Examination of Witnesses (Questions 162
- 179)
MONDAY 23 FEBRUARY 1998
MR LAURENCE
BERNTHAL, MS
DAWN BLAKE
and MR JOHN
COLLIN
Chairman
162. Apologies for being late, we had a few
traffic problems with some of our Members and also apologies for
what is a relatively low turn-out for the Committee. It is not
because of the lack of importance of the Co-op in Wales, it just
happens to be the way Parliamentarians behave on the whole I am
afraid. You are well aware of what we are here to do today. I
want to acknowledge that you have been very quick in getting your
memorandum together and your speedy attendance at the Committee
has been very much appreciated. If you would like to introduce
yourselves it would be quite useful.
(Mr Bernthal) If I may introduce myself
first. I am Laurence Bernthal, I am the Trading Manager, Co-operative
CRS, for the trading area of meat, poultry and fish. If I introduce
my colleagues. On my left I have got Dawn Blake, who is the PR
Manager for the Co-operative Food Division, and on my right is
John Collin who is the Chairman of TH Sutcliffe which is a meat
supplier to the Co-operative Food Division.
163. Thank you very much, Mr Bernthal. If I
might ask a couple of questions just to set the scene really.
You say that the Co-op Retail Services is the second largest of
over 40 Co-ops. Which is the biggest? Are all the Co-ops associated
with each other and, if so, how do they link up?
(Mr Bernthal) I think I could spend most of the afternoon
talking about the Co-operative movement. You will be pleased to
know that I am not going to! You quite rightly say that CRS is
the second largest Co-operative in the UK. We have a turnover
of £1.6 billion and we have a particular strength in Wales.
The largest Co-operative Society is the CWS which is the Co-operative
Wholesale Society. They have no food retail presence in Wales.
The third part of your question was is there any link up? Within
CWS and within CRS there are buying groups, buying initiatives,
and outside of that there is no major link up apart from the common
thread of co-operation. I hope that is succinct enough for something
that could normally take two or three hours.
164. Very succinct, thank you very much. Second
question: in retailing terms the Co-op is rather unusual compared
with other supermarkets we intend to ask questions of. How do
you see the Co-op organisation developing? This is a sort of crystal
ball question.
(Mr Bernthal) I think I would have to get my crystal
ball out for that. I think the reality of the marketplace at the
moment is that co-operation in terms of profitability in comparison
with what other retailers are generating is somewhat low on the
scale. I think if the Co-operative movement is to survive there
has to be an amalgamation of Co-operative Societies. That is a
personal opinion, that is not necessarily reflected by either
board at the moment. I see the ability to bulk buy and bulk procure
within any field, not necessarily meat, as the way forward for
the Co-operative movement.
165. Thank you. You mentioned the Co-op Wholesale
Society. As I understand it they are one of the biggest farmers
and producers and of livestock in the UK. Do you buy meat directly
from them? Do you have sort of in-house deals, if you like?
(Mr Bernthal) Indeed the CWS has a large farming presence.
It is my understanding that it is principally in dairy rather
than into beef herds. In that respect, no, I do not have any deals
with the CWS.
166. Thank you very much. Before we move on
I have to say if any questions which we do ask, impinge on commercial
confidentiality then I am more than happy to take evidence in
private and not publish that information.
(Mr Bernthal) Thank you.
Mr Caton
167. What is the market share of your food stores
in Wales?
(Mr Bernthal) Thank you for that question. That is
an exceptionally difficult question to answer.
168. It is easy to answer!
(Mr Bernthal) I will not skirt round it because basically
I do not know the answer. Market data is very, very difficult
to obtain, particularly market share. The basis for market data
is often generated by big branded manufacturers. At the moment
we have not got access to market share data to that degree. I
think if I can look particularly at meat and the entire Co-operative
movement, and the Co-operative movement is not differentiated
between CRS/CWS, the Meat and Livestock Commission through their
figures, and they have those figures audited by Audits Great Britain,
suggests that the Co-operatives—I would stress it is all
Co-operatives—had a meat share of 2.2 per cent in 1997.
Again I stress the point that it is all the 40 Co-operatives through
the UK. As for drilling further into market share in Wales, I
am afraid I have not got that detail.
Mr Jones
169. Can you tell us so far as you are concerned
what has been the pattern of meat sales say during the last decade?
It might be helpful if you could distinguish there between red
and white meat for us.
(Mr Bernthal) I think many of us around here who have
worked in the meat industry for over the last ten years would
suggest that there have been some traumatic changes within the
pattern of meat sales. If I can just define in the context of
that question meat categories, because that is quite important.
I put forward the categories as beef and veal—that is in
one category, veal being a very small part of it—lamb and
mutton, again as one category, pork and bacon and the very large
category of poultry meat. The estimated meat consumption per capita
in the UK has risen since 1985. I take that back further than
the ten years that you requested. As reported by the Meat and
Livestock Commission the total meat consumption, again using the
total of the categories that I have previously mentioned, in 1985
was 62.6 kilos, that is per capita in the UK. In 1997 the provisional
figure is 69.8 kilos. That is the figure that is reported by the
Meat and Livestock Commission. I have seen figures that differ
from that, they were produced by ADAS, and they would suggest
that there has been a rise but not as great as the rise suggested
by the Meat and Livestock Commission. However, in the absence
of any other data these are the ones that we have to work with.
Specifically drilling down into that looking at beef and veal,
beef being the principal category within that, in 1985 per capita
it was 19 kilos, the provisional figure for 1997 is 14.3 kilos.
By my estimate that looks like a 25 per cent decrease in beef.
Outside of the figures provided by the Meat and Livestock Commission,
anecdotes, some people have told me that they have seen a 44 per
cent decrease in the beef business. It is quite substantial in
the consumption of beef right across the UK in that ten, twelve
year period. If I can carry on and look at lamb and mutton, it
is perhaps not such a bleak story. In 1985 the consumption was
7.1 kilos and in 1997, again provisional, it is 6 kilos.
170. What about the figure for poultry?
(Mr Bernthal) Can I just come on to pork because that
is a bit better story than the lamb and beef. Pork was at 12.7
kilos in 1985 and I am pleased to say the provisional figure for
1997 is 14.8 kilos. Poultry meat is the one that has sustained
the growth and it seems to have carried the meat industry for
some years. Poultry was at 15.6 kilos in 1985 and it is a staggering
27.4 kilos provisional figure in 1997. I think we can see there
that there has been a significant change from red meat to white
meat. If I look certainly at some of the changing social structures
in the UK they have created another change in meat purchasing
patterns. We see there are many issues that have been connected
with health issues, that is principally I believe why there has
been a move towards white meat away from red. We have changing
social habits that have created a demand for more convenience
foods, ready meals, the use of other protein that is still in
a meal occasion, pizzas etc. Also social habits have created a
concept which retailers are now describing as "snacking and
grazing" which is eating away from the formal meal time.
That includes things like chicken portions, the traditional pot
roasts and stews and even mince to a degree have moved as meal
occasions. I think we also have to realise that with the change
in social habits there is a greater demand for fast foods. I think
we have all seen the proliferation of fast food restaurants throughout
the country. I have quite a staggering figure here. I do not want
to bog everybody down with figures and percentages but it gives
us a start point. The National Food Survey Reported in November
1997 that for the year 1996 there was 12 per cent more spent on
food consumed outside of the home. That is not food that has come
from the home stock, it has been purchased outside the home. The
survey reported, and this is quite a staggering one, it took me
aback when I looked at it, that expenditure on food, eating out,
accounts for 21 per cent of total weekly per capita food and drink
expenditure.
171. Can you just repeat that figure.
(Mr Bernthal) Twenty one per cent. The per capita
figure is 22.99, 21 per cent of that is accounting for food outside
the home. I think from that we can start to paint a picture that
perhaps some of the traditional meat retailing ideals have moved
significantly as the consumer starts to look at snacking, looking
for alternative protein whether that be in the form of pizzas
and ready meals, and also for eating out. Going back to the original
figures where meat consumption is improving, it is where is it
improving. I think if we drilled further into the eating out concept
there is the use of ethnic foods which do obviously use meat and
some of the burger houses and some of the chicken emporiums as
well.
172. Can I just ask you very briefly, because
I think these are very interesting figures, quite startling obviously
in the context of our inquiry, looking at the final figure, would
that include take aways as well as sitting in restaurants to eat?
(Mr Bernthal) Yes, it would do.
173. Okay. Clearly the pattern is a reduced
consumption of beef, veal, lamb and mutton and obviously Wales
is primarily a livestock producing country with large amounts
of both. What do you as an organisation consider the future for
both products are?
(Mr Bernthal) I think that is the big question, is
it not, to be quite honest. If I can be quite parochial and take
it from my own personal viewpoint, I think there is still a good
future for beef and lamb within our organisation. I know that
the people above me will support me in that. I think that there
will never be a replacement for beef and lamb. The consumers,
who are of paramount importance to us, we have to continually
research and attempt to find what they require from beef and lamb.
I think if I just refer back to the health issues, consumers are
looking at this stage for white meat in preference to red meat
because of the health connotations. I can perhaps see as an industry
we have to start looking to produce a product that is more in
line with the consumer's thinking.
Mr Caton
174. On the figures you gave us for what I have
written down as "cow meat", for beef and veal, you talk
about the 1985 figure of 19 kilos and then 1997 of 14.3.
(Mr Bernthal) Yes.
175. Was that a steady trend downwards or was
there a big jolt, if you like, when the BSE crisis hit the newspapers?
(Mr Bernthal) I have the figures with me. From memory
I believe there was a big jolt with BSE. I think in 1997 the provisional
figure would start to represent a slight recovery in the beef
industry.
Mr Caton: Thank you.
Mr Jones
176. Can I move you on to the issue of the labelling
of "British Beef". What is your particular policy on
that?
(Mr Bernthal) All our beef is labelled. All our beef
is labelled "British". We have taken great comfort from
the fact that we do label all our beef and lamb from the country
of origin which is the UK.
177. But does that include meat and meat products?
(Mr Bernthal) No, that is just on fresh meat.
178. So when you have meat products which include
meat, why do you find it difficult to label that?
(Mr Bernthal) Essentially with our manufactured products,
and we are just starting to move away from my area of expertise
here so if I start to labour the point please forgive me, we are
essentially retailing brand product. The brands will mark as they
feel fit. We are not in a position to dictate how they label their
products.
Chairman
179. Are you in a position to dictate what they
put in their products, sourcing? As a major purchaser of meat
pies, for example, could you not dictate to them "we want
British beef in our pies"?
(Mr Bernthal) I guess if we were the largest of their
customer base potentially we would be in that position, yes. Given
our market share at the moment I do not think we are in that dictatorial
position.
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