Big U.K. end-users complain

Press, 3 June 1983, Page 8

Big U.K. end-users complain

From

DIANA DEKKER

in LONDON

Considerable and growing dissatisfaction with the Meat Board’s marketing scheme in Britain is surfacing from big retail organisations and independent wholesalers. Some of the board’s subagents, required by the board not to talk about stock, sales, or prices, also feel that all is not well with the scheme. This comes at a time when the New Zealand Government has announced the setting up of a task force to define the requirements for the meat industry to develop and run a global meat-marketing strategy to maximise returns to the nation. The complaints are that the Meat Board has been autocratic in its approach, has failed to listen to anyone in the trade except its own sub-agents, and that its prices are set far away from the marketplace and are divorced from its realities. Many of the people who must work with the scheme favour a return to the marketing situation that prevailed before the board took over. “They did a damn good job when they were promoting meat, and they should have stuck to that and not got involved in selling it,” says Mr A. H. Smith, managing director of R. H. Thompson and Co., Ltd, an independent wholesaler. It is predicted that the Meat Board will find itself with at least as much of a surplus in Britain at the end of this year as it had last year.

The two principal complaints are: • That the holdup of new season’s New Zealand lamb as old stocks were being cleared at the beginning of this year means that the gap between New Zealand lamb on the shelves of shops and incoming British lamb has narrowed. • That the board’s setting of prices does not give the. really big buyers of lamb any leverage to bargain. Buyers taking more than 15 containers are allowed to discount one penny per pound but above this amount there .is no change. Buyers like Sainsbury’s, which used to take a million carcases a year and now take “considerably less,” feel the situation is so difficult that there is a possibility that they are losing the incentive to buy New Zealand lamb. “We have no allegiance to New Zealand lamb or to

English lamb. Our allegiance is to the customer,” says Mr Bob Wallace, of

Sainsbury’s. Mr Wallace buys for 240 Sainsbury’s stores. The Meat Board needs the goodwill of such a large retailing organisation, he points out.

“If they are not careful with this scheme, where there is a fixed price with sub-agents, they will drive the retailers away from New Zealand lamb,” .he adds. “We are not saying we will toss it out the window but the way they are playing it they will hurt themselves. The English lamb is coming in and the British consumers won’t want to know about New Zealand lamb.” He is aware that the E.E.C sheepmeat regime is against New Zealand, and that there are no simple solutions, but the situation is nevertheless worse than it might have been. “The trouble began in the middle of last year when, the Meat Board was advised on future prices and that advice put the prices far too high,” he says. This had partly been responsible for the huge pile-up of the old product. The January “bonanza” of New Zealand meat promoted by the board in Britain came when the build-up of stocks had already been well established. “Now the stocks are building up again. If there are 31,000 tonnes in store now, there is a lot more to come,” he says. “The relatively easy solution is to let the market take its /normal course. The simple solution is to go back to the normal market flow.” Mr Wallace believes the Meat Board has been given ill-informed advice on price levels. He also believes that one of the faults with the marketing scheme is that the board had seemed unprepared last year to listen to retailers. The danger now is that retailers might not put as much emphasis on the marketing of New Zealand lamb as they had in the past. “It’s a terrible tragedy,” he adds. The money spent on promotion was not the answer. The market has to take its own course, even if there are ups and downs for the New Zealand meat trade on the way. "If they want to ship the existing volumes they have

to let the market find its own level,” he says. “It’s a

matter of supply and demand. “As a result of the mess meat was practically given away in the bonanza and they were promoting a product you could not be particularly proud of.” He was referring to the meat which the Meat Board held in store for some months, and which, he claims, had often looked “tired.” “New Zealand farmers and producers seem to think we are taking them for a ride. They seem to think we will be grateful for a product which they have a Godgiven right to give us. “The English lamb season is extending and there are a lot of dangers in that for New Zealand lamb. “New Zealand has been insulated for so long I sometimes think they see Britain as a good clearing house, but we are not.

“There is always a market with us at a reasonable market price, but not at a fixed price.” Another retailer to put his views forcibly is the managing director of the giant Dewhurst organisation, Mr C. Cullimore. He has already put his views on the marketing operation. “They are very much a matter of record,” he says. “It is not a matter of leverage. It is that the Meat Board has distanced itself from the marketplace. The directors are sitting in an office in Wellington fixing the price of lamb. “People like us who put our money into the business are just going to put it into something else, like British lamb. “You have nationalised the meat industry by the back door in New Zealand. You have removed any commercial competition. “The result is that we’re trying to sell as much English lamb as we can. “One concern for the board is that there is so much in store here now that there is no way it can be shifted unless they stop shipping it from New Zealand.”

A spokesman for the Waitrose group of 74 supermarkets says there is a preference for dealing directly with New Zealand suppliers as in the past. They realise, however, that no “magic simple answer” . to the board’s problems exists. A spokesman for another big buyer of New Zealand lamb, the Tesco group, says there is a problem getting the Meat Board to recognise the difference between the big and small retailers. “But we have no objections at the moment. We are

cautiously optimistic,” a public relations manager was directed to say.

“No specific complaints” came from the National Federation of Meat Traders, which represents a multitude of butchers. Mr Vincent Champion says he is aware that the big chains feel they are dealing with a single seller and do not have the same leverage, but his members are smaller retailers who do not have that problem. There had been a problem with carry-over because of the delays in shipping schedules last year but this problem had ended. Earlier in the year there had been the problem of the release dates of new season’s lamb and concern that if the 1 Meat Board did not get its stocks out quickly enough it would run into the new season in Britain.

“The way consumption is going here the last thing we want to see is a squeeze on Third Country suppliers, but our basic view on New Zealand lamb is that it is best if the seasons remain complementary,” Mr Champion says. “Britain’s season seems to get longer and longer. There is the constant worry that New Zealand lamb will begin to compete with home lamb.” The Federation of Meat Traders has about 6500 shops, including some medium-sized multiples. Mr Arnold Smith, of R. H. Thompson, says that the board has shown no respect for the views of organisations like his own and has listened only to its own subagents. “Independent wholesalers, after a decision taken this week, will not get the discount for bulk because the suggestion is that the independents are weakening the ex-depot price of lamb.” Mr Smith says that his company, conservatively speaking, had a potential usage of 5000 carcases a week. It would be a mistake for the board to assume that the business lost could be taken up by its sub-agents in Britain. There is too much United Kingdom product to fill the vacuum created and company resources would be switched from the promotion of New Zealand lamb to that of the United Kingdom product. Mr Smith believes that part of the philosophy of the board marketing lamb in the United Kingdom had been to encourage companies that had money and resources invested in the distribution or further processing of the product but this had not happened.

He is disturbed about a situation arising in the

United Kingdom in which New Zealand could, quite unintentionally, be altering the balance within the United Kingdom meat trade. This would play directly into the hands of opponents of New Zealand lamb imports into the E.E.C. and would eventually draw comment in Brussels. It appeared an unnecessary provocation in a year when the E.E.C.’s sheepmeat discussions would spotlight the industry. He contends that consignment selling should be stopped. “The problem is one of volume. If they want to dictate the price they can’t do that unless they restrict the volume.”

Any system which now evolved should be purchasebased and equitable to all sections of the wholesale trade, and should not disrupt the traditional trading patterns existing in the United Kingdom between

wholesaler and retailer. A source from within the board’s sub-agents says that he is aware that larger retailers do not like the system because it does not allow them to exercise their buying power. Major organisations resent the idea of the Meat Board trying to control their businesses. There is some resentment among the powerful buyers and those buyers are needed because they are the ones who could move big volumes of New Zealand meat.