The current intake have visited London which included a tour of Westminster and meetings with Defra and the Food Standards Agency (FSA) on issues affecting the sector. This gave the PIP group a real insight into government and the role of NFU lobbying at this level.
The most recent visit of the group took place on 20th April hosted at ALDI’s Head Office in Atherstone, Warwickshire. The group heard from key suppliers 2Sisters Food Group, Sunrise Eggs and consumer market researcher, Kantar. Aldi welcomed the PIP group with an introduction from their poultry meat and egg buyers, Kelly Sheth and Will Barstow giving the PIP group a useful insight into the buying strategies and ethos of Aldi and retail engagement.
Aldi first came to England in 1990 with its first store in Stechford, Birmingham. Aldi learnt that British consumer’s preferences were very different. Aldi adapted and changed their supply model to fit the British consumer market.
Aldi's model is based on sourcing produce locally where possible. In a recent survey carried out by the Groceries Supply Code, Aldi came out as the leading retailer in terms of its supplier relationships. The crux of Aldi's sucess is its business model. Each Aldi store is managed locally and given a certain amount of autonomy in ordering.
Will Barstow explained to the PIP group that Aldi can buy and sell quality British produce at competitive rates because it is run so efficiently. They are not listed on the stock exchange so take a long term sustainable view.
The PIP Group were given a taste test of Aldi’s fresh British chicken products. British chicken is used in a range of products from whole birds, to breast fillets with sauces. Gary Ford posed the question to Kelly Sheth, egg buyer, on the issue of cage free demand for eggs. Currently 60% of Aldi's shell egg sales are colony. Kelly confirmed that the free range market is growing. It was agreed within the group that market forces should be allowed to drive the industry rather than the arbitary gullotine approach adopted by some countries.
The PIP group also heard from, Aldi supplier Sunrise Eggs. Sunrise Eggs is a second generation family farming business based in Leicestershire and established in 1972, now owned by brothers Phill and Adian Crawley. It has a diverse management team covering farms, packing, technical, operations and sales. Phill and Chris Stocks, Sunrise’s General Manager, explained how the business grew from local trade to coal miners to an enterprise that diversified into free range production - now standing at 300,000 - while still maintaining colony production. Sunrise supply eight different lines to Aldi, including Organic. Phill Crawley pointed out that Aldi had the vision and foresight to introduce Salmonella testing even before the NHS. Phillip commented that part of their future planning is to embrace science based developments, market trends, and customer demand in a realistic and pragmatic way.
2Sisters explained that for the past two years, 2 Sisters Food Group has not used three of the antibiotic classes identified by the World Health Organisation (WHO) as highest priority critically important to human medicine - the third and fourth generation cephalosporins, fluroquinolones and also macrolides. They are committed to responsible use of antibiotics and not using them on a prophylactic basis for 1-5 day old chicks. Their research and reports will provide vital insights for the industry.
Kantar talked about general consumer trends. In 1980 people were spending on average 60 minutes preparing their food, by 2015 this has reduced to 31 minutes on average.
Poultry meat
Consumers are buying more ready prepared meals. Pre-prepared convenience chicken has grown significantly. Across the retail market, sales of whole birds is down 3% cook in the bag format have increased in sales (+ 23%). Breast meat has performed well (+12%) and now accounts for 1% of all Aldi’s turnover. Food deflation is a big issue driven by the major retailers competing intensely for market share.
Eggs
Interestingly, in 2015, across all retailers, free range eggs became the majority, now with 52% of the egg market. Again, across all retailers, colony eggs averaged 10p/egg with sales up 1% (by volume) in 2015 but down by 10% in terms of value. Free range averaged 18p/egg, volume was up 8% and value down 4%. Organic eggs across all retailers performed well in 2015: average 35p/egg, sales volume were up 15% and value up by 9%.
Winners and losers
According to Kantar Aldi, Lidl, Waitrose and Tesco are performing well whereas ASDA, Morrisons and Sainsbury are losing market share. With the market for eggs, becoming increasingly competitive for retailer – customers are getting a great priced product!! In order for our egg industry to prosper it is vital that retailers ensure that this pressure is not being passed onto the supply chain. This makes the industries aim to promote the use of British poultry throughout the product range, ever more important. Examples include using British eggs in quiches, cakes and mayonnaise ranges. Up to 20% of the ingredients of a quiche is egg.