Food industry firms: Good week, bad week (wk 6)
]Good news this week came for Ocado, Indo European Foods and McVities Chocolate Hobnobs.
Online retail and distribution business Ocado revealed that it had made a profit for the first time since its launch 15 years ago. The company reported a pre-tax profit of £7.2M last year on the back of a 20% jump in sales to £948.9M.
The retailer also confirmed it had exchanged contracts for a 30-year lease for a new build site to create a fourth customer fulfilment centre in south east London.
But Shore Captial’s Clive Black was grudging in his praise. “Yes, following a decade and a half of trying, Ocado has worked out how to deliver baked beans, ice cream, Jaffa cakes and chipotle chillies without looking at a bottom line loss," he quipped in comments on the firm’s full-year financial statement.
400-store nationwide listing with Morrisons
It was good news too, for Indo European Foods. Its Our Little Secret brand's range of micro-meals won a 400-store nationwide listing with Morrisons. The retailer already sells the firm's dine-in cooking sauces and dine-in kits.
Good week
- Ocado: first profit in 15 years
- Indo European Foods: 400-store deal with Morrisons
- Chocolate Hob Nobs: voted nation’s top biscuit
the business is a 100% UK subsidiary of Kohinoor Foods, which is headquartered in India.
Finally in the good news file comes McVities Chocolate Hobnobs, voted the nation’s favourite biscuit in a nationwide poll. The survey was conducted by packaging firm Kernpack.
Firms with less reason to celebrate this week were Tesco and Cooplands, while some producers' milk price took another hit.
Tesco suffered a double whammy this week in the shape of yet another investigation into its conduct and an apparent u-turn decision to pay two former top executives a total of £2.2M in damages.
The Groceries Code Adjudicator Christine Tacon said on Thursday (February 5) she intended to probe claims Tesco had treated its suppliers unfairly. Launching her first official investigation into a retailer’s conduct, Tacon told BBC Radio 4’s Today programme that some suppliers would be required to give evidence, although their anonymity would be protected.
‘Reasonable suspicion’ of wrong doing
Tacon said she had “reasonable suspicion” of wrong doing after demanding Tesco conducted an internal review of the way suppliers were treated.
Bad week
- Tesco: Groceries Code Adjudicator launched first official investigation into unfair treatment of suppliers
- Tesco: agreed to pay two former top execs £2.2M
- Cooplands: put 700 jobs at risk
- Milk price: Müller UK & Ireland to cut March price
In a separate development, Tesco agreed to pay former ceo Philip Clarke and former chief financial officer Laurie McIlwee a total of £2.2M in damages, having suspended payments after their 2014 departure from the business. The retailer said it could not afford to fight costly legal claims for the remuneration.
Cooplands also suffered a bad week, as the Doncaster-based bakery warned that more than 700 jobs were at risk, following a major restructure to boost flagging turnover. Unite the union described the news as “a devastating blow”.
After filming, news emerged that Cooplands had gone into administration, with the loss of 300 jobs. Administrators Deloitte reported the business had suffered unsustainable losses, due to high manufacturing costs and falling sales.
Milk prices were yet again in the firing line after Müller UK & Ireland decided to cut its milk price next month in a bid to remain competitive, it said. The price will fall by 1.75ppl on March 5 from its current level of 24.15ppl. The decision to hold its February milk price had threatened its competitiveness, it claimed, by widening the gap between its price and those paid by other processors.
But, in a drop of comfort for the Scottish dairy industry, the Edinburgh government announced plans to launch a new dairy brand specifically designed to boost sales at home and aboard.
