Professor John Moverley writes...
CHALLENGES & OPPORTUNITIES IN THE FOOD SECTOR
Redfox works closely with a select number of associate partners and high level contacts who we ask to regularly write for the benefit of the sectors.
Over the economic recession, food has remained relatively resilient and indeed there has continued to be growth in the supermarket sector. This is something that cannot be said for many other areas of the economy, albeit much of the growth reported was linked to increases in non food sales and inflation in food prices. However, there is increasing evidence that the situation is tightening. Recent supermarket results have showed significant falls in sales growth for food purchases. Food inflation has fallen. The closer inflation gets to zero, the more that retailers must steal share from each other to increase sales.
Recent times have emphasised that customers continue to seek ever increasing levels of value in their purchases especially for staple items. This prompted a cascade effect early on in the recession prompting all supermarkets to introduce their own brand of value lines. At the same time, they have shown ever increasing interest in provenance, and there are clear signs of many seeking to balance some of their thrift in regular purchases by seeking ever more quality in purchases such as meat etc. Overall there has been a dramatic change and with continued uncertainty on employment and ever tightening finances and the potential impact of government cuts, there is real caution in consumer spending. . As a senior member of a supermarket chain said to me recently, ‘‘The savvy shopper is now very much a feature of the high street and it is impacting on how all of us respond’’.
In dealing with the very difficult economic decisions, there are dangers of ignoring the issue of food security. Whilst food supply to UK markets remains reasonably plentiful, globally there are considerable challenges. As they say, they don’t make land anymore and yet populations continue to increase. In the past the gap has been made up by greater yields and productivity. Whilst such advances will continue, there are different factors impacting now. We are using land for other uses, namely the production of energy crops to provide alternative energy sources. Water is increasingly becoming a major limiting factor to agriculture. We are also seeing greater restrictions in cultural practice and then there is that factor of global climate change. We can argue about the merits of genetic modification (GM) but whilst Europe continues to limit its application, we must be aware of a further barrier we present to food producers in driving up productivity.
Already over one billion people globally do not have adequate access to safe and nutritious food. The world faces a potentially even greater crisis in food security as expected global population growth to over 9 billion is coupled with increasing affluence and urbanisation in rapidly developing countries. To meet this, the FAO forecasts that world food production will need to increase by 40% in the next 20 years and 70% by 2050. Professor John Beddington, the Government’s Chief Scientific Advisor, recently said: “. There is the potential for a full food security crisis in the future. The growing global population combined with changing consumption patterns and increased urbanisation, set against the backdrop of a changing climate, means we cannot continue with ‘business as usual’.
All this can sound really depressing and yet there is so much happening in our food sector to cheer and celebrate. However, there are real signs that the going is to get ever tougher in all parts of the food chain. The right approach to deciding upon strategy and implementation plans is crucial for all organisations in the food sector. Interesting times we live in indeed.
SENIOR CONSULTANT AT AZURANCE
Azurance is a management consultancy business specialising in the food, regional food and agri-food sectors
Leave your comment
Redfox specialise in placing top candidates for all senior management work disciplines into leading businesses in the Fresh Produce, Agri-Business & Retails sectors in the UK and Internationally. For more info email email@example.com or call +44(0)1284 715055. Likewise, if you are considering a progressive career move and would like a confidential chat then please get in touch.