APPENDIX 27
Memorandum submitted by Tesco plc (F 36)
A NEW WAY
TO MEET
CONSUMER NEEDS
The Tesco approach to organic food is consistent
with the company's overall approach, namely sparing no effort
or expense to provide value, quality and service to British consumers.
Understanding, anticipating and meeting consumer needs is at the
heart of Tescos culture and operations. It is for this reason
that Tescos 656 stores now offer 530 different organic lines,
with sales increasing by 150 per cent of the last 12 months.
Demand for organic food has been growing exponentially.
The spurt in demand precedes, but has been boosted by, consumer
concerns about genetic modification. Organic food has shed its
"beard and sandals" image and is firmly in the consumer
mainstream.
Tescos own research reveals that two of the
key groups driving the growth in demand are mothers with young
children who are particularly concerned about health issues and
older people who want food which tastes "the way it used
to". However, demand for organic food is surging across all
consumer types as awareness about environmental and health issues
increases. The renewed public interest in cooking and the advent
of celebrity chefs has also led more people to seek out organic
food. Tesco customers report that they prefer the taste of organic
food in their meals.
As the largest private sector employer in the
UK, Tesco is also aware that demand for organic produce is growing
among its 185,000 members of staff. Our staff are an important
community within our wider customer base and we actively encourage
feedback from them. This feedback usually reaches us before the
responses of other customers and is a vital bellweather for Tesco's
approach—if we are not satisfying our own employees we are
not meeting the needs of other customers.
As Tesco continues to monitor changes in the
expectations of consumers, new product lines are being developed
and launched. Organic dairy products, meats and semi-prepared
convenience items are being added to more traditional loose fruit
and vegetables, teas and coffees and the existing extensive range
of organic baby foods and fruit juices.
A NEW WAY
TO SUPPORT
THE UK FARMING
INDUSTRY
Tesco is proud to be the largest single customer
of the farming industry in the UK. Tesco has signed up to the
new National Farmers' Union "red tractor" Kitemark,
which was formally launched this week. Tesco Chief Executive Terry
Leahy also participated in the Farming Summit, hosted at 10 Downing
Street by the Prime Minister on 30 March this year.
Consistent with an approach based on consumer
attitudes and best practice, Tesco has implemented a voluntary
code of practice, Nature's Choice, to encourage sustainable operations
among all the farmers, including those overseas, who supply fresh
produce to the company. A parallel code of practice exists on
animal welfare issues. For example, all UK and overseas suppliers
produce stall and tether free pigs, and meat and bone meals are
banned for use in feed by all overseas farmers.
Tesco is committed to supporting the burgeoning
organic sector within the wider farming community and to developing
long-term partnerships with top organic growers and suppliers.
The company has a dedicated unit to liaise with organic producers
and Tesco welcomes the Government's efforts to assist farmers
who wish to go organic through the Organic Farming Scheme. In
addition, Tesco sponsors the renowned organic research centre
at Aberdeen University—the only one of its kind in the world—to
investigate new organic growing techniques.
One way in which Tesco can assist UK organic
farmers is to enhance the aspirational aspect of buying organic
produce. There is a significant feel-good factor for consumers
who purchase goods they know to be fresh, British and organic.
Tesco is committed to working with organic producers to maximise
the appeal of, and thereby the market for, domestic organic produce.
Tesco also supports the efforts of the UK Government
to bring greater clarity and confidence to public policy on genetic
modification. We are keen to see greater innovation and competition
within the organic sector so that it becomes stronger in its own
right and less dependent on negative consumer reactions to biotechnology.
Finally, Tesco is committed to working with
Government, the Soil Association, the NFU, consumer groups and
other interested parties to harmonise standards for the production
and labelling of organic goods, as well as the rules on transition
periods, across the European Union. By providing consumers with
reliable, clear and consistent product information the market
for organic food should be further encouraged and participation
in this market should be made simpler and more cost effective
for farmers themselves.
Harmonisation of standards is vital if supplies
of organic food are to keep up with demand in a market that will
continue to expand very rapidly for the foreseeable future. Ensuring
a balance between supply and demand is also essential if the equitable
goal of price parity between organic and conventional food is
to be achieved. Tesco is adamant that the option to buy organic
produce should be available to all customers, not just a wealth
minority.
SUMMARY OF
KEY POINTS
— Tesco believes that supermarkets'
traditional methods of sourcing and selling products will promote
organic food—the everyday process of intense competition
means that products must be attractive to customers and must cover
the full range of consumer preferences.
— Tesco remains committed to research,
innovation, growth and long-term partnerships within the organic
sector of the UK farming industry.
— Tesco firmly believes that harmonised
standards and reliable information will boost demand for organic
food and also help supply to keep pace with demand—allowing
all consumers the option to buy organic.
15 June 2000
| 
