SAMW Seminar 2017

President SAMW Allan Jess welcomed around 60 attendees. He said that times were challenging but there were some unique opportunities. SAMW office bearers would be working extremely ha d to get the best possible outcome from Brexit and they were pleased with the progress towards Negligible Risk Category in regard to BSE.

SAMW look for are to developing better relationship with Food Standards Scotland and welcomed the establishment of a Scottish Meat Industry Forum which would be a big step towards this.

First speaker was Amanda Brown from Kantar Worldpanel, she gave a review of Christmas 2016, reporting what shoppers are thinking and how the retailers are doing.

She first looked at influences Lidl turkey farmer ad which did persuade customers according to measurement of impact. Mrs Claus on the M&S ad seemed to gain affinity from consumers.

Figures up to 01/01/17 revealed Grocers up almost 2%, which showed that the market grew quite strongly in the final 12 weeks of 2016. This was helped by the fact that Christmas fell on a Sunday and sales were strong right up to the Saturday night. Inflation is positive and likely to continue in 2017, alcohol grew by almost 9% with sparkling wines and spirits the best performers.

Promotional giveaways were less but there were more price promotions.
13% increase in online grocer sales with 14% of GB customers shopping online for food and drink over the Christmas period.
Growth in premium own brands across al the major retailers.
Over UK Tesco market share was 28.2%, Morrisons, Waitrose, Aldi, Co-op, Lidl and Iceland also put in strong performances. Sainsbury, ASDA and Farm Foods were the losers

Scottish grocery market is worth £10bn and growing. Growth appears to be coming from consumers shopping more often, but also by household growth and net immigration.
Tesco still dominate with 25% of the market in Scotland. Asda next then Morrison with a strong performance. Aldi and Lidl still growing. M&S the one to watch over next 12 months.

Scottish behaviour – greater top up shopping – this is down to the retail landscape of the country.
Out of home spend less in Scotland than in the rest of UK, but a market opportunity exists here.
Fresh and chilled is the biggest category in the sector, alcohol sales growing. Scotland spends more per capita on alcohol that the rest of UK, marginally less spent on fruit and veg. Meat sector is the same as rest of GB. Beef, chicken, sausages, processed meat increasing.

Challenges of change – a bumpy road is ahead of us. Inflation will ease in. Brexit is the uncertainty and caused Amanda to talk about previous experiences of recession.
During 08-09 recession shoppers behaviour changed what they bought and where they bought it. They ate no less. In 08-09 there was not such an affect from discounters, they were not the shape and size that they are now. Discretionary categories become less important as consumers watch what they really need to buy to feed their families. They will take less risks with their food shopping.
Eating out becomes less. Health as a motivator becomes less important and treats creep in as life becomes more challenging.

Retail landscape
We have not changed how often we shop but spend a little more on top up trips.
What has changed and what will continue to evolve is where we shop – switching more apparent and inevitable because of access to more and more retail outlets.
Discounters are becoming more important. Aldi, Lidl, Iceland and Farmfoods together account for 21% of spend on Scotland.
79% of population shopped in Aldi and Lidl in 2016. This figure is spectre to rise as more stores are opened.

Specifically on meat category, Sainsbury and Tesco have come out of 3 for £10 and moved into price promotion. Others have moved into the 3 for £10 market.

Needs change as lifestyles change, people say that they are time poor
35 minutes is the average preparation time for an evening meal.
Convenience and innovation is required. Meal solutions that they can stick in the oven. Lees effort and as easy as possible.
Scotland has more sitting down together occasions than the rest of the UK. We fry more often and grill more often than rest of UK.

Consumers will pay significantly more for meal solutions. Retailers are now thinking about how they can make things easier for consumers and this requires convenience instore.
Shops must respond to changing needs and food trends, understand who your shopper is so that you get the offering right.
The market is not about meat and two veg any more. There has been a decline in this kind of meal but there is strong growth in ethnic and continental meal solutions (+5.7%). Currently share is 50-50.
Flavour influences, even though British menu is still important but there are emerging tastes for American, Italian and Far East tastes.

Health
Motivator for one in four eating and buying decisions for home consumption. Nutrients in Scotland – the importance of protein is now further up the agenda and is an encouraging movement for the meat sector. Healthy eating is not just about less calories but more about balanced diet.

Final thoughts
Retail market is changing and will continue to evolve. We always be ready for change and adapt strategies. Shoppers will change buying habits when their economic circumstances change.
New flavours of dishes and cuisine are here to stay and will become the norm.
Health – protein should be pushed since it is an opportunity for the meat sector.

Why are discounters popular now when previous discounters, Netto, Kwiksave failed?

Amanda Brown suggested that the present day discounters are more efficient and have an efficient supply chain. A restricted offering in store seems to have worked.

“What is interesting is that there is an element of surprise, people go shopping in an Aldi or Lidl and come out with a very full basket that has not cost them a lot of money and the quality of the goods is very good.

“They have also focused on categories that are going to pull people into stores – their fresh offering, promoting tomatoes, vegetables. Beef is a really good example of what Aldi have done to get people into their stores because they can go there and get Scotch Beef.”

Frank Strang
Head of EU Hub, Directorate for External Affairs,
Scottish Government

He addressed the meeting on Brexit and the document launched just before Christmas called “Scotland's Place in Europe”.
What do we know? Lots of uncertainty, challenge of a massive scale with political, economic and social implications. Scotland voted 38% leave and taken by surprise, there was no plan but the margin of the voting makes things complicated.

Approach has been to pursue all the options with a wide involvement of people. There is an issue about listening to all sides, some say all opportunity, others uncertainty. There is concern over the position of EU nationals and they need to know that they are welcome here. Focus right now has to be on negotiating with UK partners.

Scotland's place in Europe was the first response. It said:-
If can't have EU membership preference to remain in single market. There are various ways in which Scotland could remain in that single market.

There is a risk that when single market is mentioned that people think only about trade. Not just access to a few markets, it encompasses all 4 freedoms – goods, services, capital and people.
The single market is still developing especially digitally.

Free movement of people. Scottish Government needs this for its workforce, skills, knowledge and creativity and to allow Scots to go abroad for experience.
Scotland wants to be a welcoming country, Demographics mean that Scotland needs people. Frank Strang explained that growth in population has all been migrant driven even if this is still required we must not stop training our own workers.

Reactions to document issued on 20th December:-
Expect rough ride but there were positive reactions.
The preference is less than ideal for a nationalist government but it showed some leadership
UK prime minister says devolved countries will be involved. Nobody really knows what the UK wants. 90% of food regulation is EU.

Farming – UK will no longer in the CAP, chance to redesign but WTO rules still apply. UK framework but farming policy is devolved. Watch if free trade agreement need to watch the trade offs. Farming policy needs to be integrated with Food Policy.

In all of this the UK market is more important to Scotland and that market will determine price.

Questions over the pound, inward investment, health of the wider economy, loss of funding streams for e.g. Research.
Labour force, bureaucracy could close the door on incomers.
Issue over borders that needs sorted out with Ireland first.
Transitional arrangements have a habit of being the arrangements.

Huge challenge, need to identify what needs agreements. Frank Strang warned that it is vitally important to focus on what is agreed as a transitional measure because invariably they become the norm.

Ian Anderson, SAMW General Manager, suggested a gold chip welfare standard should differentiate Scottish product. Meat is well placed to do this but warned that additional welfare would involve additional cost and could disadvantage Scottish product.

Frank Strang felt that we must better articulate why Scotland is at the top of current standards.

“We do not do enough shouting about hormone free but it needs tested to see if welfare is market driven and must not introduce costs. There has to be a return.”

Geoff Ogle (FSS) warned against gold plating but stated that post Brexit exporters into Europe would still need to operate at WTO rules, EU veterinary standards would have to be satisfied. He also had concerns for the consumer view of an internal market because animal welfare by far is the biggest issue for consumers.

Norman Bagley (AIMS) added Compassion in World Farming is influencing UK policy it is not market driven.