Food Chain: Strong demand for local food

Regional distribution hubs provide a valuable way for farmers to take advantage of the growing demand for local food. Paul Spackman reports

Demand for “local” or “regional” food is likely to remain strong, despite the recession, and the sector should see more growth over future years. That is the upbeat message to farmers and growers from Asda‘s Chris Brown, who says that local food sales across the company’s stores are up 51% year-on-year, despite the economic gloom.

asda fresh produce bigger 
 Local food is doing a booming trade at Asda stores.
“We are a value retailer, but value customers still want local products, even in these tougher times. What we’re seeing is definitely a long-term sustainable trend for local products and it’s not just the preserve of more wealthy people.”

All the main retailers now have established local food lines, he says, and Asda works with about 600 producers supplying over 6000 product lines. This year the supermarket also plans to introduce 120 new local fresh produce lines (eg, onions, carrots and potatoes) into stores in its six key local food regions – Yorkshire, Kent, East Anglia, Lincolnshire, the south west and Wales.

“Value-added products (eg, jams, biscuits) make up most ‘local’ sales,” Mr Brown says. “There are fundamental challenges in managing the supply of fresh products compared with processed – generally weather related – but it’s an area we hope to expand if we can get the systems in place to make it work.”

He reckons the strong outlook for local food should give growers considering direct supply to retailers the confidence to invest time and effort into getting their product offering right. But he acknowledges that approaching a multinational supermarket can be daunting, which is why regional food distribution “hubs” provide a useful stepping stone.

Local produce tips 

  • Do your market research first – consumer trends, competitor products, prices
  • Target products clearly
  • Branding must stand out
  • Farmers markets provide a good testing ground
  • Supermarkets want to see all of the above done
  • Regional food hubs link farm gate and supermarket

Food hubs

“There is still a massive gulf between the farm gate and supermarket shelf, but that can be bridged,” Mr Brown says. “You’ve got to approach it as a business proposition though.”

The food hub structure used by Asda was founded by Cumbrian livestock farmer and former FW Farmer of the Year John Geldard when he established the Plumgarths hub in 2001 (see panel). “As a national buyer we recognised that it was difficult to pick up the individual requirements and characteristics of different regional produce,” says Mr Brown.

The supermarket now works with nine hubs in 13 regions nationwide. “Hubs provide the local expertise to track down suppliers and make the most of regional tastes.

“By building a rapport with local stores they also act as a good translator between the retailer and supplier and can ensure that crucial requirements are met before products are sent to stores, such as barcodes being put on to packaging. It sounds simple, but barcodes really are the pillar of the retail operation.”

Hubs can also help manage the administration, quality control and variations in supply, he says. “We try to do as much hand-holding as possible, but ultimately every supplier has got to understand the main requirements of the supermarkets.”

Product safety is a top priority for consumers and Asda encourages all of its suppliers to have SALSA (Safe and Local Supplier Approval) accreditation.

Consistency of supply is another priority and any retailer will want to ensure that supply of a new product is secure. “There’s nothing worse than launching a new product, getting consumers to come back and buy more, only for them to find it’s not there.” The nature of fresh produce and its vulnerability to the weather means that this has been one of the main stumbling blocks for getting more local fresh products into stores, he says.

Clear ambition

Any grower wanting to supply products to a retailer – whether that’s via a hub to a supermarket, through a farm shop or farmers’ market – must make sure they are clearwho the product is aimed at and why people should buy it, Mr Brown says. “The food market is incredibly vibrant and customers are always looking for innovation, such as new tastes, recyclable packaging or health benefits. Often small producers are more innovative and better placed to change quickly, but you have to make it clear to people why they should buy your product. Products have to be relevant to what consumers want.”

That also means packaging and labelling must stand out against other branded products on the shelf. “Customers are interested in buying local, but they’re still time-pressured. For example, data suggest consumers only spend about 30 seconds in front of the meat counter, so you’ve really got to make sure the products stand out.”

Farmers markets provide an ideal testing ground before approaching a retailer, he says. “There are few other places where you have such a close connection with customers. You don’t get that kind of qualitative data from sales figures once the product’s on a supermarket shelf.”

Before starting anything though, he urges producers to investigate the market place to see what other products are available, how they’re packaged, how much they’re selling for and who they’re aimed at. “Whoever you sell your product to, you’ll need all of this information, otherwise you’re likely to struggle.”

Future trends

Mr Brown says local food will continue to be targeted at stores in areas where there is the strongest local identity. But he says there is also growing demand for “regional” produce in city centre stores where a “local” food supply may not be possible, but consumers still want to choose from a range of regional products. “Monday to Thursday it’s about food as fuel, but from Friday through the weekend we find consumers have time for more elaborate recipes and want to try different foods. There is a definite demand for food with a narrative and farmers shouldn’t miss out on that.”

For the organic market, he acknowledges demand has struggled in the recession, but still believes there is a strong long-term future for organic products. “But more than any other area, you need to be sure of the market before gong into this.”

Locally-sourced fresh produce remains an area for potential growth within supermarkets, but the logistics of ensuring consistent supply remain a challenge, he adds. “For meat, carcass utilisation is an ongoing challenge and it is something we still haven’t cracked. People will always buy the cuts they want, so it’s fraught with difficulty.”

Case study: Plumgarth, Low Foulshaw near Kendal, Cumbria 

 In 2001 Cumbrian livestock farmer and 2007 Farmers Weekly Farmer of the Year, John Geldard, set up the Plumgarths hub to market his own beef, sheep and free-range eggs, along with produce from other local producers. He and his Cumbrian farmer neighbours are capturing and sharing added value by pooling their products and supplying local customers and retailers direct.

The Plumgarth group now supplies more than local 100 hotels and restaurants, 18 Asda stores and Penrith Center Parc with high-quality locally-reared, and branded, beef and sheep.

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