Local Food RetailingLow Carbon Food Conference

St. Andrews, 25th August 2009

Patrick HughesFood Marketing, SAC Consulting

Changing Business Environment

• Changes in the economy

• Change of focus in the market

• Consumer reactions?

Changing Environment

• Price Unstable pricing environment

– Price inflation (now slowing) and slowing consumer spending

• Retailers with a focus on price and value are performing ahead of

the market

– Asda, Morrisons, Iceland, Aldi, Lidl

• Shoppers interest split between higher category products and a

focus on price

– Freshness, authenticity, origin, perceived healthiness, environmental

impact, animal welfare

1411 1212

911

1311

8

12 11

18 18

11

24 23

14

19

25

1815 15

1315

9

18

2527

0%

5%

10%

15%

20%

25%

30%

35%

40%

...food that hasbeen produced

locally in the area Ilive

...organic food ...foods that supportFairtrade

...foods with highanimal welfare

standards

% m

ain

shoppers

(all

mentions)

2003 2004 2005 2006 2007 2008 2009

Environmental and Ethical

Despite the economy, there remains considerable momentum behind ethical shopping. With the exception of Organic food, there has been an increase in shoppers claiming to be influenced by all other ethical attributes including local food, Fairtrade and animal welfare.

Question; I have specifically bought...

Source: IGD Consumer Unit, 2009

Consumer Questions?

Provenance & Local

• Scottish Origin– Separate studies have shown:

• 71% of consumers looking to buy local• 49% looking to increase local food consumption• 75% of Scots loyal to Scotch beef

• Retailers growing regional buying teams

• Still potential in local foods– rural Scottish consumers among the most likely to buy

local food, – untapped demand in urban areas of Scotland

% of all respondents who agree to the Statement ‘I Try To Buy Local Produce Whenever I Can’

TNS Worldpanel – 52 W/E 9th September 2007

() - % change v 2006

Buying local now

(X10)

32.7

36.837.6

31.9

36.738.1

20

22

24

26

28

30

32

34

36

38

40

52 w/e 13 Aug 06 52 w/e 12 Aug 07 52 w/e 10 Aug 08

Total UK Scotland

Reasons for buying local food

Reasons w hy it is important to buy local foods, FSA 2007

0% 10% 20% 30% 40% 50% 60%

Supports local businesses

I know w here producers are

Supports local area / community

Less air miles

It’s safer

Less pollution

Fresher

It’s cheaper

Quality / better food

Tastes better

Other

Don’t know

The Rural Food Opportunity

• Regionally produced food

• Local sourcing initiatives

• Food tourism

• Direct marketing

• Regionality

- Still an opportunity?

Local Initiatives

• Farm & specialist retailers

• Farmers’ Markets• Local foods into other

routes:– Multiple retail– Foodservice– Public procurement

• Food Networks

                                                                                                                                                                                                                          

The Next Generation…?

• 85% of produce sourced from Yorkshire & Humber

• Providing confidence - Auditing every producer

• Offer higher margins and a direct route to market

• Reduce, reuse and recycle is their motto

• Good quality, local food should be affordable and accessible for everyone

Credit Crunch Impact

• Shoppers are looking to retailers to prevent further inflation.

• More shoppers are willing to shop at discounters, • As consumer attitudes shift, brands need to emphasise

different credentials. Simple messages are proving the most effective

• It would be highly risky for any company to compromise its ethical standards in pursuit of ‘value engineering’ (cost cutting).

• Companies that can raise their ethical standards during a recession are likely to receive extra credit from shoppers for delivering in difficult times.

Implications for local food

• The recession presents a strong opportunity for producers and retailers of local food

• The growth in demand for local foods reinforces the importance of provenance and community engagement.

• For some this may simply require communicating more clearly.

• Growing interest in animal welfare presents opportunities • There is no sign of people losing interest in health owing to

recession • Make the message clear, simple and easy to understand

Resources

Thank You

Your questions & comments?