Why UK Food Needs A Change - Pelican Communications

The City Food Lecture is one of the most prestigious events in the food industry’s calendar and food PR expert Pelican Communications is proud to be a sponsor. This year’s lecturer was Dave Lewis, CEO of Tesco, a man with a huge influence over the UK food and drink industry.

Held at the Guildhall in the heart of The City, the Lecture is organised by seven City of London livery companies involved in agriculture and food: the Worshipful Companies of Bakers, Butchers’ Cooks, Famers, Fishmongers, Fruiterers and Poulters. It brings together 700 industry leaders, academics and members of London’s seven leading food related livery companies

The lecture was particularly fascinating for two reasons, firstly: the Lecture was being delivered on the same day as Booker and Tesco shareholders were voting to approve the proposed £3.7bn take-over of the wholesaler by the retailer. This of course went ahead, so when he got to his feet, Dave was the de facto boss of the largest combined retail and foodservice player in the UK.

Secondly, the lecture was a fascinating insight into the Tesco-Booker vision for the future of the UK’s food industry and some of the issues food PR and communications specialist will have to address..

For those who couldn’t attend here’s an overview of what Dave told the industry on the evening of 28 February.

Overview

Dave set out what he feels are the complex and evolving challenges facing the UK food industry and called for the whole supply chain to work in partnership to grasp the opportunity to step-change the way we produce sustainable, affordable, healthy food for the UK.

He urged the audience of farmers, producers, retailers, wholesalers and their representative bodies, to do this by focusing the debate on ‘the 95% of what we agree on, not the 5% we don’t’.

In the speech, Dave Lewis said: “The UK food industry has done a great job of feeding the nation though many challenges. But the challenges we face today are complex and evolving,” he said. “To overcome them, we must seize the future and change.

“Not simple incremental change, but heavy duty transformational change. The sort of change that means we all have to bring our expertise together and work in a very different way. To feed all of our nation, in a sustainable, affordable, healthy way.

“I believe customers want businesses to make responsible decisions. Quite rightly they deserve higher standards and responsible leadership from all of us. They want us to make the right calls on their behalf.”

The event, at London’s Guildhall, is organised by the seven livery companies of the City of London for agriculture and food and Pelican Communications is proud to be one of the event’s sponsors. Addressing the audience Dave, who joined Tesco three-and-a-half years ago following 27 years at Unilever, said: “Only since then have I begin to understand the true intricacies and vast scale of the food chain. It’s been a huge journey and privilege to understand more of what’s being built in the food supply chain and I’ve become increasingly passionate about the sustainable future of the food industry.”

Focussing on the Issues

Outlining the challenges the industry faced – farming and agriculture, health and food waste – he continued: “Our industry has done a great job of feeding the nation in many challenges. But the challenges we face today are complex and evolving. We know almost one billion people around the world go to bed hungry every night. Two billion people are overweight or obese. And this is driving an increase in numerous health conditions. We know that from an environmental point of view, to feed the world’s growing population, we will need to increase production by 50%.

“For a country that imports nearly 40% of the food it eats, Brexit presents both a challenge and an opportunity. The outcome of the negotiations are crucial to the food strategy of how we feed the nation in the future. To face those challenges our industry will need to change. They will be large transformational changes and we will need to bring our expertise together to work in a very different way.”

On the supply of affordable food, Dave said: “The UK is not nor will it ever be self-sufficient for food. Trade is crucial. If following Brexit negotiations, WTO tariffs apply, and we continued to source our food from where we do now without changing anything, then inflation on food would be at least 3%, and that’s before any customs costs.”

Tesco’s Health Awareness Plan

The CEO also outlined Tesco’s five year partnership with Cancer Research UK, Diabetes UK and the British Heart Foundation as a means of tackling health issues around food. He added: “The partnership is focussed on sharing expertise to help change behaviour around health because obesity is a driver of all three of those diseases.”

As a result, the supermarket has reformulated more than 4,200 products to reduce sugar, salt and fat. In doing so it has removed 9.4 million calories from the food that it sells. Dave said: “Health for our customers is increasingly a priority. We are working to remove barriers to that step and initiatives such as our Healthy Little Swaps are helping that. This is particularly significant in younger families according to the data we have.”

Meanwhile, Tesco’s ten Sustainable Farming Groups in areas including dairy, pork, lamb, and poultry and eggs are supporting its environmental goals. It has also made a commitment to measure and publish its own food waste data and ensure no food fit for human consumption is wasted in its own operations by the end of February 2018.

He added: “The business model technology that’s allowing Tesco to donate its surplus food is available to the industry. Nobody has to create anything new, having proved it works, we’re very happy to share that with our competitors so the UK food industry can take one collective step to eradicate food waste.”

Food waste tackled, the supermarket says packaging is one of its next big initiatives. “There are three steps that need to be followed – looking at materials in the supply chain and making decisions about those we would like in it and those we wouldn’t. At the same time reaching out to government for a truly national infrastructure that is consistent borough to borough against those materials. We will also use the car parks of our large stores to collect recycled materials and then use those in our supply chain to create a closed loop – the circular economy. It’s a fundamental change in how we think about things but it’s eminently doable.”

Tesco Booker Merger

The event fell on the day shareholders were due to vote on the Tesco Booker merger. The £4bn deal to combine Tesco, Britain’s biggest retailer, with Booker, the country’s largest wholesaler, was given the seal of approval just hours before Dave took to the stage.

Commenting on it he said: “The retail market is worth £110bn. The out of home food market is worth about £90bn and growing. Customer’s habits are changing and we’re pleased to see there’s an opportunity for us with our merger with Booker, as a group, to meet that demand much more consistently both in home and out of home.

“It is the coming together of two complimentary businesses – leading in retail and leading in wholesale – to create a very large, capable food business in the UK. It is an opportunity to grow for all stakeholders and allows us to take thinking and apply it to whole of the food market rather than just one part of it.”

Described as a “landmark moment” by Julia Glotz, editor of The Grocer, Dave said the deal was good news for small businesses which are part of Booker. “For the small retailers, initially there was a surprise that Tesco and Booker were having the conversation. The independent retailers are entrepreneurs and they’re finding that things are incredibly challenging from a labour, cost, and rates point of view. And actually by coming together, if we’re able to provide better quality and service, why wouldn’t it be something that could be beneficial for their business?”

Adapting to Tesco’s customers

When questioned if the merger was based on a “fundamental weakness” due to consumers not going to store but shopping outside stores, Dave said: “No, when we were looking at the business, it was clear we had some issues and to turn it around we did some simple things in going back to what our customers wanted from us.

“Food was at the epicentre of everything we did. When we looked at customers and how they are living their lives today – penetration and frequency of them visiting our stores hasn’t changed – it’s just that as habits has changed, and more food is consumed out of home, there was a growing appetite elsewhere.

“How do we take the skill and capability we had in product development, resourcing and supply into the channel that was serving that customer need? That’s where the deal came in. Serving customers better and helping businesses along the way that are part of that service. It wasn’t born out of weakness it was actually about building strength.

“We know that eating out goes up or down depending on disposable income. So strategically depending on what happens with the economy, now we have greater optionality as a business to be able to serve people wherever.”

To watch the full lecture and the panel discussion that followed click here.

Pelican Communications is a specialist in the environment, food and drink, outdoor and leisure and packaging sectors and offers a range of services such as media relations, brand management, event management, design and people development. Contact us for marketing and communications expertise.