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On the back of the Blog I wrote earlier in the week, majoring on Tesco PGS (Produce Group Sourcing) , just publishing some of the comments we have had in. Sure it will be of interest and will continue the debate. We have also had numerous calls/emails on this “topical” subject on the back of the Blog as well. The main thought that seems to be coming through on a Group basis from you all is that Tesco PGS is “Evolution not Revolution”. Many of you are wondering when the other retailers may follow Tesco….Interesting times ahead for all.  Anyway, here we go with a small sample of your comments….

It’s very interesting following the evolution of the UK supply base. 7-8 years ago ASDA and Tesco’s (and others) were piling into category management giving business to very large category suppliers, forcing smaller suppliers to trade with the category suppliers instead of supplying direct. During this process some retailers actually lost some key personnel to the newly powerful category suppliers, often by mutual agreement. Now supermarkets are basically setting up and running their own category supply teams and needing to recruit skills of some of the key personnel they lost when they moved business to category suppliers!

Where certain lines of produce doesn’t fit a central buying model some supermarkets are returning to buying direct from smaller suppliers, which in the past would have gone through a category supplier. I could never understand why a supermarket would want everything to pass through a category supplier so I’m not surprised by this recent development of moving away from category suppliers and taking the supply ‘in-house’. For a supermarket is makes logical financial sense. I always thought this turn around would happen at some point and it was obvious that it was going to be a difficult transition for some of the category suppliers – on in the case of IP – a real business opportunity for the original owners.

But remember back to 7-8 years ago, when all the other supermarkets were driving into category management, Morrison’s stood resolutely behind their sourcing strategy. In fact you never dared mention the ‘C’ or the ‘M’ word within Morrison’s at that time, especially at the same time! Yet role forward to 2010 the Morrison’s model is basically what ASDA and Tesco’s are now implementing albeit on a ‘global scale’.

And the next one:

PGS is a great idea as it gives the outside suppliers a chance to start doing business directly with Tesco. Whether that is good or bad is not for me to judge.

 The downside is that all current suppliers have to adhere to a big set of Tesco supply rules which they are being charged for and a reasonably high rates. With this in mind it seems that there is a preferential towards the PGS suppliers as they are slightly subsidised and can therefore be competitive but only at the expense of the supplier base that for years and years have been helping to build Tesco and their growing produce department.

I know of one supplier who is very upset and of another who has only every really supplied a northern retailer, and they are most happy with PGS and new possibilities for them to spreading their risk.

Then again:

 Hi Max, having read and discussed your blog with you. My opinion is quite simple re these developments with Tesco and prior to that with Asda/IPL and Morrison’s that this was always going to happen. If you look at how fresh produce (and the same with other primary products) has developed over the last 30 years moving from the wholesale markets to direct to depot via “suppliers” then with category management being the thing and the specialism’s that bought about with the retail buyers moving in supplying. This was inevitable, particularly in the hunt for profit – not only do the retailers need the cash to invest in their businesses but so do the growers, and the “middle-men” has to be the target (growers also need to invest). What I think will happen is the “suppliers” will need to demonstrate the value they truly add, and not just be complacent because they have been there supplying for years. Those suppliers who embrace the changes by getting involved with growing, investing in the core of fresh produce and developing the service they offer have nothing to fear. I think the time for “middle-man” is coming to an end, unless these suppliers can show that they have some service worth paying for. There is a real opportunity here and coupled with this the demand for fresh produce from the consumer will carrying on growing. I don’t see this as a threat but a time for positive change. As with most things in fresh produce whilst the moaners moan those with a determined spirit and an eye on the future will flourish. I say bring it on!!

 And…..

 Hi Max,

Tesco PGS is a similar Model to the WalMart Global Buying Group and should not be that surprising. I think WalMart can and will leverage more from it for the non-core Country Stores as they have such volume in US and S.America which can be used to roll out better Global value from a large US/S.Am supply base has have large exporters already. Tesco does not have the same advantage out of UK with low export potential.

 Then again:

 It’s very interesting following the evolution of the UK supply base. 7-8 years ago ASDA and Tesco’s (and others) were piling into category management giving business to very large category suppliers, forcing smaller suppliers to trade with the category suppliers instead of supplying direct. During this process some retailers actually lost some key personnel to the newly powerful category suppliers, often by mutual agreement. Now supermarkets are basically setting up and running their own category supply teams and needing to recruit skills of some of the key personnel they lost when they moved business to category suppliers!

Where certain lines of produce doesn’t fit a central buying model some supermarkets are returning to buying direct from smaller suppliers, which in the past would have gone through a category supplier. I could never understand why a supermarket would want everything to pass through a category supplier so I’m not surprised by this recent development of moving away from category suppliers and taking the supply ‘in-house’. For a supermarket is makes logical financial sense. I always thought this turn around would happen at some point and it was obvious that it was going to be a difficult transition for some of the category suppliers – on in the case of IP – a real business opportunity for the original owners.

But remember back to 7-8 years ago, when all the other supermarkets were driving into category management, Morrison’s stood resolutely behind their sourcing strategy. In fact you never dared mention the ‘C’ or the ‘M’ word within Morrison’s at that time, especially at the same time! Yet role forward to 2010 the Morrison’s model is basically what ASDA and Tesco’s are now implementing albeit on a ‘global scale’.

Keep the comments coming and we will share them with you all.

All the best.

MAX MACGILLIVRAY

I have been out and about most of last week. Mostly seeing clients, meeting new suppliers and setting up exclusivity arrangements with two well established, large clients. Very welcoming when such concerns come to Redfox and initiate such exclusivity conversations due to issues recruitment agencies have created for them. Not to bore you with it…OK I will briefly…but how can you work for a business as a recruitment supplier, place candidates into that business whilst you are placing people out of the same business at the same time…. It is unethical and immoral. Integrity before profit every time. That message should be set up as compulsory screen saver for all dubious companies and their dubious employees.

Anyway, Daily Mail rant over….retailers.  There has recently been a move of a senior “player” from one fresh supplier business to another similar supplier. And the reason why the individual moved across? Money…benefits…new shiny company 5 series? No…they were were so hacked off from fighting day to day with a large retailer, that they moved to a similar role but “serving” a retailer that respect their suppliers. Guess which retailer they moved to face….Waitrose…was not hard to guess really was it? What makes it even more interesting was that the said individual used to be a retail buyer themselves. The same word keeps on coming up when I speak to clients about retailers – attrition. It is relentless out there in the food supply base. All of the retailers perceived supply chain issues –  they want to pass to the supplier…and the supplier ends up doing more work for less money whilst constantly having a “gun” held to their head about margin and losing the account if they don’t submit to the retailer. Will things change when the new Retail Ombudsman is put in place? I’m normally an optimistic type of a chap…but I have my doubts on this subject…

I have said previously that the MD of Waitrose – Mark Price, has received just two letters in two years from disgruntled suppliers. Expect Sir Terry has a few more “land on the mat” most days, especially with Tesco PGS gathering speed.  As an aside, the planners appear to be wanting less of the blue stripey and more of the middle class green streak as per a recent case in Norfolk – Tesco lose out to Waitrose  Waitrose are starting to gain momentum with new store openings with the likes of M&S having stopped or even scaling back in some areas. Just going back to Tesco PGS (Produce Group Sourcing), there is speculation that in the East of the UK, Tesco are waiting for a supplier business to hit the buffers…and then they would take a new(ish) packhouse on from the receivers (post administration) and start processing PGS directly through that site. Basically duplicating the Morrisons model. If this occurs, it will be a major shift as it will be such a direct model and may race through further supplier consolidation, especially in the veg sector within the UK.

With Tesco PGS gathering speed, we would be very keen to hear your views. Is it going to work and make you better long term returns….or is it going to potentially destroy your business? What side of the discussion do you sit on? Let’s hear what you think… Just use the comments section on this page please.

When I was in the car last week and flicking through the local radio stations, I was surprised by how many adverts there were for Government public notice messages. “Get a driving licence.. Use a condon….” (presumably not at the same time). But one was actually really good and did get me to look it up when back on the laptop. Go and have a look at a great new website which says what is says – LOVEFOODHATEWASTE.COM I forget the stats but something like 40% of all food that is grown, packaged and sold ends up in the domestic or office bin. The site and innovative radio messaging really stands out. My kids really liked it and were racing around pulling stuff out of the bin (not ideal). But getting the message over to the tot’s of the world is great as will obviously influence their thinking long term. We will promote the site through our network heavily as it majors on fresh eating which will ultimately help us all…be you a supplier or consumer.

At Redfox we have been very busy and have a couple of major initiatives that will launch shortly. In the meantime, you can see our Video’s on our Youtube Redfox channel Many thanks to Peter Crowe for setting those up and congratulations for his new role at Ware Anthony Rust

If you want to get breaking news for the sectors as whole, join our Group on Linked In, which is called – Fresh Produce and Food Manufacturing News. If you are not on Linked In, you need to be as part of the social media “revolution”. I know what you may be saying…but we were all saying the same thing about faxes and then email and then text messaging. It is with us and needs to be adopted if you want to be kept in contact or use IT to drive your business further forward.

Have a good week.

MAX MACGILLIVRAY

Well, we all got back safely fromFruit Logistica in Berlin (apart from one of the team having their hand luggage stuck in the hold by demanding Ryanair Air staff, looking to boost their flagging profits!).

After catching up on the new work gained from Berlin, David and I went off to the Sentry Farming Conference. It is a big event with over 500 people attending. The speakers are good, but it is meant to attract farmers and viewing the delegate list, 80% of attendes appeared to be the usual assortment of Land Agents and Agribusiness Consultants. The prediction’s from the speakers were on the normal theme, being rising population and lack of commodity food products…therefore causing an ongoing rise of commodity prices. Which will obviously be good for those involved in the sector.

Mark Price - MD of Waitrose

For the Fresh Sector, the biggest international produce show is rapidly approaching in Berlin – Fruit Logistica

Redfox has attended it for the last few years. Apart from Berlin being the greyest city known to man at this time of year (apart from Basingstoke!) the show is a “must attend” for anyone in the sector. The contacts, the size, the opportunities are immense. The bulk of the Redfox team will be on site for the duration, so please contact us if you would like to meet up. Look forward to seeing you all there.

I was very kindly invited this week to The City Food Lecture by the Fresh Produce Journal (who were a key sponsor). Sir David King was the main speaker majoring on “Managing the Earths Resources to deliver food for nine billion”. Fishes & loaves come to mind somewhat.

Post the event, there was a divergence of views as to Sir David’s content. Some found it a little disjointed whilst others felt he made a lot of sense. The highlights from my perspective were sometimes obvious and at other times startling. Some of these were:

Our global resources are being depleted. There is a view that when historians look back at this period that the Iraq war may be regarded as the 1st “resource” war of our times. In 20 years time we will require 50% more food cropping. GMO’s – how many people have suffered to date due to the lack of them. TB – will there be a dairy farming industry in the UK if the government & public cannot be shown the urgent need to instigate badger culling?

He did rather rattle these points off (hence my “disjointed” comments) but did wrap up with some positive cases of environmental work successfully conducted in China and Rwanda.

The upshot is (taking a slightly mercenary perspective of it) people are going to need food and if you are producing/marketing/selling it – you are in the hot seat. Yes there is competition and you need to better and more efficient than the rest. But the opportunities for the sector globally are immense. So let’s get busy…..

The full video of the conference can be viewed HERE.

Thanks again to the Fresh Produce Journal for the invite. Keep up the good work.

MAX MACGILLIVRAY

Happy New Year to all.

What is the likelihood that we are going to see that sort of strap line in the press any day soon? Don’t be to despondent as the day may be closer than you think. Slowly, dissent is starting to grow. Peter Kendal of NFU “fame” stated at last weeks Oxford Farming Conference that the supermarkets have been allowed to create a “climate of fear” with their “abuse of retailer power”. Absolutely everyone reading this will know and agree on those statements - but everyone is so terrified of our business “partners” that you won’t speak about the issue on the record…or will you?

Hilary Ben – Secretary of State for Agriculture,  at the same conference stated food production would suffer if the Government abdicated responsibility…but he has been running a mile from the idea that an ombudsman is needed to sort out the retailers. Nick Herbet, the Opposition Shadow has stated that they would immediately bring in an ombudsman post a successful election. He…like you and I…have seen that while the supermarkets are supremely well run businesses, their zeal to cut costs has gone way to far.

With numerous examples of dubious tactics deployed by the larger retailers to “cut costs” via their suppliers, it is hardly surprising that the Competition Commission has recommended that setting up an ombudsman is in the country’s best interest. But the supermarkets have retorted back that it would be an unnecessary burden on the consumer….eh..?!! An ombudsman working from the Office of Fair Trading would cost a paltry £5 million a year to the food industry. The “big five” retailers turnover north of £150 billion per annum. They exploit this figure further as we all know by delayed payment schedules and early payment surcharges. So that financial argument is tosh and but a negotiating “smoke screen”.

At the end of the day, the retailers are supreme negotiators in all elements. They work on the fact that the supply base on issues like this are fragmented, not in union and weak. The likes of Peter Kendal are spot on and I would not even say he is brave to state what he preaches. He is elected and needs to be the voice of reason and for the common supplier. But lets give him a pat on the back anyway. Have we seen such declared declarations from the likes of the FPC “on the record”? Correct me if I’m wrong but I have not but willing to stand and be corrected.

As an Executive Recruitment Consultancy, we have recently been privileged to be involved in alternative retailer schemes and if the planning and negotiation process works, with the declaration from the likes of the NFU and others, you may….just may be dealing with a retailer in the future on a contract and secure price basis. Lets hope so. But your support will be required as this shift will not happen overnight and will need momentum. Watch this space for further updates…

P.S Plimsoll have changed their marketing of late…hopefully from us highlighting their dubious “sell fear” tactics. Now everything is right in the world…until you read the full press release. Press Release  They are not going to change overnight!

P.P.S Great report from the PMA just out on-line. Have a look – PMA\’s Fresh Magazine . When can we have the same such high quality material from the FPC??

MAX MACGILLIVRAY

Well…we are nearly there. Phones are getting quieter, emails are slowing down and the mince pies and the Queen’s Speech beckons!

You will have read/heard/experienced what the year has been like for all of us. It is very interesting to see how people have reacted to it. I passionatley believe that for the bulk of us, it will be seen in the long-term as a healthy process to have endured. It has stripped out the dead wood, the incompetent and the non-essential from our industry sectors. We have all found savings we never thought existed and ways of doing business that have made us more reactive and stronger. From these new beginnings, it is going to be fascinating to see who pushes forward to reap the rewards as we see full recovery towards end of 2010. I have my views, but the winning formula always looks to be the same; be innovative, be better and be different.

Looking towards the end of 2010. There is one constant area of concern and that is the ongoing lack of quality candidates in the food sectors. I have been to so many “talking shops” in the recent years as to how this situation can be reversed, with no proactive answers. With the demise/decline of other industry sectors, it is such a shame that the food sectors as a whole are not doing something collectively to attract candidates from other sectors. When will there ever be a better opportunity to gain new talent? The Trade press could also do so much more to promote the potential but they instead tend to be very myopic towards their readership and want/need to sell advertising space. If we do see a market recovery later next year, the biggest issue to slowing the expecpted growth will be the lack of quality candidates. So it needs to be looked at pdq. We may just have a solution to get the ball rolling and have already gained positive soundings from the industry. So it may be about time we shake things up to everyone’s long term benefit. Watch this space…

Anyway, have a great Christmas and New Year. To wish you all the very best from Redfox for 2010, here is the best New Year video we could find – (Cheesy Happy New Year Vid!) Just to say goodbye to a difficult 2009 (boo hoo) and to welcome in a better and more prosperous 2010 – Hoorrrray! 

Wishing you all the best and look forward to meeting up in 2010.

MAX MACGILLIVRAY

I have watched the marketing of analysts Plimsoll for over 10 years now, and they do the same old thing about 4 times a year, whatever the economic cycle we happen to be in, they look to sell “fear” to get someone to buy their overpriced reports. Check out this article to see what I mean, this being aimed at the Fresh Sector – http://www.foodeast.com/news/newsarchive/news7127.asp  

What you have to consider is that for years they have used negative connotations about food and other sectors to create a “fog” of ongoing bad economic publicity with the aim to get people or companies to buy their reports. This is in the hope (I believe) to see how badly their competitors may be doing in comparisons to themselves. They used to use the phraseology in previous years that there were three types of business; “Winners, Sleepers and Losers”. This was in the hope that companies would want to be identified as “Winners” and jump on their site to buy their reports. So you can see the marketing tactics they deploy. Business journalists earn their $$ by frightening people and these guys are exactly the same. It is like having our own Robert Peston for the Food Sector! Instead of having more “readers” they are hoping for more report purchases. As we suspect, their negative publicity will continue as companies find it easier to get the information from numerous on-line financial data systems or just straight from their accountants. So they will increase the “fear” angle to get you to buy more reports. You’ve been warned!

So to counter the doom and gloom presented by Plimsoll (what a name for a business anyway – smelly school gym trainers….hmmmm nice!), this is we have sourced about the economic predictions for 2010 via Cranfield University, the IGD and IOD;

- There will be no “double dip” to this recession, we are through the worst, it is just a hard slog through to recovery now.
- UK interest rates will remain low for 2 years plus.
- “Destocking” exaggerated the extend of the recession. It will accelerate recovery in the short term and overall it is a positive sign.
- In the UK, the recovery will be lead by export and we are already seen global growth improve (China as an example).
- No threat from inflation in the next 2-3years. As the rate falls, real incomes will rise.
- Food inflation was 13%, now nearly 0% and will soon be negative.
- The re-balancing of the economic will favour manufactures, food sector producers and service providers.

The majority of food businesses we have spoken to, believe that Q3 and Q4 of 2010 are looking to be very positive. As such, the more strategically aware clients are looking to build their teams to anticipate and gain from that confidence from early 2010 onwards. People have to eat….will all know that. So we are all associated with a sector that is always in demand. So no more “smelly feet” fear selling and let’s get even more confidence back into this great sector of food!

P.S We have gone live with our new facelifted website incorporating all the social media elements and it has had a great reaction from clients and candidates alike – www.redfoxexecutive.com  . If you would like to be kept up with all the breaking news in your sector, please join our Redfox Group on Linked In. You get a free daily email with all of those breaking stories – http://www.linkedin.com/groups?gid=2418182&trk=myg_ugrp_ovr

If you haven’t already heard, Redfox has just launched its new and improved website, along with a brand new addition- the Redfox Blog. You will see some great new features including more ways to contact the Redfox team, a sleeker easier to use registration process and fresh new newsletters.

One of the most exciting developments is the launch of Redfox Live Chat- use the instant messaging service to contact the Redfox team at any time of the day. No more worrying about trying to talk in a busy office- it’s a discreet way for both candidates and clients to talk to a member of the Redfox team confidentially about roles and candidates we’re working on.

Don’t forget you can also follow us on Twitter http://twitter.com/Redfoxexec, Linked In http://www.linkedin.com/companies/648949 and even see us talking about our latest roles on You Tube http://www.youtube.com/user/redfoxexecutive.

Don’t forget to update our contact details too! Our new phone number is now +44 (0)8448 011 911.

Keep an eye on this blog for all our latest news and updates as they happen.

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