‘Retailers must accept price rises for growth’: food manufacturers

Senior executives from the industry told Food Manufacture​’s Business Leaders’ forum last month that the UK retail environment was so cut-throat that no multiple wanted to be the first to concede to price rises.

Philip Wilkinson, a director at poultry processor 2 Sisters Food Group said: “No one wants to go first. One will say they don’t want to go before Asda, another says they won’t go before Tesco, and the upshot is that no-one goes.”​

He suggested it could be an issue for the Groceries Code Adjudicator to examine, but said in the meantime it would be left to manufacturers to “look at doing anything they can to add value”.​

‘No way retailers would allow it’ ​

Bill Panesar, md at sauces firm Panesar Foods, said every firm needed to put up prices, but there “was no way retailers would allow it”.​

He predicted the next 12 months would be characterised by businesses trying to become more efficient and seeking to secure raw materials at lower prices, something that will be no mean feat in the wake of poor harvests.

A vote of delegates showed the overwhelming majority thought the outlook for 2013 was more positive for their firms than in 2012 although many still predicted a tough year. The forum was sponsored by legal firm Stephenson Harwood, business improvement specialist Applied Acumen and recruitment expert Goldteam.

David Webber, md at consultancy PA Europe, said an increasing EU focus on food waste could reduce the number of buy-one-get-one-free offers, something he predicted could be a ray of light for manufacturers’ margins.

And despite tough trading conditions, Goldteam commercial director Brian Hinchley said many firms were now paying “above the minimum wage to retain good quality staff”.​

Peter Farquhar, md at Dorset Cereals, said there was a very high calibre of entrepreneurial start-ups in the UK. Others, including Mark Lynch from Windyridge Cheese and Alex Smith from muesli producer Alara Wholefoods, reported positive export developments.

‘Ruthlessly squeezed out’ ​

However, David Thompson, chairman of Marston’s and chief executive at Anglia Maltings issued a word of warning, claiming Tesco was increasingly pursuing a policy of stocking one major brand and its own-label offerings, meaning many secondary brands were getting “ruthlessly squeezed out”.​

Zeetar md Ian Blackburn also warned that this year would be the first when UK retailers in aggregate were not planning any volume growth leading firms to look for new markets abroad.

Despite the difficulties, Peter Jones, md at Speedibake, said he believed manufacturers would continue to find solutions in 2013.

Click here to find out what the chairman of Food Manufacture​ Business Leaders’ Forum, Paul Wilkinson, thought were the event’s main conclusions.​