Over Obsessing About GM Ignores Other Ways to Solve the 9 Billion People Food Challenge

GM foods are once again in the headlines this time raised by new minister Owen Paterson who says that he cannot understand the fuss about authorising GM production in the UK as the horse has already bolted.

According to Paterson, most of the beef we eat contains GM ingredients because the concentrates fed to cattle comes from GM modified crops. Which may well be true as according to Monsanto’s website 95% of soy beans grown in the US are GM, as are 95% in Argentina and 50% in Brazil.

It is extraordinarily difficult to get to the bottom of the real facts about GM – is it a way to save the world or a pernicious threat to health and the environment?

What is becoming increasingly clear is that GM crops as a tool to feed the developed world are just one part of the solution. There are less contentious and arguably more fruitful ways to meet the challenge.

A look at where the major agribusiness investment companies are placing their bets helps put GM into context.

Sustainable Asset Management, a division of Rabobank sees the solution to satisfying the growing demand for food as one of identifying bottlenecks right across the food chain, and supporting innovative companies who can find profitable ways to ease the pressure points. Examples of food chain wide bottlenecks are waste, transport, and storage.

Focusing on farming,  SAM says that producer profitability primarily depends on factors such as soil quality, rainfall and water management, and distance to markets. But secondary factors like agricultural expertise, management capabilities and wise use of fixed assets and working capital are critical, and can either enhance or limit growth potential. Successful businesses, according to SAM are distinguished primarily by their level of agricultural expertise. Note that GM as a driver of profitability does not feature in this analysis.

Agribusiness investment house, Paine and Partners discussed investment opportunities in a recent EFFP conference, touching on many of the same themes as SAM. They have identified 25 investment hotspots of which GM seeds is just one - and a moderate growth and somewhat risky one at that, the risk being strict regulatory frameworks for development. 

They illustrate the impact of GM through a wheat example where they say that 2010 production of 2.4 billion mt could rise to 7.9 billion mt by 2030 but only 0.6 of this is accounted for by yield, which in turn includes more effective fertilisers and better irrigation techniques as well as increased use of high yield seeds. Waste reduction by contrast accounted for an additional 1.1 billion mt.

GM could play a part in solving the challenge of feeding 9 billion people. It may not be as large a part as some think. In the developed world consumers will have a say – even if it is only to avoid GM containing foods. As for the impact on the developing world, this too is not clear cut. Just last week The Times of India reported on a campaign targeted at stopping Monsanto setting up a research and development unit in the Punjab.

All concerned with increasing food production in the UK might want to consider whether spending so much of their time and energy fighting for GM could be better spent on other ways of improving productivity.

Agribusiness Companies - Shadowy Figures That Need to Come Into the Sun

An under reported but well attended conference took place last week, laid on by the Agricultural Industries Confederation.

As one of the speakers, Joanne Denney Finch of the Institute of Grocery Distribution pointed out agri supply businesses will have a critical role to play in feeding the 9bn people projected to inhabit the planet by 2050.

It is these companies who have the research muscle and investment funds to identify and bring to market new ways of feeding more people whilst using less natural resources. They therefore have a societal responsibility to “get it right”.

Yet as Ms. Denney Finch pointed out, they will only fulfil their responsibilities if they understand and engage with consumers, for as we in the UK know only too well from the GM experience, if consumers do not want something it will not succeed in the market place.

For too long agri supply companies have hoped that a combination of farmer support and government indecision will push through solutions that the consumer does not want. As a result they have created an appalling image for themselves, and seem in no hurry to change it.

The average consumer has no idea which companies operate in the agri supply sector, or what they do, or why they should trust them. Their one experience is likely to have been Monsanto, and many would not have liked what they saw.

All this needs to change if agri supply companies want to fulfil their potential. Players need to come out of the shadows. They need to explain their work, and be clear about the benefits it brings to society as a whole.

Some of their work will be more sensitive than others. GM foods and animal cloning are two areas which, based on where the research on both stands now, are likely to continue to be unacceptable to many consumers.

There are though areas where agribusiness is working far less controversially, and very effectively. Examples might be prevention of loss in wheat crops post harvest, more sophisticated irrigation techniques, more sophisticated and less costly mechanisation, or provision of advice to the developing world.

In planning both their business strategies and the way they communicate them, agribusinesses need to have a clear grasp of what matters to people as they make decisions about the food they purchase. It is not, as might be expected, just a wish for the cheapest possible food to help balance budgets in tight economic circumstances. Rather it is a trade off between price, quality and ethical considerations.

Above all, the industry needs to become transparent. It is symptomatic of the secrecy of the industry that exists today that when I went to download speeches made at the conference my access was barred. Why for heaven’s sake?

If it is a mechanism to encourage more people to join the AIC to get information them it is short sighted to say the least.

If it is because they have something to hide then this just sets off alarm bells and reinforces the feeling that agribusiness is up to no good.

This feeling of unease is further exacerbated in a communications environment where access to information via smartphones or tablet computers is becoming the norm, and bad news can spread like lightening. Today there is simply nowhere to hide.

The world needs agribusiness to understand those who will ultimately shape their future, namely the public, and armed with this understanding to act responsibly, ethically, and openly, and to successfully meet the food supply challenge.  All of us need food, regardless of where we live, and we rely heavily on agribusiness to help supply it.

The Real Reasons Why Sainsbury's Dumped the Red Tractor

The Farmers Weekly poll last week asked the question “What do you think of Sainsbury’s ditching the Red Tractor”. 69%of respondents answered that they were disgusted, against 14% saying they are right to do so and 17% not caring one way or the other.

We cannot read too much into this piece of research. The question is designed to be provocative, only 874 people responded, and they probably did not think overly hard about their choice of answer.

This piece of research apart, the outraged response from many in the farming community does make you wonder about how much in touch they are with consumer trends and the way the big retailers think.

Sainsbury’s stated rationale for abandoning the Red Tractor symbol is that it clutters up the label, the EU is about to pronounce on food labelling, and too many labels lead to consumer confusion.

But, if Sainsbury’s valued the symbol, or thought that their customers valued it, a way would have been found to keep it. Why for example, is the RSPCA Freedom Foods label staying on, and, reportedly, the Irish assurance logo.

Sainsbury’s thinking may have gone something like this.

The company sets itself up as a champion of high welfare, hence its support for Freedom Food chicken and pork. As a business it feels that consumers care deeply about the issue, and that commitment to high welfare gives them an edge versus competitors, a point that chief executive Justin King pushes home at every opportunity.

They have committed by 2020 to selling all meat, poultry, eggs game and poultry products supplied by farmers who adhere to independent higher welfare standards.

The reality is that Red Tractor does not deliver the image that Sainsbury wants to portray because the Red Tractor only means that farmers have adhered to minimum legal standards. Add to this the adverse publicity experienced by Red Tractor of late including the Advertising Standards Authority judging a recent pork advertisement to be misleading, the shocking case of cruelty at a Red Tractor audited farm in Norfolk, and extensive media coverage of what the different food labels stand for with Red Tractor coming out bottom, and the value of the logo to Sainsbury suddenly looks suspect.

What about other retailers? Tesco has committed to continue with the logo. But this could change. Whilst there is still huge confusion among the majority about the facts behind the different labels, consumers are becoming more sophisticated and knowledgeable by the day, prompted by campaigning groups and enabled by technology which allows instant access to the internet for research and verification.

And  as consumers become ever more aware of food labels and what they stand for, the other supermarkets will review their animal welfare policies too. It is not hard to see that the Red Tractor stamp in its current form could become meaningless to them also.

National Trust MyFarm Experiment Falters

MyFarm, the National Trust’s experiment to involve the general public in farming decisions is closing down due to lack of demand.

Launched in May 2011 the idea was that for a joining fee of £30 people could vote on various farming decisions which needed to be made on the Trust’s 1200 acre organic farm in Cambridgeshire, and the farm manager, Richard Norris was obliged to enact whatever plan got the most votes. People voted on issues such as which crops to plant, and what breed of beef cow to rear on farm.

Despite the Trust’s 3.7 million members, and a massive publicity campaign at launch, the numbers signing up fell well short of the 10,000 required.  A reported 29,000 people went on to the internet on the first day to see what the project was all about, but a recent article in the Telegraph says that the number of people enrolling stalled at under 3000, with the Trust refusing to confirm exact figures. And this despite a decision in May 2012 to abolish the joining fee.

So what issues does this raise.

Well, it demonstrates that if the general public think something this a bad idea then no amount of money, publicity or clout will turn it into a good one.

We do not know what turned the public off and it is a puzzle given that most other pieces of information suggest that farming holds a fascination for many.

Could it be that those who went on to the website realised that the premise was unrealistic in that  a financially vital decision was being made by committee in just a few days and on the basis of few facts and less experience. Perhaps the unreality was exacerbated by a feeling that the Trust is wealthy enough for a bad decision not to lead to financial ruin. Perhaps some realised that the results of their decision would not be available for months if not years, which can be unsatisfying in today’s climate of instant gratification.

In truth the MyFarm experiment made farming a game and trivialised its importance. It was interesting that the Telegraph article appeared in the week that Farming Today on radio 4 was covering the issue of why youngsters seem not to understand that farming is a highly skilled and technically demanding career and Farmers Weekly published its survey showing that the average farm manager’s salary is a respectable and competitive £50,000, a number that does not include non cash benefits such as a car or rent and council tax payment. By contrast MyFarm gave the impression that farming could be done with little expertise and a seat of the pants approach.

The NT should be applauded for trying something new, and for its efforts to reconnect the general public to farming.

But this experiment did neither they nor the farming profession any favours.

The Changing Face of Private Label

Ever since the 1980’s when Loblaws Canada introduced a premium private label “Decadent” chocolate chip cookie which tasted miles better than any branded equivalent, private label has ceased to be a poor relation and became a potent weapon in the retailers armoury.

Once an inferior substitute for brands, private label marketing  evolved into the well known tiering strategy of “good, better, best” with most attention paid to “best” because those were days of affluence when consumers shelled out vast sums regardless of whether the quality justified the price, and were happy to pay for the premium label.

Now, in a very different economic  climate retailers are once again rethinking their strategies.

They face multiple challenges to keep customers, and grow sales and profits.

Shopping behaviour is well documented, and few who are interested in the food industry will be unaware of the consumer search for value, and the increasingly creative ways that retailers are responding, like cheaper petrol,  money off in store, bogofs (buy one get one free) or “threefers”, (three for the price of two).

The biggest battle ground has been branded goods. Whether it is Sainsbury’s promise to refund if a branded shop on a given day could be bought cheaper at Tesco or ADSA, ASDA’s promise to be 10% cheaper, Waitrose’s promise to match Tesco on branded goods ( promotional activity excepted), orTesco’s penchant for price promoting, branded goods have become the punchbag of shopping. As a result, depite the pressure put on branded manufactures to fund promotions, retailers are struggling to make profit from branded goods.  

The question facing retailers is how to keep sales and profits rolling, and the answer is through private label.

Private label offers flexibility to address the needs of most shoppers from affluent to cash strapped.  If it gets the quality/price/taste equation right it can be a tremendous tool for generating loyalty. And it does this in an environment where price comparisons between stores are difficult, bordering on  impossible.

So we see £millions being poured into private label development, at the value end of the spectrum where, according to Kantar Worldpanel sales of value lines are rocketing, up 13% in May 2012 compared just 1% last year, and at the premium end which has traditionally been a source of substantial profit but has seen sales performance swing from +10% last year to minus 1% in June of this.

The range of value products is growing as are retailers efforts to explain to customers why they represent a good buy. Tesco say they “are proud to bring you Everyday Value – quality and value for everday eating, cooking and living”. Morrisons M Savers go flat out on communicating price, and visitors to their website are guided by price bands – under 30p, under 50p, and under £1.

At the other end, retailers are busy developing premium ranges that rely on provenance and quality of ingredients, like Sainsbury pasta which comes from a family firm in Puglia, Italy. Morrisons M Kitchen ready meal range has been developed by celebrity chefs.

Private label is also good for retailers in that, with the exception of Morrisons they own few production assets relying instead on suppliers to make the products. So if an idea does not work they do not bear the burden of factories lying idle, or workers laid off because demand was less than hoped.

Expect to see the private label battle intensify over the coming months, and branded suppliers to do much head scratching about how to fund both advertising to keep their brands front of mind with consumers, and cut price promotions demanded by retailers.

Multi Channel Retailing - Is It a "Must" For Success?

Multi channel retailing is business speak for offering customers more than one way to buy something be it a shop, mail order, online, or through a mobile phone. The concept is further confused by defining different types of shops as channels, so we have the convenience channel, the discount channel, and the standard mainstream grocery shop.

The words multi channel strategy appear in most major company reports and those not seen to be participating get criticised.

Morrisons supermarket has been lambasted because it is not represented in the fast growing channels of on line retailing and convenience stores, and this has led to a drop in sales and market share. On the other hand, Ocado which is solely available on line has been criticised for missing out on sales at peak periods because there are not enough hours in the day or vans available to deliver the increased amounts people have ordered.

Large retailers are investing £millions into multi channel development.  Although trialling food sale on line, and offering customers the opportunity to order online and collect in store, Walmart is putting most of its emphasis on opening stores – small ones in urban areas, medium sized stores for towns and more of the huge supercentres for which they are famous. Marks and Spencer has said that whilst web based channels are important they feel that stores will remain the core of their business.

New and eye catching digital developments are announced daily.  At Gatwick airport Tesco has built huge screens that look like a fridge and the idea is that holidaymakers waiting for their flight can scan products from the screens on to their phone, ping to Tesco, and have their groceries delivered immediately they arrive home again, cutting out the need to make a stop at the shops after a long tiring journey.

Certainly in today’s fast paced society there is something compelling about the notion that consumers must have a quick and easy way to purchase whatever time of day or night the urge strikes. The rapid growth of food shopping online, said by the Office of National Statistics to be 14-15% per annum compared with 3% for the market as a whole, and the explosion in ways to access the net whether through smart phones or tablets or the standard computer, seem to suggest that food retailers large and small should be seriously examining online retailing, or risk getting left behind.

Nevertheless, there are question marks over all this multi channel effort.  It is noticeable that whilst all retailers are keen to talk about sales growth, few mention profits, and indeed there is recognition among most retailers that online will never be as profitable as shops. There is little discussion of the different skills required to run different channels. And despite all the effort, the proportion of food retailing done through the internet remains small – around 2 or 3% according to Mark Price of Waitrose. Even mighty Tesco is estimated to have just 6% of sales made on line, and Sainsbury 4%. The fastest growing retailer of them all, Aldi, avoids online shopping possibly because the costs involved might mean they cannot continue offering the very low prices which makes them the success they are.

Anyone deciding to experiment with a new channel may first want to ensure that they are operating a secure, cash generative core business. It will be important to have the requisite skills in place, to capture all the costs associated with the new venture, to ring fence the investment and returns, and to accept that it will take time to achieve success.

The Co-op - Not Good With Food

If ever there was a company which should be flourishing in today’s economic climate it is the Co-op, yet last week it posted a 16% drop in its food business profits for the last 6 months. Like for like sales are down 1.2%, and market share is sliding.

The Coop should have much going for it. It operates in the convenience sector which is growing fast and is now worth nearly £34 billion or 21% of the UK food and grocery market, driven by factors such as consumers shopping locally to save on petrol costs, and the benefit of longer opening hours. With nearly three thousand stores it has a scale advantage that smaller shops envy, and it is Britain’s biggest farmer which should give it access to high quality food at reasonable prices. It also claims to be ethical in its sourcing policy.

Peter Marks, the Co-op’s chief executive, attributed the drop in profits to budget conscious consumers and a particularly competitive grocery trade, where over 40% of goods are sold on promotion. Well yes, but none of this is new news, and the Co-op has failed to deal with market place reality.

Price is not everything. If the Co-op offered something different and special then the fact that it is a bit more expensive would not be a stumbling block. A trip to several Co-op stores seems to indicate that what can be bought is anything but special. Despite the claim to be “Good with food”, there is a minimal amount of space dedicated to food, and what is available often looked tired and unappetising.

   

Add to this a sense that nothing new or exciting has happened to the Co-op food offering in years, and it is possible to see why shoppers might be tempted to pop down the road to a Tesco or Sainsbury or even Marks and Spencer and Waitrose who are all now operating in the convenience sector, and upping their game with a focus on value, innovation and good if not superb quality.

It is difficult to avoid the conclusion that the Co-op has been badly managed, and it is perhaps here that we see the downsides of the cooperative model where operators are insulated from shareholder pressure to improve performance. Indeed if the Coop were publicly quoted it would have faced demands for management changes and a strategy rethink. Instead, the chief executive has decided to retire at a time of his own choosing leaving a mess at the food business as well as a huge challenge on the banking side which also saw a big drop in profits and must now set about the huge task of integrating the Lloyds TSB branches it recently acquired.

Shopping at ALDI Again

Spurred on by reports of a return to booming sales through discount grocers and news that ALDI is so confident about its growth prospects that it intends to employ an additional 3000 people in the next year, I visited a brand new ALDI in leafy Stratford on Avon to work out why discounters are proving more popular than ever.

Discounters first came to national consciousness in 2008 as a way to save on groceries at a time of economic pressure.  When things got a bit better economically speaking in 2009/2010, discount supermarket sales levelled off. But now in the face of further economic challenges discount supermarkets ALDI and Lidl have come into their own again, and in the last 12 weeks according to Kantar Worldpanel, ALDI grew by 26% and Lidl by 11% when the total market was down by 2%. Now ALDI and Lidl have record brand shares of 2.9% each.

The IGD (Institute of Grocery Distribution) tells us that the number of people visiting a discounter in the last month grew from 35% in May 2011 to 42% in May 2012, and that 31% say they will shop again in the next month, up from 24% last year. Thus discounters are benefitting from more people through their doors as well as regular customers choosing to spend a bigger slice of their food budget in a discount shop.

Indeed according to IGD it is better off families with children who are frequenting discounters more often, with 39% of ABC1’s with children saying they will return to shop compared with 30% of CDE’s with children.

It is clear from the trip to Stratford that ALDI is moving away from its traditional business model.  It continues to sell most of its packaged  goods under brand names only available at ALDI , in pack designs remarkably close to the national brand equivalent but at prices significantly below that of the national brand or a supermarket own label offering. The ALDI ginger nuts pictured cost 29p, versus McVities at over a £1. The company has also started to bolster its price credentials through witty advertising.

However, it now stocks many more national brands than previously, including Tetley, Nescafe, Mars, and Cadbury.

In the fresh arena it has started to offer premium lines, mimicking the “good, better, best “ approach taken by bigger supermarkets. Thus we find a “Specially Selected” range featuring lines like West Country butter with sea salt crystals.

The store acknowledges trends such as free range eggs and chicken, and seems to be a supporter of British produce. The chicken was British as was beef and some cuts of pork, although not bacon or sausages. Packs featured the Union flag and Red Tractor logo.

Despite the move upmarket,  fresh food prices in most cases remain remarkably low. However, there are signs of an upward drift. Beef mince claiming less than 28% fat was £3.11p per kilo, compared with Tesco less than 25% fat at £3.00.

The products Aldi sells are changing, and there are signs that the way in which they sell them is changing too. Of those extra 3000 staff, many will be employed in existing stores which will mean an  increased cost. I noticed too that the old speedy and cost efficient way of checkout whereby customers cannot pack at the till but have to throw goods back in the trolley and pack on one side is changing too. In Stratford, customers were packing at the till, leading to long queues. Another change is the availability of baskets which again are more time consuming to checkout as well as taking up valuable selling space.

 Some things have not changed. Trolleys still cost £1, redeemable on return, which means no staff are needed to collect them from the car park. Product is still displayed in boxes to reduce staff time involved in stacking shelves.

 There is no doubt that ALDI is evolving to offer more of what customers seem to want. However the big thing which makes ALDI successful is the low prices they offer – if all the new ideas interfere with that they will lose not only those seeking bargains at a time of austerity, but their core budget conscious customers too. And that way lies disaster.

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 10^th 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.

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.

The First Commandment of Selling - Know Thy Customer

Anyone who operates in the food chain is regularly told that we need to understand the consumer. Now, propelled by low growth markets, and the rise of technologies which allow personalised consumer contact, the race to lead the way in consumer understanding is becoming increasingly intense.

The consumer as ever holds the key to business success or failure. When, as now, markets are flat, the only way to grow sales is by stealing market share, and the only way to steal market share is to satisfy customers better than the competition.

It is easy to drift away from understanding what it is about a business that makes it appealing. ASDA forgot that its customers went to them because of lower prices, sprang into action by promising that they would be 10% cheaper than anyone else, and have started to recover market share. More controversially, Morrisons who are facing some growth difficulties have been lambasted by its founder Sir Ken Morrison for going too upmarket and forgetting the needs of core customers.
Whilst those two examples are about broad strategy, it is clear that “know thy customer” marketing activity is getting much more precise, and technology allows this to happen.

No longer is it enough to track an individual’s web viewing through “cookies” and flash up a message on the computer screen, or to send a general email to customers announcing events like a sale or special promotion. Now retailers are striving to send tailored communications which closely reflect the interests and previous spending patterns of their customers.

Thus we see Tesco’s Philip Clarke in a speech entitled “Follow the customer or die” a couple of days ago saying they would be using Clubcard, held by some 18million people, to categorise their shoppers into age, number of children, and  wealth categories based on recent purchases. The information is then tailored to suggest to online shoppers what they should buy. The action follows from Tesco’s recent decision to categorise their stores according to neighbourhood, changing the range of goods stocked to match the spending power of the people who shop there.

It is this pursuit of ways to tailor messages to consumers which led to Facebook commanding what some might call a ludicrously high price when it floated on the stock market. Enthusiasts reckoned  that with 100’s of millions of members most of whom used their Face book page every day there had to be a way of translating this vast consumer contact into hard dollars. Of course the practicalities are leading to some having second thoughts now.

So as we are bombarded with messages at every turn, on our computer screens, smartphones, or even in the post, the key issue for any seller is how to balance giving consumers genuine and welcome information versus an unsolicited and irritating intrusion into their everyday lives and personal affairs. There is already some evidence of a backlash and it is likely to grow.

GM Foods - What the Consumer Thinks

The recent protest against Rothamsted’s Genetically Modified wheat trial brought GM foods back under the spotlight, and perhaps the most interesting data to emerge was that published by the IGD which indicated that shopper attitudes to GM foods have hardly changed at all in the last nine years. In 2003, 14% of shoppers either strongly supported or tended to support GM foods versus 36 % who strongly or tended to oppose them. In spring 2012 the equivalent figures were 16% in the support camp and 33% were opposed. In both 2003 and 2012 just over 50% were not sure what to think about GM.

The views at either end of the spectrum have been formed despite shoppers acknowledging that their understanding of GM is sketchy. Just 21% of shoppers claim to have a good or very good knowledge of GM foods, and 8% claim to have a very poor understanding.

The data seems to indicate that scientists still have a long way to go in explaining the benefits of GM, and reassuring consumers about possible risks. They may take some heart from media reporting of the attack on the wheat trials, which was generally measured in tone, highlighting what the scientists aimed to achieve as well as outlining the views of those opposed.  The Guardian for example gave a considered response, saying that pressures on food supply anticipated in future years meant that science should not be ignored, and GM foods could have a part to play.

One set of stakeholders who have remained quiet are the supermarkets, yet their reaction is critical. During the last major uproar about GM they weighed up public opinion, decided that supporting GM could be damaging to their reputations and took the decision not to use GM in any of their own brand products, a stance which continues today. Tesco for example says on their website “Our research shows that UK customers don’t want GM foods in our stores. So naturally we don’t have any own brand GM foods on our shelves”. Sainsbury have categorically stated that they have no GM crops, ingredients, additives or derivatives in their own label. Supermarkets are unlikely to change this stance any time soon, especially in view of incidents such as the uproar which erupted in social media following news that Waitrose were selling a broccoli, which although not GM was grown from seeds purchased from a subsidiary of Monsanto, a company well known for its GM involvement. Supermarkets will only embrace GM once they are sure that those in favour significantly outweigh those against.

What the IGD data combined with supermarket attitudes tells us is that, for GM to become acceptable, the (extremely vocal) 33% who tend to, or strongly oppose GM, will need to soften their views,  and the 50% who are not sure what to think about GM will have to be persuaded of the benefits,

All of which suggest that it will be many years before GM technology is accepted in the UK’s food chain.

Merger with Arla – Milk Link Secures Stronger Future for Farmer Owners

The proposed merger between Milk Link and Arla has been warmly applauded by dairy industry watchers, and rightly so.

Against a background of ever stronger retailer power, increased globalisation by major players with turnovers in the £billions, and a realisation that dependence on commodity markets usually means erratic profits it was becoming more and more obvious that Milk Link, a company with sales of around £700m operating in one country and without the benefit of strong brands, was unlikely to deliver the returns that investors deserve. And so it has proved. For years Milk Link’s price to farmers on a pence per litre basis has consistently languished near the bottom of the league table.
The merger with Arla means that Milk Link is allying itself with strength.  Arla, as has been pointed out is big, innovative and invests heavily in the industry. It is also highly commercial and unafraid to take the tough decisions in order to provide the best returns to its farmers as shown by its announcement last week that it intends to cut its cost base by some 500 million Danish Kroner to ensure it remains competitive.

No doubt there will be tough decisions ahead in the UK as the two businesses are streamlined, eliminating over capacity in production and duplication of ack office services such as administration, finance and IT.

The Arla Milk Link move follows aquisition of Wiseman by German company Mueller and it will force remaining companies in the dairy industry to examine future strategies with some urgency. First Milk will need to do some hard thinking, and even relatively strong Dairy Crest, which is publicly quoted and therefore more in the spotlight will be facing close questioning from investors.

The existence of larger, well capitalised, forward thinking processing companies selling higher added value products should result  in bigger profits. With that should come increased returns to farmer owners, and not before time.

Shoppers Further Batten Down Hatches in Face of Economic Gloom

According to the IGD’s latest research, 59% of shoppers say that their most important concern just now how much they spend. Not surprising given that since 2007 prices have grown by 14% compared with wages at 9%, the spectre of unemployment  looms and every day brings a fresh story of economic woe.

As Giles Quick of Kantar Worldpanel pointed out in a recent presentationto dairy and red meat levy boards, in the search for spending control, shoppers have two options - either buy less or pay less.

It is clear that they are following both routes.

Both IGD and Sainsbury in its recent results presentation confirmed that consumers are indeed buying less. Justin King of Sainsbury told us that shoppers are putting less items in their shopping trolleys, and he and the IGD pointed out that shoppers are making more trips per week in an effort to cut down on total spend by buying only what they really need, and minimising waste as less products are thrown out due to being past sell by dates or starting to shrivel in the fridge. IGD data shows that the percentage of people making 3 or more shopping trips a week has gone up from 39% to 49 % in just two years.

Shoppers try hard to pay less. For the first time since late 2009 sales of supermarket value lines are growing faster than their premium ranges. The amount of product sold on promotion shows no sign of decreasing and 40p in every £ is spent on deals. Supermarkets have recognised this trend to shopping around and responded. ASDA promises to be 10% cheaper than everyone else, Sainsbury have countered this by giving their shoppers a coupon at the till which refunds the price difference if a branded product could be bought more cheaply that day in Tesco or ASDA, and Waitrose have now pledged to match Tesco on all branded items except when these are on promotion.

Pricing at a “round pound” is another tactic being pursued to attract shoppers. ASDA first started the trend towards pricing goods at £1, £2 or £3, and such goods now account for 40% of their sales in categories where the tactic operates. Tesco and Sainsbury are responding by stepping up the number of goods they sell in this way.

Paying less encompasses reductions in fringe shopping costs. The effort to reduce fuel consumption has led to a rise in on line shopping, and buying from the local convenience store. Sainsbury recorded a 20% increase in online grocery sales in the past twelve months, and IGD tell us that 17% of people currently shop for groceries on line.

All in all it’s a story of hard pressed consumers who think that they will be even harder pressed in the coming months. 46% say their future spending will decrease a little or alot compared with just 15% who think their spending will increase a little or alot. And it’s a story of highly competitive retailers changing strategies, and coming up with innovative ways of fighting for every tenth of a point of market share.

Removing a Barrier to Organic Market Growth - Prince of Wales Charitable Foundation Funds Programme to Boost Organic and Low Input Farming Yields

Few people reject the idea of organic products. Indeed according to the Soil Association’s market report 2012, 8 out of 10 households have bought at least one organic product in the last year, and most people have some idea of what organic farming means, with the top reasons for buying organic being  fewer chemicals, cited by 62% of people questioned, natural and unprocessed (57%) and healthier for me and my family (52%).

Nevertheless, according to the Soil Association the market fell by 3.7% in value terms in 2011 and the problem is price.  91% of people questioned say that high price stops them buying more organic food. The problem is made worse by the current difficult economic climate. So much so that the Soil Association concedes that “Prospects for revival in the organic market are inextricably linked to trends on the high street and conditions in the wider economy”.  Even Waitrose, known for its well heeled customers, and an enthusiastic promoter of Duchy Originals organic produce saw sales drop by 2.2% in 2011.

There are two ways to tackle the price issue – either persuade consumers that it is indeed worth paying the higher price for organic produce, or work to reduce the cost of production and pass any savings on to the consumer in the form of lower prices.

It is therefore good news that the Prince of Wales Charitable Foundation is allocating £200,000 to help organic farmers and those striving to farm on a low input system to rely less on expensive bought in materials, step up their yields, and possibly increase nutritional performance whilst holding true to sustainable principles. It is especially good news too that the scheme will be open to conventional farmers many of whom will be keen to reduce reliance on bought in material s such as fertilisers.

As for future growth in the organic market, any work which reduces production costs and therefore the price needed to charge consumers can only be beneficial. Whilst it is important to continue explaining to people why they should buy organic, translating good feelings about this way of production in to actual purchase will always be difficult whilst the current price gaps between conventional and organically produced foods remain at current levels.

Tesco Recovery Plan - Not Radical Enough

Following January’s shock profits warning Philip Clarke, CEO of Tesco, has set out what he will do to restore growth to the UK, and one is left with the feeling that a player with nearly a third of the market, and nearly twice as big as its nearest rival could have come up with something more imaginative.  

The main planks of Clarke’s plan are:

 Sharper prices

More staff to keep the shelves filled

Better quality products

Nicer looking stores

Clearer marketing messages about why shoppers should choose Tesco over the competition

Easier shopping over the internet including the chance to order on line and pick up in store

Less store openings

It is difficult to argue with any of this, but reaction has been tepid, the general view being that Tesco have underestimated the how difficult it will be to get back on track at a time when their competition is being uniformly successful.

Clarke has admitted that Tesco has lost touch with its customers, and is now committed to getting them to love Tesco again. He is aiming for warm and cuddly versus cold and hard.

 However, scale does not have to be bad. Used wisely scale confers terrific business advantage. Philip Clarke could have seen scale as a power for good and used it to provide exciting plans that really would make a difference to Tesco’s growth prospects.

Tesco’s scale means they employ more people, and so have a bigger net from which to catch the truly talented.

They have bigger research and development budgets which should mean market leading innovation in products and services

They have huge marketing budgets which gives them the chance to communicate to more people, more often and through more channels.

 They have unparalleled purchasing power which they could use to support suppliers in return for lower prices rather than just bully.

So Tesco could have faced the world last Wednesday with a commitment to using scale to do good. They could have announced bigger budgets for research and development, a revised innovation process to get new ideas to market more quickly, a new supplier code of conduct, and even a deeper drive to provide the pricing and value that hard pressed shopper need in the current difficult economic climate. Instead we got a standard list of actions that every other supermarket is implementing.

What Philip Clarke’s announcement lacked was an overarching view of how Tesco could be made different and special again, so that customers do indeed find that shopping in Tesco delivers what they seek, if not an experience that they will love.

More Staff and Brighter Stores Won't Cut It - Tesco Needs a Culture Change

It is not often that a business story makes headline news but that is what happened when Philip Clarke of Tesco announced that he would start managing their UK arm direct, leading to the resignation of the man he appointed to run the business just a year ago.

The news prompted a rush of comment from investment analysts and business writers. Most referred to a profits warning following a disastrous  Xmas where a much publicised £500m price drop campaign actually turned out not to be such a good deal after all with customers instead going to other supermarkets where prices were not much different but the shopping experience much more pleasant. Deeper digging though shows that Tesco’s troubles have been going on for years. Market share, that critical barometer of competitiveness has been steadily dropping, and sales per square foot have been declining.

How did the mighty Tesco, much trumpeted taker of 1 in 8 pounds spent on retail products, get to such a state. The commentators talk about the resurgence of the other big supermarkets, Morrisons, Sainsbury and ADSA, and the growth of Waitrose at the top end of the market,  and discounter ALDI , all putting a squeeze on Tesco’s middle ground position. They talk of non availability of funds for investment in the UK because of the drain on resources from overseas investment. They point to structural issues like the rise of on line shopping making purchase of items such as books and CD’s in store less attractive.

Philip Clarke’s reasons for taking control of the UK are that “Greater focus will allow me to oversee the improvements that are so important for our customers”. To this end he plans to invest in more people and more exciting stores.

Clarke and the analysts have overlooked a key issue - it is arrogance that has landed Tesco in its current difficulties. Tesco has believed that it is so big and powerful it can treat customers (and suppliers) how it wants, and get away with it.

 It has forgotten the most fundamental principle of business success, namely that you ignore your customers at your peril. For years every article about Tesco has received hundreds of comments about the customer experience, some good, but mostly bad. Even a cursory tracking of shopper views across the internet, on Twitter, on social networking sites like Mumsnet would have revealed how many claimed to be fed up with shopping at Tesco. Tesco’s own market research must have told them this too. Yet, they did not act.

So, unless Mr. Clarke leads culture change at Tesco, shows some humility, and pays more than lip service to what shoppers want, brighter stores and more assistants at the fresh food counter won’t turn this ship around.  It remains to be seen whether a person who started at Tesco when he was 14 stacking shelves in his father’s store and been with them all his working life can recognise and correct the cultural issues.

Consumers Continue to Feel Gloomy

Despite the welcome uptick in consumer confidence reported in January many people remain worried about their finances.
Institute of Grocery Distribution data shows that over40% of the population feel that they will be worse off this year than last. It would seem that a slowing of the inflation rate combined with modest decreases in the price of gas and electricity are not enough to offset rising fuel prices, and a lurking fear that redundancy may be just around the corner. The gloom is confirmed by Bord Bia, the Irish Food Board people who regularly monitor consumer sentiment in Britain, Ireland’s largest export market. Their latest survey in the “Feeling the Pinch” series indicated that when asked the question “How well do you think things are going in the British economy these days?” 86% of people answer badly or very badly.

Little surprise therefore that when asked “What one thing will become more important over the next six months?”, 58% of people answered “saving money”. (Source IGD).

Out in the market place we see supermarkets continuing to burnish their value credentials, with offers ranging from money off promotions to vouchers for petrol. The generally quoted figure for goods sold on promotion is close to 50%. Even the more premium grocers have had to jump on the promotional band wagon with Waitrose recently saying that their percentage of goods on promotion had increased in the past year from 17% to 28%.

That said, consumers are not always hell bent on buying the cheapest possible items. When asked which  products were worth paying extra for,  54% said they were prepared to spend more for high quality ingredients, 47% for high welfare/ free range, and 41% for locally produced. The percentages dropped to 26% for Fair Trade and well known brands, and 20% for organic products. (Source: IGD).

There are some glimmers of light among the general battening down of the hatches. 2012 is an event packed year for the UK, and a combination of Euro 2012, the Olympics and the Diamond Jubilee may encourage some to splash out. Generally though, consumers will remain wary.

Red Tractor Logo - The Reality

The hoo-hah among some farmers about Countryfile’s piece on food labels and what they mean for animal welfare seems to have died down, replaced by a new furore over Panorama’s look at whether rich/non farming types should receive the single farm payment.

If the people behind the Red Tractor are returning to business as usual, breathing a sigh of relief that the story has blown over, then they should think again.

Careful viewing of the Countryfile piece reveals no inaccurate reporting but rather a gentle effort by John Craven to get at the facts behind three labels – Red Tractor, Freedom Foods and Soil Association.  

The bald facts are that when it comes to welfare the Red Tractor label stands for little more than compliance with minimum legal standards.  This was tacitly acknowledged by their spokesman.

Freedom Foods requires more than the legal minimum in some areas. Animals cannot be transported for more than 8 hours compared with the 24 allowed by the Red Tractor. Pigs get more space than the legal minimum. They have to have bedding to lie down on, and be able to root around, neither of which is mandated by Red Tractor. Farrowing crates are being phased out next year, but Red Tractor has no plans to forbid them. When it comes to chickens, Freedom Food says no more than 15 per square metre compared with 19 for Red Tractor, and chickens must have natural light and straw bales to peck on, neither of which are required by Red Tractor.

The Soil Association also requires more than the legal minimum in some areas.

What the Red Tractor team need to understand is that animal welfare matters to consumers, and whilst there is still huge confusion among the majority about the facts behind the different labels, consumers are becoming more sophisticated and knowledgeable by the day, prompted by campaigning groups and enabled by technology which allows instant access to the internet for research and verification.

Red Tractor therefore needs to be clear in itself about what it promises, and transparent about what it communicates because it will continue to be exposed if it is not. It is no bad thing for it to stand for a guarantee that the food which carries its label is produced to legal requirements. But it has to be confident that this is indeed the case. Headlines such as “AFS promises action after shocking Red Tractor expose” (Farmers Guardian February 2012), must not be allowed to happen. It would help avoid another expose if it uncompromisingly stood for food produced in Britain instead of being prepared to accept all comers and rely on having a Union flag on the packet to confirm Britishness.

Whichever way it moves forward, the 15 member strong Red Tractor board would do well to give thought to the changing nature of consumer feelings, the rise of ever stronger campaigning groups, and the place of Red Tractor in this new environment.

Food Shopping 2012 - Not So Different From Granny's Day

So many things about the way we shop today would strike a chord with consumers in the 50’s and even 60’s. Then, there was little choice but to buy locally.  Home delivery was the norm with the customer making a list, and handing it over to the shopkeeper who would then drop the order off at a prearranged time. List making was critical as post war housewives abhorred waste, instead carefully planning meals, and eking out the Sunday roast for days – cold on Monday, in a pie Tuesday, and soup on Wednesday. Some of the more controversial farming methods like broiler chickens, or eggs from caged hens, or intensively reared pigs or fish farms were still to come, and anyway, shoppers often knew their local producer and found this reassuring.

A return to buying locally, home delivery, and list making are all major trends today, and concern about animal welfare is growing.  

The hard numbers confirm the trends.

Sales through local convenience stores have mushroomed, and they now account for over one fifth of all grocery sales, up 5% to £33.6bn in 2011. Local stores are indeed convenient. They cater for the weary commuter who does not want to detour via a superstore on the way home, preferring instead to buy what is needed for supper that evening and go straight home. They are a boon for the older, and walking to a local store helps save on petrol costs.

Localism is not confined to a local shop. Supermarkets are getting in on the act, mindful that nearly half of consumers say that supporting local/ British producers is their number one shopping concern.

On line shopping and delivery to home has exploded. This market is now worth £4.8bn, up 21%, and sales are expected to double by 2015.

And the rise in sales of welfare friendly chicken, the use only of free range eggs by all the major supermarkets, and the interest in better welfare pork all attest to increasing numbers of consumers putting their money where their animal welfare mouth is. 31% of shoppers cite animal welfare concerns as a driver for what they buy.

Much has been written about the careful consumer, adapting to difficult economic times by sticking to a budget, using lists rather than buy whatever takes their fancy, and going back to cooking.

Whilst the way we shop may be a return to previous decades, the technological tools we have to help us would leave the 1950’s shopper wide eyed. The internet allows grocery lists to be sent to the store without having to leave the armchair, smart phone apps can be used to create a shopping list anywhere, and thousands of recipes are available at the touch of a button rather than having to wade through cookbooks.

A return to old fashioned methods and values helped by the latest technology will be welcomed by most.

It must be remembered though that within this warmth and nostalgia lies a fundamental truth – and that is the need for an acceptable price/value relationship. There is a hard edge to shopping today, and it is about seeking the best bargains, finding the lowest price, buying 40% of goods on promotion, and making sure that the item in question, whether a premium or low ticket item, really is worth the price. This was probably true for the 1950’s as well as in 2012. 

Cattle Farm Gate Prices Up But Beef Consumption Down

Whilst beef farmers breathe a sigh of relief that farmgate prices for cattle have improved, there is a cloud on the horizon in the shape of falling beef eating.

In the 12 weeks prior to Christmas the amount of beef bought from shops plunged by 9 %. And it is not really surprising. Over the same period the average price of a kilo of beef went up from £5.99p a kilo to £6.58p, reflecting the increased prices that retailers and processors have been paying producers. (Source Kantar Worldpanel)

The drop was even more dramatic in the 4 weeks immediately before Xmas when sales were down 13%.

We have seen this picture already on lamb which saw even steeper farm gate and consequent retail price increases. Last year lamb consumption plummeted by 20%, and this was on top of a decrease in the previous year.

It is, though, a rare cloud that does not have a silver lining and the beneficiaries have been fresh pork (up 2% last year),bacon (up 4%), and sausages (up2%).

Consumers seem to have replaced much of their red meat eating with alternative protein sources. Chicken sales continue to grow and there was much anecdotal evidence of a major switch to turkey pre Xmas.

Of course domestic consumption is by no means the only contributor to farmgate prices. The size of the UK breeding flock has an impact as do the euro and imports.

These factors can change, as the euro performance just now shows, so, regardless of external factors, British farming needs a healthy domestic market.  The drop in beef and lamb eating reminds us that meat is price sensitive.To this end we should perhaps not chastise retailers for encouraging consumers to keep buying lamb, beef and pork, even if this does mean some price promotion.

Shaking Up the Milk Market - Why Muller Might Want to Buy Wiseman

At first blush it seems very odd that Muller Dairy, a very successful branded  yoghurt and desserts company, would shell out £279m to buy Wiseman – a one  product, one distribution channel company who are totally reliant on selling a commodity to fickle, hard negotiating supermarkets and  regularly issue profit warnings as a result.

Indeed, the Wiseman team saw the strategic writing on the wall nearly two years ago, in summer 2010, and appointed a financial advisor Greenhill to get themselves acquired. Muller apparently was the top contender. So Wiseman will be delighted with the outcome and as all the papers have pointed out the eponymous brothers have benefitted handsomely.

The rational for Muller is more difficult to pinpoint. Muller has a reputation for being secretive, and being privately owned is under no obligation to tell us the thinking behind their purchase. Their UK MD has confined comments to a bland statement about the two companies uniting to become a leading dairy player which can offer “exceptional products” to their customers.  Investment analysts seem baffled. Peel Hunt reckoned that there is no strategic logic to the move. Clive Black of Shore Capital could not see much benefit except in the area of milk procurement, collection and utilisation which he felt could be substantial.

Further mystery has been added by reports saying that the reason for purchase is not so called “hard savings”, ie the costs that can be shaken out of a merged business through streamlining back office functions like accounts, IT, purchasing, logistics, and administration. Apparently Wiseman will be left to run itself as it did – at least for now.

So we must look further afield for enlightenment. The clues could come from Mullers business in Germany. In Germany Muller sells not just yoghurts and desserts but cheese, butter, and fresh and UHT milk. It also has a big private label unit dedicated to providing brand and product development , packaging and logistics services to major European grocery players. Perhaps access to Wiseman’s milk supply would pave the way for some of their European products and expertise to be brought to the UK.

The one thing we do know about Muller is that it is highly innovative. Their entry into the UK yogurt market transformed the way it operated, improving quality, adding innovative products with the corner concept, and packaging innovation with the square container which is logistically more efficient than the round pots which previously prevailed .
Muller must see the acquisition of Wiseman  as platform for new product introduction which will wake up the hitherto rather  sleepy UK dairy market.

Players such as Dairy Crest and the milk cooperatives should standby for a milk shake up.

Tesco Pays the Price for Ignoring its Customers

It’s been a dramatic week for  supermarket watchers.

First, Morrisons who had been the clear leaders in the grocery war of late announced that their sales over Xmas period had grown by a tiny 0.7%. Dalton Phillips their Canadian chief executive said it was because cash strapped Brits were unwilling to splash out over the festive season.

Somewhat contrary to this picture of austerity consciousness, Waitrose announced sales growth of +3.8%. Now as anyone who has ventured through the doors of a Waitrose will know their food is not cheap, even following much publicised activities such as a price match with Tesco on 1000 lines.  Next came Marks and Spencer, also not a cheap place to shop, with sales growth of 3%. According to ex Morrisons chief executive Marc Bolland this was due to the introduction of 600 new products, and keen pricing on some lines. Indeed M&S customers seem to be gregarious types, powering sales of party packs of food to by 8% and fresh turkey by 25%.

Then we heard from Sainsbury with sales up 2.1%. According to their head man Justin King, their premium Taste the Difference range grew by 10%, but he did concede that at the other end of the scale their cheaper value range grew by 7%.

We have not heard from ASDA yet but they are reported by market researchers Nielsen to have had a good Christmas sales performance also.

And what can we say about Tesco whose Christmas trading performance was nothing short of dire, with sales down 2.3%. It is not just a short term issue either.  According to their chief executive Philip Clarke, Tesco’s “entire shopping experience” is not as good as it should be and he indicated that Tesco has failed for years to deliver on product availability, service and food quality.

And thereby hangs the clue as to what makes the difference between winners and losers. Yes, indeed British consumers are feeling the pinch, scrutinising all costs, budgeting, cutting down on waste. But, they are prepared to spend their money with grocers who offer the combination of price, quality, and specialness which makes them feel as if their money has been well spent.

The “upmarket” grocers between them have about 25% of the market and despite cash strapped times were rewarded because they offered that critical concept of value for money that consumers seek, especially when money is tight.

Those who keep close to their customers and listen to them generally do well. Tesco has not been listening, and has not done so for years, resulting in lost customers and falling market share.

Turning a deaf ear to customer needs leads to problems.