NPD hit by tighter budgets

Every avenue of British manufacturing is going through a very tough time at the moment. Each month you hear or read of businesses not being able to support themselves during this difficult trading period. As a result the supply base is getting smaller and often the competition that remains is getting dramatically fiercer. Only the cash-rich companies are holding out, but at what cost to our industry?

It would seem that the retailers are definitely taking advantage of this climate and are putting a lot of their own-label business up for tender under the smokescreen of supply base rationalisation. New product development teams are also not working as much on new innovation and fresh ideas, but more on business retention. And there is minimal growth at present, so manufacturers are fiercely competing for market share.

The tendering process is also changing and taking on new guises. Products that are "offered to tender" are listed by the retailer and various manufacturers are invited to bid. This can happen over the internet as a price only e-auction, or by means of following a submission timetable. The latter is where product and costs are submitted together by all invited parties for a review behind closed doors. The process can be quite lengthy, with modification to product, cost adjustment and business incentives all negotiated at each stage. So, in very crude terms, retail loyalty is not earned by good, consistent product quality and service, but bought by the sharpest commercial package with little guarantee of durability.

But as we know, in any competition there is only one winner. So in the short term, would this appear to be the retailer? In which case, it makes you wonder who is paying the ultimate price?

''Becky Sparks is director and food technologist at Sparkling Innovation r.l.sparks@totalise.co.uk''