute of Grocery Distribution survey, waste was cited by consumers as their major environmental concern. Whilst they raged against food companies for not selling smaller packs, and using cut price promotions to encourage buying too much, consumers acknowledged that they themselves cause much waste through lack of planning, and not paying enough attention to using leftovers.

And there is considerable scope to reduce waste. According to WRAP, in 2009 UK households generated £12 billion of avoidable food and drink waste, or about £480 per year for the average household. To put into context, DEFRA estimates that households spend around £125 billion each year on food and drink, so if WRAP figures are anything like accurate we waste about 10% of what we buy.

As to what is being wasted, WRAP estimates that £6.7bn goes on food and drink thrown away untouched or started but not finished. Examples are fresh fruit and vegetables (£1.4bn), bread and bakery products (£1.1bn), milk (£280m), yoghurts past their sell by date, and unused slices of bacon. A further £4.8bn is wasted on food and drink where too much has been prepared, cooked or served.

Still on the waste theme, there is evidence of shoppers spending less merely by refusing to shop impulsively and throw something into the trolley just because they like the idea.

Shopping at discounters is seen another way of spending less, and according to Kantar sales of ALDI and LIDL continue to grow at a clip, the former recording a growth of 24% in the last three months compared with the previous year. And sensible use of promotional offers is another well tried method of reducing spend.

Interestingly though, as Kantar points out, consumers’ food choices are not only about price. In the last 3 months sales of budget own label lines grew by just 2%, compared with an 8% growth in sales of premium own label products. So premium foods are by no means dead, but they do have to offer that elusive combination of quality and value to justify their price.

Shoppers have the scope to reduce spend and in the current economic climate will continue to do so. We can expect more years of cutbacks, especially on what could be described as poor value, over processed or not strictly necessary.

By contrast, spend on staples should continue to hold up. Despite the pressures, sales of beef, pork, bacon, sausages, milk and cheese have all shown volume growth in the last year. Consumers clearly see them as necessary, and, critically, fairly priced.

Red Meat Consumption Update - Beef and Pork Steady, Lamb Plummets

Shoppers bought 19% less lamb in the 12 months to mid July 2011 than they did in the previous year. (Source: Kantar Worldpanel)

By contrast, volume sales of beef are up 1%, pork and sausages up 2%, sliced cooked meats up 3%, and bacon up 5%. Overall, purchases of red meat have remained level with last year, indicating perhaps that lamb buyers have migrated to alternative red meat options.

This is perhaps not surprising given that the average price of a kilo of pork is £4.71p, and beef £6.12p, both around what they were last year. The price of a kilo of lamb though has increased by 14%, and now stands at £7.94p, the knock on effect of higher prices being paid to farmers for their live lambs.

Consumers are walking away, put off by having to pay around £5 for a couple of chops, or £13 for a small leg of lamb. Only 22% of people buy lamb every 4 weeks compared with 37% buying pork and 55% buying beef, and when they do buy they buy less – 1kg of lamb compared with 1.5kg for pork, and 1.4kg for beef.

The figures should make those advocating higher retail prices for beef and pork pause for thought. So far, despite the difficult economic climate, sales of these meats have held up well. The question is whether they are sufficiently special to persuade people to buy despite price hikes. Or would demand just fall as it has with lamb? And will a fall in demand lead to oversupply of pigs and cattle, and reduce the price paid to farmers anyway?

Many factors influence prices paid to farmers, and it is difficult to find a clear link between retail prices and those paid at the farm gate. The lamb experience shows that domestic eating of lamb can fall dramatically yet prices paid for live lambs stay buoyant due to external factors like a strong euro, less imports and shrinking breeding flocks. By contrast, when farm gate prices for beef fell sharply last year due mostly to high quantities of dairy beef cattle, retail prices hardly moved at all, and consumption stayed about the same.

What is clear though is that a push too far on price will probably result in big falls in the amount of meat eaten, and  that the fundamentals of supply and demand tend to hold true in the long term. So, if farmgate prices are to remain higher following an increase in retail price in the home market, additional outlets for British cattle and pigs need to be found urgently. Not an easy task.

Buying British - Catering Companies Letting the Side Down Badly

Unlike supermarkets, catering companies are not obliged to tell the public where the food they sell every year actually comes from. So you and your family could be eating anything from anywhere, and produced to heaven knows what standards.

Quite apart from the standards question, it is depressing to see that so many catering companies, even the big ones, do not wholeheartedly support British farmers and growers.

Trawling through profiles of some of the larger businesses we find that:

Compass Group, the biggest catering suppliers in the world, use 100% British for their fresh beef, milk, and eggs. All their root veg comes from Britain “where seasonality and quality allow”. They do not claim that their chicken is British, but use the words “British Farm Assured”, which may mean it is produced in Britain. We do not know where they get their pork, bacon and ham from, or their dairy products apart from milk, or their lamb.

McDonalds’ goes for dual sourcing, buying milk (all organic), eggs, (all free range), beef, pork and oats from both Ireland and Britain, probably to benefit from the effects of currency exchange.  100 tonnes of the 440 tonnes of apples they use in their fruit bags are British. We do not know where their chicken comes from.

Wetherspoons the pub chain have 100% British beef in their burgers. All the pork in their sausages is British, as are their potatoes. Their eggs (all free range) “carry the British Lion quality mark”. Again, it is not clear whether the eggs are produced in Britain.

 About 40% of KFC’s chicken is imported, with the rest coming from Britain. They have just put the Red Tractor logo on their on the bone chicken.

Gregg’s, noted for their pies and sausage rolls, provide no details of where their food is produced but have committed to issuing an ethical sourcing policy this year.

Subway, now said to be the biggest fast food chain in the world, also has nothing about sourcing in its literature, but is reported to get their turkey from Brazil, and their chicken from 5 different countries – Thailand, plus 4 in South America.

The most transparent company found is Pret a Manger, the £350million turnover purveyor of extremely high class sandwiches. On their website you can find details of where every ingredient they source comes from.

Their chicken is UK sourced, to higher welfare standards, as is their ham, bacon, organic milk, and free range eggs “if we can get them”. Their beef though comes from southern Ireland, as does their cheddar, and their butter from France!! But though it is possible to cavil at a company which for some reason won’t buy British beef, cheese or butter, at least we know a fair bit about what we are eating.

So some caterers make more of an effort than others, but clearly there is a lack of commitment by catering companies to buy British, and it is disappointing. The market for food and soft drinks eaten out is worth £43 billion. Supply to catering companies would be a welcome boost to demand at a time when consumers are cutting back on the amount of food they buy from the shops.

Supermarkets' Own Brands - An Increasingly Important Battleground

For the first time in a long time supermarkets are struggling to grow food sales. Food inflation of around 5%  plus economic uncertainty equals shoppers trading down, seeking promotions, cutting waste and sticking to a budget. All of which gives a headache to supermarket bosses.

They of course will be twisting their supplier thumbscrews ever tighter, but ultimately there is only so far that cost cutting will take a business. At some stage it needs to grow. And here is where a sound own brand strategy can make a difference.

Own brand is possibly the best weapon in a supermarket’s armoury, if it gets it right.

It is supremely flexible. The name can be applied to thousands of products at various price ranges. Tesco Finest operates at the top end, and Tesco Value at the bottom. Sainsbury has Taste the Difference and Basics,  Asda has Extra Special, Chosen by You and Smart Price. Waitrose Essentials distinguishes their standard range from more expensive variants.

Done well own brands can enhance a retailers reputation, and provide a point of difference from competitors. Marks and Spencer has built a business on great quality, highly innovative food products.

Ultimately though, the reason why supermarkets make such an effort on own brands is that they are  more profitable than national brands, because they deliver a higher margin.

A good own brand range is especially important just now. Lower margin national brands are promoting heavily, drawing sales from own label. And, supermarkets are desperate to provide reasons for people to choose their store rather than a competitor’s, so that they get the highest possible share of a shrinking market.

So, we hear that Morrisons, which has 45% of its sales in own brand, is planning its first own label revamp for four years. Sainsbury is relaunching its 6500 line mid tier range, renaming it “By Sainsbury”.  Apparently around 25% of products across Sainsbury are new each year, so that customers don’t get bored and go elsewhere.

Waitrose is also working on improving its own label offer.

Reportedly Tesco is trying something completely different, registering a number of different brand names, but not displaying on the packaging that the brands in question belong to them.  The products will be premium priced. Chokablok ice cream for example which is said to be one of the new Tesco brands, sells at the same price as Haagen Daz.

The consistent theme through all these upgrades is an emphasis on quality. Supermarkets realise that in order for their own label ranges to succeed competitively they have to offer a combination of quality, price, and something a bit out of the ordinary.

So supermarkets’ own brands are more profitable and a potential differentiator. There is also a new thread emerging. Shopping online has been earmarked as a growth area,  and retailer labels can play a part in enhancing a supermarket’s on line shopping offer. The IGD points out that the web does not suffer the same space constraints as a shop, and so the full range of own label can be highlighted, reinforcing a stores reputation in whatever area they choose be it for innovation, price or quality, or ethical and environmental standards.

Renewed Growth of Discount Grocers Prompts Return Visit to Aldi

Discount grocers sales are booming again, with growth levels not seen since the recession of 2008. Aldi is up 21% in the last three months and Lidl not far behind at plus 16%. Their combined market share has reached an all time high of 6.1%. Kantar Worldpanel who monitor this data, say that unlike 2008, the growth is coming mostly from existing customers buying more, rather than new shoppers.
So I went back to Aldi after an absence of three years to look again at what it is that generates such customer loyalty.

Well, the main attraction remains rock bottom prices. At Aldi you can buy a kilo of British beef mince for £2.40 ( at least £4 everywhere else unless very high fat content), a kilo of Jersey Royals for 49p (Tesco’s best price for new potatoes is 69p), and nectarines for less than 18p each compared with 25p at Tesco.

Packaged goods prices are low too, certainly in comparison to the leading brands, with coffee at £1.69p for 100g compared with Nescafe at £2.40p, and jaffa cakes at just over 3p each versus McVities at 8p. Interestingly their jaffa cakes contained 11% orange juice compared with 8% for McVities.

Aldi seems to have improved the feel of shopping in its stores. There are nods to food trends with free range chicken and eggs on sale, and they stock alot of British food. The store was clean and bright and the staff cheerful and helpful.

Aldi’s pursuit of low prices has downsides. Fresh food has to be carefully selected – the strawberries were mouldy today and there was no date code on the potatoes. It stocks few brands you will have heard of, and the range remains limited to essentials.  Quality is not always great. The jaffa cakes were entirely acceptable, but the coffee tasteless.

There are irritations too. It is annoying to have to find a £1 coin to unlock the trolley, but the system ensures no one has to be paid to fetch trolleys back to the store. There are no baskets for doing a small shop, because that would require additional investment. There is no bag packing at the till because that would slow the cashier down. Instead the system requires the shopper to unload the trolley at one end of the belt, fling everything back into the trolley at the other end, and move to a different area to pack.

But having said all that, regular shoppers will have adapted to the system. They will know which products deliver the quality they want and which do not. We know that many people are budgeting more tightly than before, and thinking carefully about how much they spend and where.

Aldi seems to be offering what its loyal shoppers want.

Milk Drinking Bolstered by Retail Price Cuts of 5p Per Litre

A dip into Dairyco’s data on the milk market shows that fresh milk volumes have grown by 2.5% in the year to June 2011, but the retail price paid per litre has dropped by 8% , due to the milk price war waged by supermarkets. So far, so not newsworthy.

What is surprising is just how long the price war has been going on. This is far from an occasional tactical practice to encourage people through the supermarket door. In the 12 months to June 2010 the average price per litre of milk was 66p. The average price in the 12 months to June 2011 was 61p.

And even though in the last few weeks some major retailers have put the price back up, ASDA still remains at the lower level, Tesco is selling its Creamfield whole milk at 44p a litre, and Morrisons have just announced that their 1% fat milk is on promotion at 50p for four pints.

All claim that promotional prices have not affected what they pay to farmers, but look at it another way. The fact that supermarkets can reduce prices by so much and for so long shows just how much they were making from fresh milk in the first place. Indeed Dairyco analysis tells us that for every litre of milk sold in 2008/2009 retailers took 18.8p, processors 20.4p, and farmers 25.8p. In the following year, retailers took 22.4p, processors 18.9p, and farmers 23.8p.  

The price reduction has badly hurt sales of organic milk. In the 12 months to June 2011 volumes dropped by 7% as the retail price of organic stayed at 81p per litre, a 33% premium to conventional milk.

Sales of filtered milk,( Cravendale being the best known brand), have now levelled out at 338 million litres, possibly due to a price rise of 2p to 78p, a 28% premium to standard.

Award for best performance goes to the low fat sector, defined as milk containing 1% or .75% fat. Sales grew to 362 million litres,an increase of 24%.

And the one area defying a generally price conscious consumer response is Jersey and Guernsey which maintained its, admittedly tiny, sales level, despite costing nearly £1 per litre.

Inside Consumers' Heads - The Psychology of Dealing With Economic Difficulty

Consumer confidence has fallen again according to GfK NOP the social research company, and is now lower than at any time in 2010. It is unlikely to bounce back any time soon. Indeed research done with British consumers by Bord Bia the Irish food board shows that most of us think that there will be no light at the end of the economic tunnel for at least 3 and possibly as much as 10 years.
The lack of confidence seems to stem as much from an overwhelming air of uncertainty as from the harsh reality of coping with rising prices and near static wages.
People are uncertain about whether their jobs are secure. They are rattled by an economic performance which is up one quarter and down the next, and which does not follow a comforting path of modest but predictable growth. They have lost the security blanket of rising house prices, and worse, are bracing themselves for an increase in mortgage rates which many feel unable to afford.
We know much about the way consumers are dealing with economic pressures - searching for money off promotions, comparing prices on the internet, working to a budget, cooking from scratch. The Bord Bia research indicates just how deeply this behaviour has become entrenched.
They point out that 62% of British consumers agree with the statement "I find myself thinking twice before making even the smallest purchase". Haggling has become a way of life for many. As one male put it "We're negotiating on absolutely everything now - gas, electricity, house insurance, Sky subscription. We didn't use to do that". The pursuit of the good deal has become a game, even among the better off.
In summary, as Bord Bia puts it, the consumer's relationship with time has fundamentally changed. Now people are prepared to put in time to get the peace of mind that they have secured the best deal.
Bord Bia also points out that this search for value is here to stay, even when the better times come round again.
In a nutshell, offering the best value, that elusive combination of quality, price and service, will be a prerequisite for business success in the years to come.

27% of People Cutting Back on Food

Consumers are prioritising expenditure on their mobile phone contract and subscription to satellite TV ahead of food, says research published by insurance company AXA. Apparently 27% of us are cutting back what we spend on food, but only 5% are cancelling their TV subscriptions, and just 1% cancelling their mobile phone contract.

The findings could bring on despair that Brits put so little value on having a good sustaining diet, but according to the Institute of Grocery Distribution it may be more about consumers being efficient in their food buiyng behaviour.

The IGD calls 2011 the year of economising. It has found that buying habits which started to emerge during the recession of 2008 are now being embraced by more people. Their research shows shoppers to be chasing value by balancing price and quality. This they do by buying more on promotion, using the internet to compare prices, and being prepared to use different shopping channels to get the best deal. Thus they might buy online, or spend more at discount channels like ALDI, or stick with the traditional supermarket, all depending on what is available at what price.

Economising is not just about deals. People are planning meals better to avoid waste. They are doing more cooking from scratch because it tends to be cheaper, and are considering growing their own food.

Whilst many of these changes have been noted before one newer trend is a preoccupation with sticking to a budget. This is particularly true of 18-44 year olds, 46% of whom say they are budgetting. And 34% of all shoppers say they cut back at the end of the month rather than overspend before payday.

Supermarkets have forseen many of the trends. Most are extending budget and own label ranges. All offer recipe ideas, and some tie the recipes to a price such as Sainsbury's promotion suggesting how to feed a family of four for £50 per week. All, even those catering for the more affluent customer, run myriad price cutting promotions in an effort to woo shoppers into their stores.

Adding Value to Beef - Morrisons Traditional Breeds Venture

The news that Morrisons supermarket has introduced a scheme paying farmers a premium for beef from traditional cattle breeds marks a new effort to prove that value can be added to a product which many dismiss as a commodity.
This is an attempt to brand both a breed, the beef Shorthorn, and in the case of the other traditional breeds, to brand a distinctive sector which is part of British farming heritage.

Why might Morrisons, one of the "Big Four" supermarkets, be doing this?

They will have noted that with branding comes as premium price, as proved by Waitrose who for years have sold Aberdeen Angus and Hereford beef alongside standard British. A store check today showed their Angus mince at £8.87p per kilo compared with £5.78p for standard, and Hereford rump steak at £15.99p versus £12.49p for standard.

Morrisons pursuit of premium products reflects another trend which is to introduce higher priced, higher margin products to help offset falling profits caused by cutthroat competition among supermarkets. Importantly, they have recognised that the product has to live up to the price charged, hence their wish for supplying farmers to stick to a specific feeding regime which will enhance product quality.

Clearly this is a commercial move. Morrisons would not be doing it unless they had identified interest among their shoppers.

They do though appear to have considered all aspects of the supply chain, showing flexibility in relaxing some of the grading grid requirements to accommodate the conformation and fat cover which can come with traditonal breeds, and allowing the breed to be determined by the dam as well as the bull.

It is to be hoped that the initiative works. Morrisons have high hopes, believing it will create demand for another 16,000 cattle, a 10% increase on current requirements. It will add value to beef. And, if the idea is well publicised it will allow the many millions who shop at Morrisons every week to understand more about where their meat comes from, and to recognise that meat is not just a commodity to be bought at the lowest possible price.

Online Grocery Shopping - Some Facts and Figures

My search for hard data about trends in food buying continues with a look this week at online grocery shopping.

This is another topic receiving considerable media coverage, and attracting massive financial investment.
Morrisons supermarket paid £32million for a 10% stake in Fresh Direct, a new York based company, in return for detailed information about what makes their business successful. Ocado, which only sells on line, floated on the stock market to mixed reviews, but it is valued by some investors despite not having made a profit in the 10 years they have been going.

The optimism stems from huge growth in online sales. Recently Tesco said they were experiencing "double digit" growth (corporate speak for just above 10%). Sainsbury said they grew by "over 20%" in the last year, and Ocado reported sales up 21% in the last quarter.

So, how big is online now, and how big might it get?

The Institute of Grocery Distribution estimates that online grocery sales amounted to £4.8 billion in 2010, which sounds massive, but is just 3.2% of the total grocery market. As the IGD says, online is a small and infrequently used way of shopping, with just 6% of shoppers using online as their main way to buy groceries. Those that do use place an order less than once a month. Younger people with children are most likely to be online shoppers, and usage tails off with age.

With growth of 21% in 2010, and a predicted growth of 15% per year, online shopping is is indeed increasing at a  faster rate than that for the market as a whole, and by 2015 will be bigger than the discount channel (Aldi and Lidl).

But, despite being relatively small, there is considerable optimism about the future for online. Mark Price of Waitrose reckons their online sales will grow by "40%, 50%, 60%" per annum. Certainly the rate of investment is not slowing down, as supermarkets address the issues which are getting in the way of growth like inflexible delivery times, high delivery costs, products with insufficient shelf life left, and frequently bizarre substitutes if a first choice item is not available.

Basically the big grocery chains will invest in any emerging trend which might give them the edge over competitors. They have decided that online is here to stay because it fits the needs of some people for convenient shopping any time and anywhere the shopping urge strikes. Not only are some shoppers this way inclined, but Smartphone technology provides the means of fulfilling the need. Consumers can now order their groceries in the middle of the night, in the office, on the sofa, and even, as a recent Tesco advert showed, emerging from the shower.

Consumer Purchases of "Ethical" Foods - Some Data from DEFRA

It is difficult to get a factual grip on the difference between what consumers say they will do and what they actually do when buying food. DEFRA has had a stab at this as part of their effort to build a sustainable food chain.

Their research confirms that consumers are interested in the issues surrounding sustainable food production, but that actual purchase of some foods generally defined as ethical remains fairly low.

Free range eggs

This is the animal welfare issue that has gained most support. 50% of those who think animal welfare is important buy free range eggs - but only a third of them buy free range all the time, and at the other end of the spectrum, 31% buy free range less than 10% of the time.

Free range chicken

88% of households buy free range chicken less than 10% of the time, and 75% never buy free range at all. DEFRA does not report purchase of higher welfare chicken where sales have grown rapidly, and so the numbers may underplay consumer committment to welfare.

Fair Trade tea and coffee

This is another sector which has received wide publicity, but 93% of households buy fair trade coffee less than 10% of the time, with the equivalent figure for tea being 85%.

British apples in season

Despite growing enthusiasm for local produce, 62% of households buy British apples in season less than 10% of the time.

Green issues

The DEFRA research does not give buying figures for environmentally friendly products, but does give clues about peoples' feelings on the subject. In general, people are aware of the issues but stop short of agreeing with inconvenient or financially disadvantageous measures to limit environmental damage. So, whilst 82% agree that people have a duty to recycle, only 13% feel car owners should pay higher taxes to offset the environmental damage they do, and just 8% strongly agree that people who fly should bear the cost of environmental damage.

The DEFRA research paints a picture of informed consumers, who say they are actively seeking sustainable or ethical foods, but who are not yet wholly committed to buying them.

It serves as a timely reminder that, for most people, making the leap from being informed and interested to embracing a wholesale change in buying behaviour takes a very long time.

Shedding Some Light on the Organic Consumer

Organic consumers are complicated souls. For a start, according to a thorough piece of research from Better Organic Business Links, on behalf of the Organic Centre Wales, there is no such thing as an “organic only” consumer. Not one of 1407 shoppers interviewed by BOBL bought organic from every category they shopped.

Neither is there any individual category which attracts a high degree of purchasing loyalty. Whatever the type of food, be it milk, meat or vegetables, a maximum of around 30% of organic buyers “almost or nearly always” bought from the category.

And yet, when prompted about the benefits of buying organic, around 70% agreed that organic production results in better standards of animal welfare and allows wildlife to flourish, around 60% feel it is healthier and 50% that it tastes better. The problem is that too often those benefits do not outweigh the price premium. Just over a quarter of those interviewed said that organic represents good value for money. And a worryingly cynical third said that an organic label was just an excuse to charge more.

When asked about future buying intentions, 3 out of 10 people said they would consider buying more organic food, but around 6 out of 10 people said that they did not intend to buy more organic produce, with price being the main stumbling block.

The BOBL research seems to indicate that many consumers are interested in organic food, but not sufficiently convinced to prioritise its purchase on a regular basis.

The stiff competition offered by local foods also inhibits organic purchase.
Consumers are increasingly interested in provenance, or where the food has come from, a trend which has been gathering momentum in recent years. About 60% of consumers agreed with the statement “I’m much more interested in where a product has come from than whether it is organic”. Asked to choose directly between a locally produced product and an organic one, 6 in 10 chose the local version versus 1 in 10 for the organic version.

Measured and accurate communication of what organic means will help consumers make up their minds, but it will be a long and slow process. The issues around communication remain as they always have been – currently there are several organic messages rather than one clear and compelling one, with the result that consumers remain ambivalent.

The Soil Association has published it market report for 2011 and sales have dropped again, by 5.9%, although the rate of decline is slowing. The Association says that sales have levelled out during the back months of the year, and they are hopeful of a return to growth before long. This is encouraging news for organic enthusiasts.

Brasher of Tesco and King of Sainsbury Confirm Changed Consumer Behaviour

Figures from the ONS last week indicated that shoppers are buying less food, with volume sales in February down 2.2% compared with February 2010. There were reports that this is the biggest month on month drop since records began in 1988. According to Justin King of Sainsbury the February drop came as a bit of a shock. He said “there is a new reality. There has been a quite significant step down by customers”. Whilst a cutback in January is the norm it is unusual for the purse tightening to continue into February, and what Sainsbury is seeing is shoppers deliberately buying less when doing their main shop, and topping up mid week on essentials. Mr. King speculated that this could be in an effort to avoid waste. Shoppers are doing even more cooking from scratch and shunning ready meals in an effort to reduce the “cost per calorie”. They continue to seek out good promotional deals. He added “I don’t see sentiment changing in the foreseeable future”. Richard Brasher, new boss of Tesco, speaking at the Retail Week annual conference, confirmed that behaviour was changing, and also mentioned cooking from scratch and seeking the best offers. But, he said “there is no neat sound bite to sum up what the change is”. Overall, shoppers were being more careful. They were still prepared to buy premium goods but he added that “Value for money trumps being the cheapest.” In his view, consumers are just as keen as they ever were to achieve cherished goals such as a comfortable home, or a good holiday, and that shortage of money was driving consumers to be even better informed about where they could get the best deals. Hard data tends to support what the two retailers are saying. Figures published on the BPEX website show that meat consumption is holding steady, possibly as a result of more scratch cooking. The exception is lamb which continues its downward plunge in sales (minus 11% in expenditure and 21% in volume in the last twelve weeks). Dairyco data shows milk volumes holding up, but prices are well down as retailers continue to price promote.

More on Consumers Reaction to Rising Food Prices

It looks as if the return of food inflation is leading consumers to rethink once again about the way they shop.

In my previous blog we saw that during the 2008 bout of inflation consumers responded by buying less food. They stuck to a budget. They tried to make the budget go further by shopping around, making use of promotions, and buying own label and cheaper “value” ranges, but the main way of coping was to buy less. When inflation eased in 2009 they returned to buying more, and in 2010 not only bought more but were prepared to spend on premium goods.

Research from IGD published in February showed that 91% of consumers think that food prices will rise over the next twelve months. More startlingly 33% think prices will be much higher in the next year compared with 19% who thought the same thing when surveyed in October. As a result, say the IGD, consumers are rethinking how they shop, but are more concerned about getting good value for money than merely chasing the lowest price.

Kantar Worldpanel who audit grocery sales report that in the 12 weeks to February 20th 2011 grocery sales grew by 3.9%, of which 3.7% was due to inflation and just 0.2% to volume growth. Their data shows the discounters gaining market share again with Aldi up to 3.1% from 2.8% and Lidl up to 2.4% from 2.2%. Unlike 2008 though, the increases are a result of existing shoppers spending more rather than new shoppers visiting the stores. At the other end of the spectrum Waitrose continues to boom, reaching their highest share ever at 4.4%.

These two extremes receive much media coverage, but are tiny in absolute terms, accounting for less than 10% of the market. It is what happens in the mainstream 90% which reflects what consumers are really doing. All we know so far is that about 40% of grocery products are bought on promotion and this number shows no sign of dropping. And, in another piece of IGD research we learn that consumers are wobbling a bit when it comes to trading quality and ethics for lower prices. When questioned recently, only 19% of British consumers said that the quality of food is more important than saving money, and just 17% said that environmental and ethical factors are important when deciding what to buy.

Much will be made over coming months about changes in consumer buying behaviour, particularly by supermarkets eager to demonstrate that they have their finger on the consumer pulse. Yes, we could see an occasional rise in premium food buying, probably connected to an event like Mothers Day or Easter. There might be a rev up in sales of value ranges, off their current very small base, and there will be a further rise in buying own brand goods.

But all the signs are that 2011 will see another drop in the amount of food bought as consumers once again deal with shrinking purses and growing uncertainty.

Food Inflation + Recession Worries = Less Food Bought

DEFRA’s recently published Family Food Survey compares 2009 with 2006 and shows that people coped with rising prices and recession pessimism by buying less food. They did not, as might have been thought, buy the same quantities as before but pay less by searching out good deals, moving to value ranges, switching to own label products, or flocking to discount supermarkets.

So, in volume terms, 2009 saw grocery shoppers buying 11% less red meat than in 2006, 7% less fish, and even 4% less poultry which is usually the fall back protein when prices rise. Sales of vegetables have fallen by 3%, potatoes by 6%, fresh fruit by 11%, fresh milk by 3%, and butter and spreads by 2%. Even bread sales have fallen by 5%.

The only fresh foods bucking the downward trend are eggs, up 6%, cheese and yogurts which are level with 2006, and, bizarrely, cream where sales are up by 5%.

By contrast, flour sales are up 8% which could mean that people are baking more. Confectionery, which usually holds up when times are tough has seen purchase grow by 9%, and cereals are up 3%.

Overall, when food inflation soars shoppers seem to work to a budget, and accept that they will get less for their money.

The cutback does not mean that people are necessarily eating less. They could be reducing the amount of food they throw away. A DEFRA study published in July 2010 estimated that 15% of food is wasted, with bread waste reaching a shocking 40%.

As far as the catering sector is concerned, the DEFRA figures show that the amount of food eaten outside of the home in 2009 was 9% less than 2006, although expenditure, excluding alcoholic drinks was up by 3%.

Short term, the DEFRA figures show signs of growth in grocery food buying 2009 compared with 2008, and, given anecdotal evidence about a return to premium food purchasing and the excellent performance of more up market retailers, it would seem that 2010 saw a further increase. What consumers will do in 2011 though, is difficult to project. Food inflation is ramping up again, and signs of depressed consumer confidence are re-emerging.

So, how can profits grow if volumes are shrinking?

Food inflation can help when prices rise ahead of costs. Currently food inflation is running at about 4.6%, compared with wages at about 2%. Those businesses with clout will negotiate lower costs from suppliers.

Another strategy is to develop premium products so that maximum revenue is extracted from a smaller volume.

The third, albeit often costly avenue is to grow market share, stealing volume from competitors.

Examples of all three will no doubt be seen this year.

Appy Talk – Will Apps Change how Consumers Look at Food and Farming?

Apps, (defined as computer programmes for a mobile phone, customised for the phone user) get acres of media coverage, and there are hundreds of thousands available to download. Are they another technology gimmick falling into the category of interesting but ultimately useless, or could they have a lasting impact on the way consumers buy food and on the way that food is produced?

To make real changes apps have to be widely available, which is not the case now. The vast majority of apps can only be accessed by users of Apple products such as the Iphone or Ipad, of whom there are not many. Other smartphone manufacturers will catch up but it will take time.

Let’s assume though that apps are available to every mobile phone owning consumer. Which in the UK means nearly 60million people. Are there any apps around which might change food buying habits?

Like any other product, an app will only succeed if it fulfils a consumer need. An app which makes food related life more convenient, or offers information quickly and clearly could well be taken up and used regularly. And here the potential for apps becomes quite exciting.

Supermarkets are well away on developing apps to make shopping more convenient. Tesco recently launched an app which allows shoppers to scan a product wherever they are and add it to their online shopping list. All by pressing a few buttons on a phone.

The apps with most power to change consumer food buying behaviour are those providing instant information.

Here are examples already up and running in America.

Seafood Watch allows shoppers to see at a glance which fish to buy if they want to support sustainability. The app provides three options – best choice, good alternatives, or avoid.

The Center for Food Safety, an organisation that supports organic farming has an app to help shoppers avoid GM containing foods. “Safe” foods are highlighted in green, and GM containing foods in red. The information is based on what manufacturers say, and also on general advice such as avoiding American corn and soy on the grounds, they claim, that most is genetically modified.

The Environmental Working Group has a guide to fruit and vegetables with the least and most pesticide residue, based on data collected by American regulatory bodies.

There is an app in development designed to support local sourcing. AUG/Living Goods allows shoppers to scan a barcode and get details of how far the product has travelled to reach the shop, the identity of the primary producer, and whether the ingredients are in season.

Several apps allow users to input the type of foods they want to eat or avoid, including allergens, and be warned if a product does not meet these requirements.

As the IGD points out there are obstacles to successful app take up. How for example to ensure accurate timely data. Who has the legal responsibility for inaccurate data? How do manufacturers complain if the data misrepresents them.

However the IGD concludes that the day of app impact is coming. And they are right.

Consumers are demanding ever more knowledge about what is in their food and how it was produced, all the way from farm to shop. As talk of gmo's and cloned animals gets louder in Europe, as more publicity surrrounds "mega farms", and more horror stories emerge about hunger or extreme weather, so increasing numbers of people will seek information about exactly what they are putting into their mouths. And the app developers will make it easy for them to get hold of the information.

Premium Food Sales Growing Despite Economic Gloom

Despite the gloomy economic news, and reports of plummeting consumer confidence, people still seem ready to spend on premium quality food.

Kantar Worldpanel, the market data company, tells us that overall grocery sales grew by 5% in the 12 weeks to 26th December 2010, but that sales of premium own label across the 4 big supermarkets grew by 11%, over twice as fast. The Kantar data also shows us that the so called upmarket grocers are doing best, with Sainsbury, Waitrose and Marks and Spencer gaining share whilst low priced ASDA and Morrisons lost share and Tesco only managed to stand still.

Reporting on their performance Sainsbury, who spent nearly £1 billion revamping their premium Taste the Difference Range, said sales of higher priced and ethically sourced products were growing fast, citing free range turkey sales up 30% and smoked salmon up 16%.

Marks and Spencer also mentioned booming sales of turkeys and smoked salmon, whilst Tesco confirmed the trend towards premium food, with sales of “Finest” ham on the bone up 50%, “Finest” party foods up 90% and “Finest” wines up 100%.

Less spectacular, but nevertheless welcome, beef sales in the 12 weeks to end December grew by 4% in both volume and value after months of virtually static sales.

Undoubtedly there will be a Christmas effect in these numbers. Shoppers traditionally splash out during the festive season. But these are comparable figures with Christmas last year, and presumably people were feeling festive then, so the big growth in premium sales does seem to be a trend rather than a one off.

Whether the trend will continue is another question, as the effects of government cuts put further pressure on disposable incomes.

The difference between now and a couple of years ago when the credit crunch first happened and shoppers flocked to discount supermarkets and grocery value ranges is that then, the worry of economic hardship was greater than the reality. The reality now is that money will become tighter, and we may yet see down trading in food. On the other hand it could be that people have tried the value route and it does not meet their needs, at least all of the time.

The Institute of Grocery Distribution is of the view that shoppers will not trade down if it means compromising on quality or values. Rather, people will be more careful about how they shop and prepare food. 36% of us are already trying to reduce food and packaging waste, say the IGD, and 22% are going back to a simpler diet, cooking uncomplicated meals and cutting out unnecessary add ons. This perhaps means higher sales of top quality staple foods.

One high priced staple that shows no sign of growing is lamb. In the 12 weeks to end December 2010, lamb consumption dropped by 17% in volume and 6% in value. It is no good arguing that Christmas is not a big lamb eating time. The point is that these figures are compared with the same period in 2009, The only conclusion to be drawn is that the lamb eating experience does not justify its high price, and that lamb is becoming less and less relevant to the meat eating public.