Close ties with supermarkets pay dividends for meat producers

The annual Food and Drink index from OCC&C Strategy Consulants has predicted a “tough year ahead” for meat producers, while those “integrated” with supermarkets are performing better.

The index, an analysis of the largest 150 food and drink producers in the UK, shows “an atmosphere” of declining profits for meat producers. However, Hull-based Cranswick was reported to be performing well and jumped a place from 22 to 21 on the index.

Will Hayllar, partner at OC&C Strategy Consultants, commented on the report: “The UK’s largest meat producers saw steady growth of 5.4% between 2012 and 2013, but the pressure on margins has intensified. The trend for low or even declining profits is holding steady across the entire meat industry and only a few stand-out players, such as Cranswick, Forza and Browns have seen healthy growing margins.”

Cranswick’s performance is indicative of own-label producers and smaller agile brands, who are outperfoming big players across different sectors of the food and drink market. These include Innocent, Quorn, Haribo, Cranswick and La Doria, who all performed well.

Hayllar also highlighted the producers that are performing well had aligned themselves well with retailers: “In particular, those meat players closely integrated with supermarkets are gaining market share as retailers continue to shift towards more vertical integration in the wake of the horsemeat scandal. Supermarkets are keener than ever to build trusted partnerships and invest better in their meat products. Asda, for example, took control of Forza and Kober in 2012 and both suppliers have seen revenue growth of 8.8% and 5.6% respectively.

“To thrive in the current climate, meat producers must take advantage of the increasing scrutiny for quality from shoppers and supermarkets by revamping and investing in their premium product ranges and developing a strategy for forging even stronger relationships with grocer retailers.”

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