The Changing Shape of Meat Eating

The British Pig Executive (BPEX) has published data about meat consumption comparing the year ending 25th January 2009 with the previous 12 months, and the figures give an interesting insight into how consumers are coping with the twin challenges of rising prices and recessionary nervousness.

Faced with some whopping price rises on red meat*, and a conscience led move towards buying more welfare friendly chicken, I thought that consumers would just cut back on the amount of meat, fish and poultry they bought. In fact total consumption of these foods has remained the same as last year at just under 3 million tonnes.

There are though quite big changes in the types of protein bought.

Up are sales of burgers (+6%), sausages (+3%), frozen fish (+4%), pastry based meats (+2%) and fresh fish (+1%).

Down are sales of canned meats (-5%), lamb (-4%), beef (-3%), pork (-2%), and chilled ready meals (-5%).

Poultry is still by far the biggest meat bought, and sales are level with last year.

Within the red meat sector there has been a well documented trend towards buying cheaper cuts. Lamb mince has seen the biggest rise in sales followed by pork loin, stewing lamb, beef mince and stewing beef. The biggest falls have been in roasting cuts of lamb, beef and pork shoulder, and also in beef steaks. What seems to be happening is that people are buying red meat less often, and when they do buy, they buy less at any one time.

The trends make sense. Consumers are managing their budgets carefully. They have turned to meats such as bacon, sausages, and burgers which are not just cheaper but allow for stricter portion control, and so less waste. They are prepared to spend time at home now, cooking those cheaper cuts, rather than go out and pay restaurant prices. The trend towards frozen foods is being seen generally, not just in fish, again because of price. And the move away from ready meals reflects unwillingness to pay high prices, but also the rise in home cooking.

Perhaps the most surprising thing is that these shifts in consumer behaviour are large, and have happened very quickly. They can have a dramatic effect on profitability, for example in red meat where demand for expensive cuts has plummeted and best cuts are either being minced or sold off at vastly reduced prices. They forcibly illustrate the need to keep a very close eye on trends, and to be prepared to change tack to meet consumer needs.

* Notes on price rises

The data shows that in the last year prices per kilo have risen as follows: beef +11%, lamb +9%, pork +10%, bacon +11%, sausages +7% and sliced meats +8%. These rises are averages and reflect the trend to cheaper cuts. Like for like comparisons on each cut will show much higher increases. Price increases are accelerating, for example in the last 12 weeks, beef has gone up by 16%, and lamb by 11%, compared with the same period a year ago. Further changes in the patterns of consumption are therefore likely.

Essential Waitrose - All a Bit Confusing

To Waitrose, keen to see what the new “essential Waitrose” range is all about.

Billed by the Waitrose press office as “designed to make shopping for staple groceries easier for shoppers”, I found it all rather confusing.
Perhaps the problem was expectation. I had expected to find a new range, displayed alongside existing products, but with a cheaper price and an easy to understand reason about why it is cheaper. Similar to Tesco’s Value, Sainsbury’s Basic and ASDA’s Smartprice.

Not so. Much of the new range is being sold at the same price as existing products. This is true of meat, where the new range and the old were being sold side by side, and fruit. What makes it more difficult to understand is a sign above the meat and fruit shelves saying “all the quality you would expect from Waitrose at prices you wouldn’t.” Which means the price conscious shopper will probably feel put out because prices have not been reduced, and the quality conscious consumer fret that the product is not as good as it used to be.

And then there is that word “essential”. On shelf today were blackberries from Mexico, blueberries from Chile and raspberries from Morocco. Hardly essentials. Essential branding on the meat shelf is being used on rump and sirloin steak, not just on cheaper cuts like mince and braising beef. And I see from the press photo that there will be an essential farfalle. It’s a pasta apparently, but to most people probably not an essential purchase.

On a less critical note, it is easy to see an opening for a bog standard yoghurt, because at the moment all you can buy are speciality flavours and ranges like Seriously Fruity or Probiotics. Also, an offering of free range eggs that do not come from a specific breed like the currently sold Columbian Blacktail could be cheaper, and understandably so. The milk, jam, and biscuits are not yet on shelf so we do not know what sort of products they will be.

Waitrose is a great business, to be wholeheartedly admired for its commitment to quality, and its exemplary animal welfare standards and reputation for fair dealings with its farmers. Clearly it does need to tune its strategy, along with every other retail operator, to manage through the current economic challenges.

But to work, an initiative needs to have a clear and simple message easily picked up by consumers. I think the issue Waitrose faces is that they tried to combine two elements – a pack design change with the introduction of cheaper products. And its hard enough to communicate one new message to shoppers, let alone two.

I really hope it’s just me who finds the offer confusing.

Diversification Trends - DEFRA Survey Shows More Farms Involved But Income Down

DEFRA has just published its annual analysis of farmer diversification activities in England, and the income generated from them. (Diversification being defined as “The entrepreneurial use of farm resources for a non agricultural purpose for commercial gain.” )
The survey is peppered with statistics and makes for dry reading. But for those happy to delve into the detail there are some useful insights to be had.

Income from diversification fell sharply to £400m in the year to April 2008, compared with £430m in the year to April 2007, and dropped from 21% of total income to 15%. The fall is not due to less farms being involved in diversification. Indeed there were 29,600 diversified farms in 07/08, compared with 28,700 in 06/07. Rather, the drop is due to a fall in the amount of income generated per farm. In 06/07 the average income per farm was £14,500 compared with £13,700 in 07/08.
The survey figures are not sufficiently robust to draw hard and fast conclusions about the reasons for the drop, but anyone considering diversification might want to think about the following factors, which boil down to the size of the market opportunity, competitive conditions, and costs to operate.
For example, is there now so much competition that diversifiers are having to reduce prices to get business. Or, are the new businesses being established very small because most of the market has been mopped up by existing players. Or, have costs now risen sharply, but competitive conditions mean that prices cannot be put up to offset them, and so margins are squeezed.
Another factor is that the drop in diversified income coincided with a rise in income from core farming excluding subsidies, so it could be be that diversification loses focus once financial circumstances improve. This is in itself dangerous as business once lost will be difficult to recapture.

The survey also compares the number of new and discontinued enterprises, and shows that the number of new enterprises exceeded discontinued ones in all areas except food retailing and processing. 3,100 farms started diversification in 07/08, compared with 2,200 discontinuing. The biggest jump was in sport and recreation, and tourist accommodation and catering (although the survey says the sample size for tourism is small, and may not be totally accurate). By contrast, 1,100 food processing and retailing enterprises were discontinued, compared with 800 start ups.

Letting of farm buildings accounts for just over half of all diversification enterprises, and 68% of diversified income, and has the highest profit margin.
Letting buildings gives a margin of 83%, compared with 62% for sport/recreation activity, 58% for tourist enterprises, and 25% for processing/retailing. It is perhaps no wonder that letting of buildings is so attractive given the high margins and low hassle factor.
The average enterprise incomes per farm are as follows:
Letting of buildings = £13,000
Processing/retailing
of farm produce = £9,800
Sport/recreation = £4,700
Tourism = £10,300
These look like healthy returns, but they are average figures which disguise the fact that most diversified enterprises are small. 56% of all enterprises have an output (turnover) of less than £10,000 and 15% have an output of less than £1,000.

It is often thought that small farms are more likely to diversify than larger ones, but the opposite is true, with 66% of the very largest engaged in diversification compared with 42% of the smallest. Less surprising perhaps is the fact that the largest make considerably bigger profits than the smallest, averaging £25,100 per farm versus £10,900 for the smallest.

Reading through the survey results reminds us that diversification requires thorough research about the size and profitability of a market opportunity before proceeding, and constant attention to consumer trends and competitive activities once up and running. It also reminds us that most diversifications are small.

But encouragingly, the survey shows that just 2% of diversified businesses made a loss in 07/08, which indicates that diversification can be a very useful addition to farm income.

Catering Trade and the Credit Crunch - Value Winning Here Too

Conventional wisdom says that the catering trade performs badly during recession, but just like every other sector this trade is seeing its winners and losers, and the broad message is that those who offer value for money are performing well.

Value for money does not mean cheap. Even the most expensive restaurant will be seen as good value provided food, service, bar bill and general “feel” justify the cost at the end of the meal.

Take Le Gavroche, one of London’s top eateries. According to legendary owner Albert Roux, the restaurant is a full as it has ever been. What has happened though is that instead of ordering wine costing hundreds and in some cases thousands of pounds, customers are trading down to more sensibly priced tipples, a pattern seen in many other up market restaurants, according to a piece in Bloomberg news published last week. The same piece interviewed several other expensive restaurant owners. Most are reporting that business is generally holding up, but all are heavily focussed on service and value for money, as well as keeping a very close eye on costs.

On the other hand, some celebrity chef ventures have not been able to keep going. Anthony Worrall Thompson, has just closed 4 of his 6 restaurants, Aldo Zilli has shut his Brighton café, Raymond Blanc has shut his Manchester restaurant, and Tom Aikens has gone bankrupt, although managed to reopen elsewhere, allegedly leaving a trail of unpaid suppliers in his wake. Even Gordon Ramsey has a reputed £10m overdraft, although he claims overall business is good.

Presumably all these names will be reviewing exactly what they are offering consumers to tempt them to spend when times are so difficult, and why in so many cases their business models have not worked as planned.

But moving out of celebrity chef territory, and into a world more familiar to the average diner, there are sectors of the catering trade performing well.

Fast food businesses are motoring. Domino’s Pizza has grown profits by almost a quarter, they plan to open 50 restaurants this year, and will be creating 1500 new roles. KFC is undergoing a £150million expansion, opening 250 new outlets and creating 9000 new jobs, Subway is adding 600 new stores and 7000 new staff. McDonalds added 2 million new customers a month in 2008, grew sales in the “low double digit” range, and is opening 20 new restaurants. What characterises all these firms is that they offer predictability in taste and price, and are seen as value for money.

Fast food’s performance contrasts alarmingly with what is going on in pubs. According to the British Beer and Pub Association 39 pubs are closing every week, due to a combination of tax hikes on beer prices, the smoking ban, and the recession. But here again, value for money wins out. Wetherspoons, with its focus on cheap food and beer, has grown sales by 2.6% in the quarter to 18th January 2009.

Mid market, mid priced, and middling quality outlets are also struggling. Its these outlets who are promoting heavily with offers more usually associated with Tesco like buy one meal get one free, or “eat early eat cheaper” and set price lunch deals. There has also apparently been a big rise in on line restaurant vouchers.

So in the catering trade, as in every other sector, its value for money which is winning out. If food or drinks are ludicrously priced, with average quality, tiny portions, and surly service, then customers will vote with their wallets, and take advantage of the “Eat in for a tenner” type offers promoted by the likes of Marks and Spencer.

Marcus Wareing who operates from the Berkeley Hotel in London’s Mayfair, summed it up well “The slowdown has made me more aware – conscious of waste, making sure margins are right, seeing what we can do to bring customers in. We are not offering lots of cheaper menus…..but we are ensuring that the customer receives value for money. This slowdown will shake up the industry. In some ways it is a good thing as it makes us all think more.” Wise words.

Livestock and the Environment - Where is the Voice of Farming?

Livestock and the environment are in the spotlight again, and the frustrating thing for anyone involved in food or farming is the one sided nature of the debate. All the media coverage boils down to one message – “meat and dairy environmentally bad so eat less”. We hear little about the food value of the products, the role that livestock plays in keeping Britain’s countryside beautiful, or the steps that agriculture is taking to reduce its environmental impact. The headlines are worrying because a cut back in consumption will eventually affect the price paid to farmers for their products, and it is difficult to understand why the industry seems voiceless and invisible.

Capturing most headlines is the proposal by the NHS to cut back on the amount of meat it serves to patients. This, they say, will help reduce their carbon footprint, and will be beneficial to the long term health of patients. Whilst those with sick loved ones might worry about whether recovery will be as quick without the benefit of a balanced diet, and the cynic might wonder whether the driving force is to reduce NHS costs, nonetheless the fact is that the NHS serves up millions of meals and such a move will impact meat sales.

Less headline grabbing is the report “Food Futures” by think tank Chatham House.
Read the detail and you see a real anti meat and dairy bias. Meat and dairy are blamed for health issues. Global agriculture is said to be responsible for 14% of non carbon greenhouse gas emissions, and that a third of this is due to livestock. And they quote an EU report which says that meat and dairy are the main source of green house gas emissions in the food and drink sector. They trot out the old statistic that a kilo of grain fed beef requires 15 cubic metres of water versus cereals which require between 0.3 and 4 cubic metres, forgetting to mention that most livestock in the UK is pasture fed. Most alarming of all, the Chatham House solution is for government to dictate what we can and cannot eat, saying “The food system will need to reflect society’s choices as much as individual preferences”.

Then last week at the Meat and Livestock Commission’s Outlook conference a speaker from the Food Climate Research Network said that eating meat had to become more environmentally viable either by the industry reducing emissions or people eating less meat. She said that a meat tax might help and that there were moves to add the cost of emissions to the price of a food in order to encourage consumers to rethink what they are buying.

Fortunately a more balanced view of things emerged at the same conference in the shape of Mike Coupe, trading director of Sainsbury who said that cutting carbon emissions by limiting food choice is a “form of communism”, and that a tax would be unlikely to change people’s meat consumption unless it was huge.

The key point is that the issue of agriculture and climate change is not going to go away.

Few will dispute the need to take climate change seriously. But the debate is totally one-sided. Consumers not getting a balanced message about the value of meat and dairy products and the livestock which supply them.

So what should be done?

In a nutshell, simple fact backed messages must be communicated regularly and by independent, respected sources as well as the industry itself. A one off burst of activity just will not work.

There are three messages to convey

1. Meat and dairy are high protein foods, containing vitamins and minerals essential to good health. As the Food Standards Agency says "Meat is a good source of protein and vitamins and minerals, such as iron, selenium, zinc, and B vitamins. It is one of the main sources of vitamin B12, which is only found in foods from animals, such as meat and milk.”

The FSA also says “ Milk and dairy products such as cheese, yoghurt and fromage frais are great sources of protein and vitamins A and B 12 . They're also an important source of calcium, which helps to keep our bones strong. The calcium in dairy foods are easy for the body to absorb”.

2. Without cattle and sheep grazing the hills and moors our countryside would become overgrown in just a few years

3. Livestock farming has a plan to reduce greenhouse gases. (Assuming it does have a plan of course. A trawl through websites from the NFU, Dairyco, the NBA and the NSA does not turn up an easy to read summary of how the industry is tackling climate change. Contrast this with the National Cattlemens' Beef Association of America page on beef cattle and the environment.)

Funding for the information campaign can be found from any number of places. For a start I’d suggest ditching the Red Tractor and redirecting the levy funds, on the grounds that the Tractor means no more to the average consumer than a Union Jack.

Then, what about forensically examining the evidence that Meaty and Lamby are persuading people to buy more meat. Would the funds be better spent supporting a targeted campaign.

The big question is why the industry is not doing more about an issue which has been on the table for years, and which is growing in importance.

Animal Welfare - What Does the Public Really Think?

Animal welfare issues are again in the news.

Last week alone saw Hugh Fearnley Whittingstall take on Tesco in the cause of truthful labelling on chicken, Jamie Oliver supporting British pigs, a concerted advertising campaign by Sainsbury promoting their Freedom Foods pork, chicken, and salmon, and news of their ban on caged eggs. We also heard that Tracy, marchioness of Worcester has done a programme advocating better pig welfare, to be screened tonight.

On the other hand, last week also saw a piece by Andy Bond of ASDA in The Grocer claiming that worrying about animal welfare is yesterday’s agenda, and that celebrity chefs are patronising cash strapped consumers. Waitrose who have for years promoted high animal welfare standards seem to be losing sales, and organic meat products, which support high welfare, have apparently seen a big sales drop in the last three months.

So do consumers care?

The facts suggest that many already care enough to have changed how they shop, and that the more information they are given about the issue, the more prepared they are to change. It’s by no means everybody, and even the worried have limits on how much they are prepared to pay, but there is a growing movement to higher welfare products.

IGD research continues to find this. They say that whilst price has increased in importance as a factor influencing shopping habits, the number of consumers who have specifically bought foods with high animal welfare standards has increased from 11% in 2007 to 18% in 2009. They also point out that use of free range eggs has now moved to processed foods such as mayonnaise and pasta.

TNS the market research group in a survey commissioned by Compassion in World Farming have reported that free range chicken sales grew by 35%, and higher welfare sales by 42%, between December 2007 and December 2008. They also say that in December alone, standard chicken sales dropped by 11% in total and by 55% in Tesco. Free range, higher welfare and organic chickens now account for about 15% of sales, still small, but growing fast.

On to pigs. Jamie’s programme attracted 1.9 million viewers, less than the 3 million for his chicken programme, but nevertheless a sizable audience. It is early to judge whether it has made a difference although Waitrose have reported that their sales of pork (all British of course) rose by 20% following the programme.

It looks as if Andy Bond’s sweeping statement that consumers are not prepared to pay for higher welfare products is just not true, and if we are talking patronising, then for Bond to lump all his customers into one box and not recognise that people have different priorities, pressures and values, seems patronising in the extreme.

Most supermarkets, even Tesco and ASDA have acknowledged the trend and sell a higher welfare chicken to help the conscience stricken but cash strapped consumer.

Sainsbury have introduced a Freedom Food endorsed option costing about £1.50 more for the average bird, but with a clear explanation of the better rearing conditions. Sainsbury have also kept their range of basics, free range and organic for those who want alternatives.

They are adopting the same approach on pork. Again, it’s Freedom Food endorsed, again there is an explanation of why it is better for the pigs, and the extra price is small at about 50p per kilo more than standard.

Where will the animal welfare issue go from here? I feel that as awareness of how farmed animals are raised grows, consumers will increasingly look for higher welfare options. It may take years, and it will require commitment from well known respected champions like Hugh and Jamie who will not be put off by vested interests coming down on them like the proverbial ton of bricks, and equally will seek out the full facts before acting. It was a bit depressing for example that Jamie in his admirable support for British pigs did not mention that there are still some unsavoury yet legal pig raising conditions here such as housing the animals on slats. But you have to start somewhere.

There is evidence too that animal welfare concerns could extend to other species. The long running Anchor advertisements for butter from “free range cows”, with the implication that not all cows run freely in the sunshine as consumers would like to believe, would be an example of a company, foreign at that, spotting both the trend towards higher welfare.

Finally, it is not too difficult to imagine that better welfare conditions become such an issue that supermarkets decide to raise the bar for producers yet refuse to pay more.



























claiming that worrying about animal welfare is yesterday’s agenda, and that celebrity chefs are patronising cash strapped consumers, and a concerted advertising campaign by Sainsbury promoting their Freedom Foods pork and chicken, and their ban on caged eggs. This week Tracy, Marchioness of Worcester, will be seen on More 4 TV in the cause of pigs. Meanwhile Waitrose who have for years promoted high animal welfare standards seem to be losing sales, and organic products, which also promote high welfare, have seen a big sales drop in the last three months.

So do consumers care? The facts suggest that many already care enough to have changed how they shop, and that the more information they are given about the issue, the more prepared they are to change. It’s by no means everybody, and even the worried have limits on how much they are prepared to pay, but there is a growing movement to higher welfare products.

The IGD continues to find this. They say that whilst price has increased in importance as a factor influencing shopping habits, the number of consumers who have specifically bought foods with high animal welfare standards has increased from 11% in 2007 to 18% in 2009. They also point out that use of free range eggs has now moved to processed foods such as mayonnaise and pasta.

TNS the market research group in a survey commissioned by Compassion in World Farming have reported that free range chicken sales grew by 35%, and higher welfare sales by 42%, between December 2007 and December 2008. They also indicated that in December alone, standard sales dropped by 11% in total and by 55% in Tesco. It should be said though that the percentage of sales in free range, higher welfare and organic remains small.

On to pigs. Jamie’s programme attracted 1.9 million viewers, less than the xx for his chicken programme, but nevertheless respectable. It is early to see whether it has made a difference although Waitrose have reported that their sales of pork (all British of course) rose by 20% following the programme.

It looks as if Andy Bond’s sweeping statement that “xxxxx” is just not true, and if we are talking patronising, then for Bond to lump all his customers into one box and not recognise that people have different priorities, pressures and values, seems patronising in the extreme.

Sainsbury have spotted the trend, and have been very shrewd in the way that they have tackled the issue. In an effort to help the conscience stricken but cash strapped shopper, they have introduced Freedom Food endorsed, higher welfare chicken with a clear explanation of why it is better for the birds. It does cost more but only about xxxx a kilo, or £ for an average bird. They have also kept their range of basics, free range and organic for those who want an alternative.

They are adopting the same approach on pork. Again, it’s Freedom Food endorsed, again there is an explanation of why it is better for the pigs, and again, the extra price is small.

Where will the animal welfare issue go from here? I feel that as awareness of how farmed animals are raised grows, consumers will increasingly look for higher welfare options. It may take years, and it will require commitment from well known respected champions like Hugh and Jamie who will not be put off by vested interests coming down on them like the proverbial ton of bricks, and equally will seek out the full facts before acting. It was a bit depressing for example that Jamie in his admirable support for British pigs did not mention that there are still some unsavoury yet legal pig raising conditions here such as housing the animals on slats. But you have to start somewhere.

There is evidence too that others are looking at animal welfare conditions from a different angle. The long running Anchor advertisements for butter from “free range cows” would be an example.

Finally, it is not too difficult to imagine that better welfare conditions become such an issue that supermarkets decide to raise the bar for producers yet refuse to pay more.

Dragons Den’s Evan Davis on the Secrets of Successful Entrepreneurship

After 4 years hosting Dragons Den Evan Davis probably knows more than most about entrepreneurs. At a conference in December held at the Royal Agricultural College on the topic of "Inspiring Entrepreneurship" in agribusiness, he described the 5 characteristics he feels all successful entrepreneurs possess.

1. Optimism
This is the key requirement. Successful entrepreneurs possess an optimism “bordering on the delusional”. Those who make it see the glass half full all the time, they are never put off by obstacles thrown in their way, and bounce back after the hardest of knocks.

2. The ability to spot how things could be done better
The good entrepreneur has the knack of spotting the irritations in life’s everyday activities, and working out how they could be removed or reduced. Evan advised would-be entrepreneurs to make a point every day of finding two products or services which could be improved.

Equally entrepreneurs can see ways to create opportunities. He gave as an example the couple who developed cardboard beach furniture, but decided that the most lucrative route was to sell the opportunity to brand the furniture, rather than sell the furniture itself. Their product ended up on Henman Hill at Wimbledon, carrying the logo of a well known company.

3. The energy to make things happen
Being highly creative is on its own not enough, great entrepreneurs come out of the clouds, get their shirt sleeves rolled up, and work out the nuts and bolts of putting their ideas into practice.

4. Basic business knowledge
And, in the same vein, they have basic business skills. They can write a business plan, and understand costs and cash flows. This skill often clashes with their optimism resulting in wildly overblown projections, but the successful entrepreneur can temper the optimism with reality.

5. Willingness to adapt and change
The best entrepreneurs have tested their ideas thoroughly on potential customers, not just mum and dad, or sympathetic friends. They have listened to feedback, and adjusted their idea accordingly.

Despite all those skills an entrepreneur’s idea may not get off the ground, and even if it does, may not fly for long for all sorts of reasons. The most successful business people can catch a cold as the recent failure of green haulier JPM Eco Logistics which received investment from Dragons Deborah Meaden and Theo Paphitis showed.

But that’s presumably where the optimism comes back in. The best entrepreneurs just dust themselves down and get going again, regardless.