British Pigs Are Worth It - and the retailers know it
By Rick Sanderson, Pork Chain Business Development Manager, PIC. Congratulations to the 'British Pig Are Worth It' campaign. It seems our supermarkets are getting behind it and offering retail price increases, which will hopefully filter through to producers and procesors and help safeguard the industry's short-term future.And we hope that British consumers will also respond and support British Pork by absorbing the modest price increases that they will now be faced with.
Some may argue that this increase may go undetected, indeed in PIC's own recent consumer research our standard pork buyers had little knowledge of the p/kg of pork compared to other meats. They were however, aware of the 'relative price' compared with other proteins, and the feeling was that price increases would have minimal impact, and that pork was being devalued in the first instance.
While feed price increases are a fundamental shift in raw material values across the globe, the impact they will have on imported meats will doubtless be dampened by the relative value of cuts in other nations and exchange rate advantages. Nations that are geared up to export and have planned excess production will use price differentiation more than ever to hold on to their market.
So what about the long term plan for British Pork?
Yes it seems hard to think positively when survival is currently the name of the game, but we must have a game plan to really make 'British Pork Worth It' to our customer.
In many developed grocery markets, achieving cost reduction remains a key focus and retailers are embracing supply chain efficiency and sourcing improvements in order to deliver better value for the consumer.
However, there is significant growth at the premium end of the market too, with an increase in retailers and suppliers seeking to add value in this segment.
With growth occurring at both ends of the market, those operating in the centre ground may find their market share increasingly threatened. It is the middle of this hourglass where we currently aim a large proportion of British Pork, and we need to be striving to make our product fit for purpose. Can we achieve a cost of production low enough to satisfy the value end of the hourglass? Increasing feed prices on top of an existing premium make this proposition sound very difficult. So we must try and develop our premium credentials.
The opportunity for premium
IGD figures from 2006 demonstrate that opportunities created by retailers and their suppliers for premiums were vast. The 'Premium' market was worth almost a £13 Billion in the UK. This breaks out as follows;
Retailers Premium Brands | £5.0 Billion |
Local & Regional | £4.0 Billion |
Premium Branded Goods | £1.9 Billion |
Organics | £1.6 Billion |
Specialist & Fine Foods | £0.2 Billion |
There are exciting growth prospects in all these sectors too. If we look at the 5 year forecast of the market sizes, again IGD predict that these established Premium Markets may grow a further third to £18.7 Billion.
Retailers Premium Brands | £8.9 Billion (+£3.9 Billion) |
Local & Regional | £4.8 Billion (+£0.8 Billion) |
Premium Branded Goods | £2.4 Billion (+£0.5 Billion) |
Organics | £2.4 Billion (+£0.8 Billion) |
Specialist & Fine Foods | £0.2 Billion (No Change) |
It is interesting to note that the largest predicted growth is in the supermarkets own Premium Brands. If we take a look at how dominant the supermarket own labels are within store, it easy to see why they are predicted to carry on driving growth. It cannot be a coincidence that the retailers who have had a difficult time of late have a significantly lower percentage of own label premium brands.
Percentage own labels:
Waitrose | 50% |
Sainsburys | 49% |
Tesco | 48% |
Asda | 48% |
Morrisons | 43% |
Co-Op | 39% |
Somerfield | 35% |
Kwik Save | 15% |
So let's take a look at all the buzzwords that retailers are using to attract these premium customers;
Sustainable, ethical, welfare friendly, carbon footprints, food miles, fair trade, energy efficient, wholesome, nutritious, healthy, environmentally friendly, waste neutral, locally sourced, non air-freighted, fresh, etc.
Retailers are all keen to establish their 'Green' credentials, and the premium labels are being used as a 'halo effect' around the rest of their offer. Just look at Whole Foods in Kensington, a whole new concept of premium retailing of fresh and local goods. 'Food Miles' claims and 'Local Food' opportunities cannot be satisfied by imported produce, so an opportunity is clearly under our noses.
In fact Tesco have made a real commitment to what they call 'Green Labelling'. This campaign aims to show the impact of food production on the environment and could lead to major changes in consumption. Speaking in March this year, Tesco's Ms Neville-Rolfe stated that "It is a trend that might be bigger than all the rest", adding that "Green labels could be a big driver for change".
So there are clearly big opportunities over the horizon to carve out a sustainable premium for a Quality British Product, one that is led by demand for its premium attributes, and one which in the long run will be more sustainable than cost price increases. We need to take these opportunities and develop them to clearly establish that 'British Pigs Are Worth It'.