Let the dancing begin

WITH SCOTCH beef and lamb as its flagship products and a number of innovative companies proving profits are there to be made, the Scottish meat sector is meeting prevailing challenges head on.

From the now-resolved issue of tallow burning to butchers' concerns over the removal of vertebral columns in cattle aged over 24 months, legislation continues to be a major bugbear for the Scottish sector, as with its counterparts in England, Wales and Northern Ireland. Concerns over lack of margins and supply base sustainability also abound. However, the Scottish sector has many positive stories to report from the 14% sales increase experienced by the independent retail sector over the last year to the success of companies such as Campbells Prime Meat.

PROMOTIONAL PUSH

Quality Meat Scotland - set to usher in a new era with the appointment of Uel Morton as chief executive next month - is forging ahead with marketing campaigns for Scotch beef, lamb, and its Specially Selected Pork brand. With England accounting for 70% of Scotch beef sales, QMS plans to revisit its Glen campaign south of the border, which achieved 50% recognition among the target audience after last summer's adverts.

Beginning August, this summer's campaign will target particular regions of England, with backing activities organised by Scotch Butcher Club members in those areas. "In Scotland, where we believe we have a tight grip on the market due to the success of five years of Glen promotional activities, we are looking at developing new radio adverts to promote beef due to the success of the pork and lamb advertisements with this audience," says Louise Welsh of QMS.

Promotions behind Scotch lamb are set to include tastings and various in-store activities centred round new recipes. QMS claims 70% recognition of the brand in its domestic market. Specially Selected Pork adverts to date have focused on communicating cooking information to consumers. "The latest radio adverts are designed to encourage people to drop the habit of eating pork on certain days of the week and to encourage them to take advantage of the meat's versatility by trying out different recipes," says Welsh. "Again we will embark on around-Scotland tasting as this is a proven way of boosting sales in-store."

EXPORT DRIVE

A major driver for QMS this spring and summer is taking the Scotch beef and lamb propositions to the Continent, where their EU Protected Geographical Indicator (PGI) status should reap premiums. "There is a huge focus at the moment on the drive to boost beef exports in Europe following the lifting of trade restrictions," says Welsh. "The announcement has acted as a huge fillip to farmers and processors in Scotland, freeing them from the shackles of only having the domestic market to trade in."

France, Italy and Benelux have been identified by the promotional body as its main target markets on the Continent, with a series of PR activities underway and a multilingual website now online. QMS is hosting inward and outward learning trips with the target countries, and has enlisted ministerial support from the Scottish Executive to ease the return of Scotch beef exports.

Last month, QMS hosted a dinner at the Columbus Hotel in Monaco, the first to place an order for Scotch beef following the EU's lifting of export restrictions. Among attendees were Formula 1 racing driver David Coulthard, Scottish Food Minister Ross Finnie, QMS chair-man Donald Biggar and dignitaries from the Monegasque Parliament.Chefs from top restaurants in Monaco, Nice and Cannes, Scottish suppliers, French and Italian buyers and a contingent of British and Continental press were also among guests.

Speaking at the event, Biggar said: "The lifting of trading restrictions is already having a positive impact on our sector and farmers I have been speaking to in recent weeks are telling me that the new opportunities in both the export and domestic markets are convincing them to adapt their businesses in order to meet the increased demand for Scotch beef products."

QMS's chairman and the Scottish food minister visited Belgium last month too, inviting Belgian chefs, restaurant proprietors and supermarket buyers to a Scotch beef export relaunch at the UK Ambassador's residence in Brussels. A tasting session was also held at Van Engelandt, a key meat importer in Brussels. Further such events will be held in Rotterdam and Bologna. "Although a huge way to go before we reach the volumes achieved before the ban was imposed, Scottish companies are making steady progress," says Welsh.

Prior to the 1996 ban on beef exports, Scotland exported a fifth of its production or an annual 42,000 tonnes of beef, valued at £120m back then. France and Italy were its chief beef markets, accounting for 38% of beef exports apiece, followed by the Netherlands at 10% and Belgium 7%, with smaller markets absorbing the rest.

RESEARCH & DEVELOPMENT

QMS recently published its first report on Research & Development, summarising last year's projects. "A major part of the R&D strategy is using sure-fire mechanisms to get the information back out to the industry," says Welsh. "They pay for the work and it is vital that they have ready access to the information and results."

The body is producing a new animal health DVD, identifying areas in which farmers could cut out unnecessary costs by improving livestock health. Further plans on production include continued funding and co-ordinating of Scotland's monitor farm network, and the launch of a new Scottish sheep strategy at Scotsheep next week. The three-year strategy aims to boost profitability and product quality by encouraging sheep farmers to take on board breeding technologies such as Estimated Breeding Values and Performance Recording.

PRODUCTION

With cattle prices up to 6% higher than last year's disastrous glut and the Scottish processing industry winning a reprieve from potentially devastating legislation applying to the burning of tallow, the situation could be worse for both producers and processors. However, Scottish Association of Meat Wholesalers executive manager Alistair Donaldson has concerns over continued pressure on profitability, rising utility costs and the sustainability of supplies.

Disappearing margins, the latest CAP reforms and forthcoming World Trade Organisation (WTO) negotiations could all cumulatively push Scottish beef farmers to seek their fortune elsewhere, he fears, and result in a self-destructive cycle for the sector as a whole. "With trade liberalisation, we need to make sure we don't give everything away," says Donaldson. "Studies by the European meat trade body have thrown up concerns over how many jobs could be lost, up to 600,000 across the EU. There could be opportunities within the WTO but we need to make sure we don't undermine our position."

The picture is not all negative, adds Donaldson, with positives of the Scottish sector including the caché of the Scotch beef and lamb PGIs at home and abroad, improvements in transparency along the chain and, of course, the return of beef exports. Scotland's biggest meat processor, and indeed biggest private sector employer overall, the Grampian Country Food Group, reported tough trading conditions in its recently published financial statement for the year to 31 May 2005. While expressing optimism that "our business is fundamentally solid and is able to respond effectively to market changes," Grampian chairman Fred Duncan states in the report: "We have seen raw material cost inflation in recent months and the increases, particularly in distribution, packaging utilities and other outputs containing oil-based material have been unprecedented. To date we have not seen sufficient sales price movement to recover this impact."

In a recent interview with Glasgow's Sunday Herald, Duncan hits out at the multiples for continuing to "screw their own-label suppliers", while also indicating that further rationalisation of Grampian's sites could be on the cards.

RETAIL

Scotland's independent retail sector, meanwhile, is bucking the UK trend by recording a 14% increase in sales over the last year, according to QMS. The promotional body's activities in the sector include the provision of 'summer eating' recipe leaflets for all butchers and additional PR material for Scotch Butchers Club members. A new addition this year is the Scotch Catering Butchers Club, allowing members to offer guarantees of provenance and animal welfare and use QMS logos in their marketing activities.

A continuing issue for the Scottish butchery sector is harmonisation of the UK with EU regulations pertaining to removal of vertebral column from cattle aged over 24 months, following the lifting of the UK beef export ban. According to Scottish Federation of Meat Traders' Associations chief executive Douglas Scott, "the FSA has a real lethargy on getting anything done." FSA guidance on the new requirements lacks clarity, says Scott, while delays in sending out registration forms for butchers planning to remove vertebral columns on site have also been branded as unacceptable.

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