The business case for local food

Increasingly, consumers are seeking out local produce – and retailers are finding that working with local suppliers is good for business as well as benefiting society and the environment. As...

Increasingly, consumers are seeking out local produce – and retailers are finding that working with local suppliers is good for business as well as benefiting society and the environment.

As social businesses, co-operative retailers such as John Lewis, East of England and Lincolnshire, as well as hundreds of community-owned stores, are at the forefront of providing local choices for their consumers.

The need is evident with a recent survey showing 36% of shoppers have bought products from their local area or region in the past month. And 78% said they would buy more British food if it was available, according to research and training charity IGD.

“This is a long-term trend, with support for local produce increasing significantly during the downturn as shoppers wanted to support their communities during tough times,” says Vanessa Henry, shopper insight manager at IGD. “People are keen to buy British produce because they feel like they’re supporting the local economy.”

Waitrose, part of the John Lewis Partnership, has tapped into this market through the formation of a small producers’ charter and a network of regional trading groups to help local suppliers meet their standards. A statement from the organisation read: “Working in partnership with regional food groups enables us to benefit from their extensive knowledge of local suppliers, ensuring that we source products which our customers regard as local and regional.

“The regional food groups provide a valuable support service to those suppliers looking to work with a supermarket, especially if it is for the first time.”

Regional economy

East of England Co-operative has nurtured 140 local suppliers and ploughed more than £25m into its region’s economy since 2007. Kevin Warden, local and fresh foods manager, says: “It’s not only bringing new customers through our doors, it’s also boosting the region’s economy.

“We’re currently experiencing out highest Sourced Locally sales to date. Last year we surpassed our turnover target by reaching £12m. This year we’re on target to reach nearly £15m.

“More and more of our customers want to know where their food comes from so we continue to expand the variety of local products on our shelves – now 2,400. It’s something our customers value and it helps keep their pound local.”

East of England's new flagship local store
East of England’s new flagship local store

This year, East of England added cold-pressed rapeseed oil produced by Crush Foods of Norwich to its own-label range and it is the first retailer to stock locally produced pasta, with own-brand fusilli and alphabet pasta from Pasta Foods of Great Yarmouth. It has also opened two new stores where Sourced Locally products are predominant – the Lavenham Village store and the Darsham Hamper, the flagship store for Sourced Locally.

This April, half-year results from Lincolnshire Co-op showed a 2.2% increase in sales at its 78 food stores, while the Love Local range, which includes eggs, jams, crisps and cheese, rose by 11%. Its own bakery, Gadsby’s, which makes bread and cakes for stores, increased sales by 8%, while sales of local meat, produced by the society’s own butchery in Lincoln, went up by 7%.

The Co-operative Group is getting on board too. A project team is working to increase local food sourcing, following the group’s promise at its AGM this May that it would become a leading supporter of local and regional food producers by May 2015.

Richard Quinn, managing director of the Co-operative Group’s Farmcare subsidiary, is responsible for local sourcing at the Group. “We’re currently working with a number of local suppliers in order to increase our proposition in this area and provide our customers with delicious food conveniently,” he says.

“We want to identify iconic products and brands such as local bakery ranges and regionally brewed beers and ciders that we believe our customers want from their local Co-operative Food store. The products concerned go across our entire store range and we’re reviewing our processes in order to be able to provide products throughout our store portfolio.”

He said the team was working with key suppliers to ensure it had a model that was appropriate for both prospective suppliers and the group’s distribution channels. “The team is at present working on detailed solutions following a number of review sessions with suppliers where we have been listening to how we can adapt our processes which will enable local suppliers to work with us better.”

The Co-operative Group has also recently agreed to give British farmers a premium of £5m to help strengthen its meat, poultry and milk supply chains. So far, 207 farms are receiving a share of the payout for taking part in a number of working groups, formed to set standards in the supply chain.

Farms are judged on health, welfare and quality standards, and are also expected to discuss and exchange best practice ideas. For farmers that meet all criteria, which also includes sustainability, the environment and ethical training, they will be awarded gold or silver status. Since the scheme’s launch last year, 55 out of 599 protein farming groups have achieved the higher statuses.

Relationships

“Producer groups like these foster stronger relationships with the farmers involved and ensure that retailers are able to provide more consistent products for consumers, which in turn, guarantees more British food on more British plates,” says National Farmers Union president Meurig Raymond. “It is important that retailers continue to ensure that these initiatives are applied across other farming sectors, including fresh produce.”

Kevin Warden believes fairness is key to working with local suppliers. “Our underlying policy is that we’ll give suppliers a fair price, offer customers a fair price and make a fair profit,” he says. “Beyond that there’s no one-size-fits-all policy. You have to be flexible, look to the future and recognise your suppliers are key partners.

“We work with our family of 140 local suppliers at a pace to suit them. It’s a two-way relationship. Initially, they may want to supply just a couple of stores until they’re in a position to expand. We support them every step of the way and in turn our suppliers support us, not just supplying products but getting involved in events, promotional activities and supporting our Producer of the Year Awards.

“The impact we’ve experienced, with improved customer satisfaction, increased awareness and higher sales, has been extremely positive. Our customers love Sourced Locally and we’ve seen how they will choose very local products, even over British branded products.

“In the year to 25 January 2014, Sourced Locally sales grew by 30%. Just last week we experienced our highest volume of Sourced Locally sales.”

But working with small suppliers in a commercial environment can be challenging, he warns. “You have to go with the pace of your supplier,” he says. “About 70% of our suppliers deliver direct to stores. It brings logistical challenges but means there’s a stronger relationship between the store managers and the suppliers, and the stores gain that local knowledge of the product. Delivery is quicker too and often means products are picked and in store the same day.

“Another challenge is the level of support we offer all our suppliers. This involves face-to-face meetings and site visits to advise on everything from trading standards and food audits to labelling and sourcing barcodes.

“We want what’s best for the suppliers’ businesses. It’s not just about growing our own business, so our suppliers are free to seek other outlets for their products, as long as they can maintain their service to us. Everything is possible to provide local, it’s about the will to achieve.”

But there is still debate about what local actually means. The Campaign to Protect Rural England (CPRE) defines local food as ‘grown and processed within 30 miles of the store’. Other organisations, including retailers, have looser definitions which may include their region or trading area, or products processed but not grown locally, such as biscuits or preserves made with non-local sugar.

CPRE says supermarkets like Waitrose, which has accepted its definition, have a vital role to play. “We’re urging other supermarkets to take this on,” it says. “We need to make a greater link between the food we buy and the landscape in which it is produced.”

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