Examination of witnesses (Questions 40
- 59)
WEDNESDAY 3 MAY 2000
MR GORDON
SUMMERFIELD and MR
DAVID MCNAIR
Mr Mitchell
40. You mentioned 10 companies you are trying
to push into export, presumably you do not work with the multi-nationals,
because effectively Grimsby is Europe's food town, but the multi-nationals
trade internally because they can send fish-finger production
to another part of Europe and supply the British market from there,
so you are not working with multi-nationals, are you?
(Mr Summerfield) There are opportunities for those
people. David, earlier, spoke of own label products. A number
of the companies within the Grimsby empire do export some products,
but their brands they manage themselves. In terms of own label,
there are lots of opportunities that these companies are turning
to and own label is a very low component of the total food sale
through the European retailers, and that is an opportunity.
41. Which you are helping them to promote?
(Mr Summerfield) Yes.
42. Following on this point again, the market
research of the American Grocery Manufacturers, when we were in
the US a couple of weeks ago, said that increasingly consumer
demand was concentrating on more and more instant food. In fact,
she said quite dramatically that McDonalds was regarded as rather
slow. Is that what you are finding about demand elsewhere; the
consumer wants things that can be prepared much more quickly and
much more easily?
(Mr McNair) Yes, which is where we talk about added
value. Often the added value is in terms of taking primary agriculture
and processing it in order to improve the convenience of preparation
and serving for the home-maker and for food service companies.
What we find interesting in the area of sea food, for example,
where exports have been very buoyant this year, is that it is
a combination of crustacean in terms of shell fish from United
Kingdom waters being exported, but it is also processed fish recipe
dishes, rather than just filleted fish. One of the reasons we
are going to have such a strong presence in Belgium is that with
the Belgium supermarket chains 25 per cent of the fish that they
sell is in fact exported from the United Kingdom, particularly
from Scotland.
(Mr Summerfield) The ultimate convenience is sandwiches.
Fresh sandwiches are an enormous growth market.
43. Are those made in Britain and sent to Europe?
(Mr Summerfield) There are a lot of sandwiches made
here and sold in the stores in Belgium, yes.
(Mr McNair) The most popular filling
flavour in Paris is chicken tikka. The French manufacturers have
not got to that flavour. It is because of our experience in terms
of the cosmopolitan range of foods that we have in this country
and the development of the skill base which it has been through,
manufacturers working closely with retailers, that has developed
those. I think that is a very important point. I was very encouraged
by MAFF's recognition of the need to facilitate throughout the
whole supply chain. It is actually about bringing primary agriculture
together with the retailers and distributors, and as a result
of having built a very competitive and professional industry in
this country, it now allows us to be looking at trading off that
base and developing those skills into other European markets.
44. That is interesting. I want to ask you about
targets, but first of all, in these figures about exports of food
and drink I see, as the Chairman said earlier, that exports to
EU markets are down 6 per cent, and to the rest of the world 3
per cent. You count whisky in them, presumably?
(Mr McNair) Whisky is in the overall figures, yes.
45. What proportion of those is provided by
whisky?
(Mr McNair) Within the 8.8 million, I cannot remember
the figure exactly, but food and drink, excluding spirits, is
just under 4 billion. I will confirm the exact figure for you.
46. You are really in a position to coast along
on the basis of whisky exports, which I would imagine are reasonably
constant, and the rest of it fluctuates more.
(Mr McNair) You will find, in fact, even Scotch whisky
performance has been affected by exchange rates as well. There
are peaks and troughs within spirits. We try to separate out the
spirits industry, because that is not our primary area of focus.
We are much more concerned about building other food and drink
industries.
47. It is half of your exports.
(Mr McNair) It is half of the United Kingdom's exports,
it is not half of our responsibility as Food From Britain.
48. What you are quoting here is the United
Kingdom's exports.
(Mr McNair) Yes, because that is one of the roles
that we do in terms of pulling together those figures and acting
as spokesman in terms of the overall performance. We want to use
those figures to highlight the trends in terms of identifying
markets where we should have opportunities and which should be
developing a presence over time. Clearly, when we see the direction
of exports to the Americas and to the Far East we are in discussion
with the likes of British Trade International in terms of how
we build our presence in order to encourage and support other
companies to look at those parts of the world for export.
(Mr Summerfield) The figure on the export of alcohol
is broadly 25 per cent of total food and drink exports.
49. That is more constant in terms of the effect
of over-valuation, than food, is it not?
(Mr McNair) No, it has got swings and roundabouts.
50. But it is still more constant, is it not?
(Mr McNair) Well, I come from 10 years within the
drinks industry. I think one of the reasons for me joining the
organisation was the food and drinks experience that I have had
with blue-chip companies such as Unilever, Allied Domecq and Guinness.
Believe you me, when I was looking after Johnnie Walker Worldwide
there were roller-coasters. There are fluctuations from year to
year depending on particular markets. Clearly Scotch was severely
hit by the economic recession in the Far East a couple of years
ago.
(Mr Summerfield) Alcohol is down 6 per cent of the
total year on year this year, as opposed to the total food and
drink sales being down 5 per cent, so it is, in fact, slightly
more of the total food and drink market.
51. Drinks experience is valuable in this industry
as well, but you are recommended by the Efficiency and Effectiveness
Review to set targets. Are those targets for increased exports
as a result of your activity or do those targets include this
drinks component?
(Mr McNair) When the Stevenson Report was delivered
in the mid-1990s they were very realistic in relation to the size
of our organisation and its funding. It was unrealistic for it
to be seen to be having a major impact on overall food and drink
and, therefore, the kind of targets that we are set are a mixture
of commercial targets in terms of funding from industry in relation
to government funding, and in terms of bringing in smaller and
medium size enterprises. Clearly, the overall performance of food
and drink exports are impacted by, as you say, the major multi-national
and blue-chip companies. It will only be in terms of particular
subsidiaries or particular markets where we might be able to give
them some specialist help, but they are driving the overall performance,
we are not able to have a significant impact at that national
level. What we can do is plant the seed corn for future larger
companies.
52. Weeding your role out of that overall level,
do you have specific targets for extra activity generated as a
result of your work in terms of exports?
(Mr McNair) We do not in terms of our overall figures.
We have in terms of some particular funding. For example, with
the work that we do with the Home Grown Cereals Authority—with
that as a levy body—there is a very clear commercial target
set against each pound that is spent on projects having to deliver
a return which is six times that pound spent.
53. Is that realistic?
(Mr McNair) We have shown in terms of our track record
on the expenditure that we have with the HGCA, that with the particular
projects that we chose, we can deliver that. Commercial targets
cannot be the only appropriate measure for this organisation.
Much of it is actually about providing consulting skills, and
that comes down to service levels. What we have introduced is
a series of customer satisfaction measures which will be the basis
of judging us in terms of delivery of our services in the years
going forward.
54. In terms of the overall figures, you are
telling the same tale as every other British exporter; that the
pound is hitting your world?
(Mr Summerfield) Over 60 per cent of our exports going
to Europe we are bound to feel the impact of the different values.
It is quite obvious that if you buy something that is readily
recognisable in a brand in France today, it is 20 per cent more
expensive than it was 15 months ago.
55. I hope you shout it loud and clear that
somebody has to move the Government on this issue.
(Mr McNair) We are talking about an organisation which,
in terms of the combined funding of government and industry, is
£12 million per year to actually deal with an export industry
which is £8.8 billion per year. We need to be clear in terms
of perspective of what we can actually achieve.
56. How do you identify new markets, either
for destination or new products? What facilities have you got
for doing that?
(Mr McNair) Again, from looking at a lot of the market
research that we do, we identify trends. Through the discussions
that we have with the embassies around the world we see where
there is potential interest and, as a result, one of the services
we do out of our London office is that we manage both outward
and inward missions to those markets. The week that I joined Food
From Britain, for example, we had buyers over from the Czech Republic
and Hungary.
57. You try to match up markets?
(Mr McNair) Yes. We match them up with a number of
British companies who have expressed an interest in looking to
export to those markets. Our role is bringing them together. Similarly,
we take parties out to markets. We have been out to Taiwan and
Singapore recently, looking at the opportunities there.
58. So, if I came to you with Mrs Mitchell's
deep frozen Yorkshire pudding, could you match me up to a market?
(Mr McNair) It may be a local market. One of the things
that you need to bear in mind is that—and I think this is
a very important thing—sometimes a number of companies that
come may not like the advice that we give, but the advice that
we give is impartial and realistic in terms of what the opportunities
may be. For small companies often what we find is that the biggest
export market—for example, for Wales and the Highland and
Islands of Scotland—is in fact England still. Therefore,
part of the service that we have been able to provide for those
companies is by actually being able to open doors to give them
exposure to the buyers and some of the major retailers in order
to get their stock in those stores.
59. I remember years in Dunedin waiting for
the import of haggis to arrive for the Burns' Night supper. Do
you find the market and then think, let us get this manufacturer
or supplier to supply it, or does the manufacturer come to you?
(Mr McNair) It works both ways. What we have often
is meetings with groups of potential exporters and we highlight
to them where we believe there are opportunities. If there is
enough of them interested, then we would help invest in spending
some time building experience and contacts in that market for
them.
(Mr Summerfield) The other area, which is very important,
and is a very important area for the overall organisation, is
that throughout this year there are 14 international trade fairs,
food fairs, that we organise and we want to make sure that we
get Food From Britain well represented there and also companies
that were able to export products that we in Food From Britain,
and they, had already agreed that they were able to export to.
It is a show case for our business around the world.
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