Morrisons reaps rewards of simplifying manufacturing base

By Rod Addy contact

- Last updated on GMT

Morrisons has driven the launch of 750 local products in its stores
Morrisons has driven the launch of 750 local products in its stores
Morrisons is making progress by simplifying its manufacturing base, the retailer reported in its preliminary annual results.

In its financial statement covering the 53 weeks to 4 February, the company said: “During the year we simplified our manufacturing business, moving it from profit centre to cost centre. A greater focus on cost, yield and volume, assisted by investment in technology and improved digital capability, has improved productivity and capacity utilisation​.”

The company’s acquisition of a potato packing business in Angus, Scotland, from Farmcare in January 2017​, as well as egg producer Chippindale Foods last month​ showed how it was growing its domestic supply chain, it said.

“We recently bought two new businesses ​– one potatoes, the other eggs ​– that allow us to own more of the supply chain, meaning closer relationships with farmers and growers, improved product quality and consistency, lower costs of production, and the lowest possible prices for our customers,”​ stated the retailer in the results report.

“Both acquisitions required little capital expenditure and both complement our existing manufacturing businesses.”

Local products

During the year, more than 200 of the nation’s best local growers, farmers, fishermen and other food-makers began supplying Morrisons with local products, it said.

Plumgarth’s sausages, initially launched in its Kendal store, were now available across all its Cumbrian stores. The Friday Beer Co brews beer just two miles from Morrisons’ Malvern store, and is one of the best-selling bottled ales in the store, the supermarket chain claimed.

Across the year, the retailer introduced more than 750 new local products to its stores. It launched a range of locally-sourced meat in south-west England and local market street vegetables in its stores in Yorkshire, it said.

Fresh Look

In Skipton, as part of its Fresh Look store revamp programme, Morrisons showcased local products and introduced many new local lines, such as Yockenthwaite Farm Cereals, Box Pizza and Voakes Pies. Since the Fresh Look introduction, local sales had risen by more than 30% in the store. Overall, sales of local suppliers’ products had grown by 50% over the past two years, it said.

For more detail on its initiative to promote local suppliers, read our related story here​.

Chairman Andrew Higginson said: “Morrisons is now entering its third consecutive year of growth, which is a credit to the whole team. We will continue to prioritise consistent, meaningful and sustainable growth, which I am confident we are well-placed to keep delivering.”

Morrisons reported a rise in underlying pre-tax profit of 11% to £374m on total revenue of £17.3bn, up 5.8%.

Related topics: Business News, Supply Chain

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