Last year was packed with surprises for the food and drink manufacturing sector, according to business guru Paul Wilkinson.
Here we capture the highlights of his introduction to the Business Leaders’ Forum organised by our sister publication Food Manufacture last month.
Wilkinson chaired the forum and is also chair of the National Skills Academy and, from the beginning of this month, chairman of Thorntons’ board of directors.
“The year was full of surprises – some predictable, some not so predictable.
“On the political front, delaying the Common Agricultural Policy was not a surprise. Neither was UK politicians’ decision to get back to telling us what we had to eat. That included not only interfering with labelling, but the Labour Party recently demanding legislation to force manufacturers to reformulate products, which they regard as creating healthy food.
“But maybe Caroline Spelman’s [former environment secretary] and Jim Paice’s [former agriculture minister’s] exits from the Department for Environment, Food and Rural Affairs (DEFRA) were not expected.
Grocery Code Adjudicator Scheme
“I guess we were surprised that the Grocery Code Adjudicator Scheme was born – very much thanks to the powerful lobbying of the National Farmers Union. The dairy farmers also jumped on the bandwagon demanding fair prices for milk – proving that public relations can work where the market fails.
“Sustainability and the environment seemed to fade with most companies seeing it as good business rather than an unnecessary cost and burden. No political stick to beat us with here.
“Food waste seems to have taken on the role. But the politicians are unsure who to blame.
“GM won support from DEFRA and some converted sceptics and the wheat crop trial survived all the protesters.
“The badger cull got the go-ahead only to be pulled by farmers as the problem was found to be worse than imagined and the objective unlikely to be achieved.
“The spring drought and subsequent washout impacted on the harvest and pushed up grain prices. This clearly surprised Hovis, which had banked on the benefits of UK wheat provenance to create a unique sales point. That is until last week [when brand owner Premier Foods dropped its pledge to buy only British wheat].
“Food price inflation looked to be on the up again, which food retailers like because it helps their like-for-like sales. Pound price points and promotions became the essential marketing tool in a retail dog fight.
Who would have thought that Tesco would falter?
Who would have thought that Tesco would falter? Morrisons abandoned its northern heritage in favour of emulating Sainsbury and Waitrose to its cost and defended its vertically integrated model.
“In terms of what we eat, frozen did well but not enough to keep Martin Glenn at Iglo. And what else is there once you have won the Food Manufacturing Excellence Awards?
“Who would have thought that breakfast biscuits would take off as the big new product of the year?
“Organic struggled. Fair trade held on, as did free from.
“Warburtons seemed to be pinning its hopes on Genius to save its bread reputation. Who would have thought that Allied Bakeries would have emerged as the winner against Warburtons and Hovis with its Co-op deal forcing Premier Foods to shut down chunks of its supply chain capacity?.
“Geoff Eaton picked up the poison chalice at Premier Foods [before leaving the firm earlier this month] and formerly was a regular attendee at this event.
‘Britvic fruit-shooted itself’
“Britvic fruit-shooted itself in the foot with its expensive recall. Still, at least it remains British, as our assets were picked up by international buyers acquiring Weetabix, Hartleys, Wiseman, Zetar − all gone.
“Mergers and acquisitions remained active as a whole but not to manage distress. Leverage transactions tended to refinance to stay with debt for equity where necessary and, of course, Premier Foods embarked on the sale of the century to survive.
“In general, financial results for food manufacturers held up well.
“Also, food manufacturing made it onto the agenda of the Department for Business, Innovation and Skills as a sector of significance and economic importance.
“Maybe we should not be surprised at that. However, the Treasury did surprise; first with the introduction of the pasty tax as the biggest unforeseen event of the year followed only by its subsequent climb-down.
“So, in over all terms, we can truly look back on 2012 as not only a year of surprises, but as one when the industry’s profile was raised to levels not seen before.”
The Business Leaders’ Forum was sponsored by law firm Stephenson Harwood, business improvement specialist Applied Acumen and recruitment expert Goldteam.