Supermarket price wars in focus at business forum

Everyone knows Tesco was struggling but the scale of the implosion could not have been predicted, forum chairman Wilkinson told the invited audience of senior food and drink manufacturing executives.

“The salutary lesson has to be that no matter how big you are, if your business model gets out of date then there is trouble ahead,”​ said Wilkinson, who is also chairman of Thorntons and the National Skills Academy for Food and Drink. “The inevitable sense of denial only makes resolving the situation more difficult.”​

Wilkinson was also scathing about the troubled retailer’s management structure. “I attended the annual general meeting and the chairman proudly announced that to have the status to be a Tesco director you need to have been really powerful and important … all 10 of them. So much for governance.”​

‘Passed the poison chalice’​

But turmoil in the grocery sector was not confined to Tesco, he continued. Morrisons also suffered the recent exit of Dalton Philips, while former Sainsbury ceo Justin King “passed the poison chalice” ​to Mike Coupe. The addition of bid specialist Crystal Amber as an activist investor on Sainsbury’s shareholder register could herald news later this year.

“Given that they​ [Crystal Amber] only take positions on likely bid targets, watch out for the Quataris,”​ said Wilkinson.

As for the limited range discounters, given the “unrepenting public relations support from the Beeb ​[BBC], who could resist at least one visit to experience the glory of Aldi and Lidl shopping”,​ asked Wilkinson.

Turning to politics, Wikinson noted “the musical chairs continued”, ​as Liz Truss replaced Owen Paterson as environment secretary. Truss’s pledge to champion food as well as the environment and farming  was encouraging but chancellor George Osborne had all the money and was more inclined to give it to the Department for Business Innovation and Skills rather than the Department for Environment, Food and Rural Affairs.

‘Watch out for levies on food’​

Last year had also witnessed the demonisation of salt, fat and sugar, which was likely to lead to legislation during the next Parliament. “The politicians and food police can use the tax system to alter behaviour, so watch out for levies on food in the next parliament or even VAT to reduce consumption offset by welfare food credits. Andy ‘nannygate’ Burnham ​[shadow health secretary] has already got the show on the road at last week’s health of the nation road show.”​

The net result was that food manufacturers would remain in the firing line, said Wilkinson.

The Food Manufacture Group’s Business Leaders’ Forum took place at the Walkie Talkie building, home of host sponsor DWF in central London yesterday (Tuesday, January 20). The event was also sponsored by Lloyds Bank and food testing company ALcontrol Laboratories.

Taking part in the forum were representatives from Greencore, Warburtons, Greggs, the Edrington Group and McPhie, and Butt Foods, along with a wide diversity of food and drink manufacturers.

The free-to-attend half-day event is open to senior executives in food and drink manufacturing firms. To register for next year’s event, email Felicite.Burke@wrbm.com.

Meanwhile, watch out for video news, views and analysis from the forum designed specifically for top food and drink manufacturing executives.