Consumption changes offer food for thought

The food industry must change to suit the new circumstances created by international economic turmoil, VION’s Peter Miller tells Chris Lyddon

Peter Miller, managing director of VION’s poultry business unit, believes that changes in food consumption patterns that are being wrought by international economic turmoil are here for the long term. The food industry, he says, needs to find a new way of doing business to suit these new circumstances.

“There is no fixed system in place for negotiating changes to input costs, whether they be increases or whether they be decreases, on a formalised basis,” Mr Miller points out.

“It tends to be on an ad-hoc negotiation whereby one party, the supplier, tries to justify why he needs to increase the cost price to the retailer.

“This has been an acceptable way of doing business. I question, however, in the current environment, which is relatively new and has a degree of uncertainty about it with regard to the cost of commodities, the value of money and the demands from other markets around the world, whether now is not the time to try to develop a more formalised review of costs, inputs and impact upon the price within the supply chain?”

Mr Miller believes the whole model is being reset. “We talked about change to buying and selling habits and consumer usage in 2008. That was too soon, too early, and I don’t think people had grasped it.

“Now we are seeing a fundamental change long-term to buying habits and that will bring about a requirement to better understand input costs and how they move.”

Consumers are now being more cautious when they buy. Mr Miller believes the rise in global commodity prices has created changes that are here to stay.

“Pack sizes are being reduced,” he points out. “As we all know, a bar of Cadbury’s dairy milk or a Crème Egg are smaller than they were; all the confectionery tins for Christmas are smaller than they were last year. This is attempting to maintain current price levels rather than add to food price inflation.

“I believe people are now going to start using food more sensibly and they will throw away less,” Mr Miller suggests. “In general the British don’t respect food. We value food purely on its price. We have not valued it for its provenance or quality.

“Our food culture has been driven by the ready meal and price. I believe the demand by retailers for a higher proportion of their meat and other produce to be British will bring about a positive change in attitude.”

VION is trying to change perceptions.

“We have just announced sponsorship in Scotland,” Mr Miller says. “It’s a three-year programme and the idea of it is that we will get children in Scotland onto farms. We will show them how their food is grown. We will educate them about their food.”

He also wants to see an improvement in the way the industry is regulated and the way regulations are implemented.

“When something new is developed and implemented the relevant government department, for example DEFRA, should ask whether that genuinely adds value,” says Mr Miller. “We’re living in an extremely cost-conscious environment. They should ask: Does this new piece of legislation, does this new rule make a positive contribution to business and the environment or is it simply another criterion that has to be met without actually having a genuine known outcome or benefit?”

He addressed the idea of full cost recovery by government departments which he said industry would accept, but not on government departments’ terms. “We have to take those terms into the marketplace. The marketplace will not accept them.”

Industry, said Mr Miller, would want the Government to control its costs in the same was as industry. “Staffing levels, timing etc, benefits, should be at industry levels, not
Government levels.”

He is also calling for Europe-wide consistency. “It’s disappointing at times when we in the UK adopt a higher standard than is adopted by the Continent and we would like to see, particularly with regard to animal welfare, one system adopted throughout Europe,” he says.

“Obviously we’d like that to be the higher welfare system. If a welfare programme’s put in place within the UK but not put in place in the rest of Europe that means UK producers can be uncompetitive. That’s unfair.”

• Peter Miller is managing director of VION’s poultry business unit.