Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Memorandum submitted by Asda (A 60)


  Asda welcomes this opportunity to contribute to the Environment Food and Rural Affairs Select Committee enquiry into the future of UK Farming. As a food retailer one of our key interests along with food integrity and sustainable long-term supplier relationships is the area of consumer food preferences and trends and how they are met. We are therefore interested in initiatives which bring the objectives of food production closer to the requirements of the market and the choices of customers.

  With this in mind, our evidence will focus on consumer food trends, recent developments and our expectations for the future. We hope this will provide a useful context for the Committee's deliberations.


  This section of the document will describe wider trends in UK population structure, the changes in the structure of households and the impact these have on consumers' food choices.

  Any understanding of consumer trends has to be underpinned by a clear understanding of who your customers are and how they choose to live. This enables retailers to predict food trends, driven by perceptions of the attitudes of consumers as defined by these characteristics.

  Demographic trends demonstrate that the age structure of the UK will radically change by 2011 when there will be 1.5 million more 60 to 75 year olds and 1.4 million fewer 30 to 44 year olds than in 2000. Evidence also suggests that the 60 to 75 group is increasingly diverse in terms of lifestyle as a proportion will have retired earlier, be healthier and have more disposable income than previous generations.

  Census evidence suggests that households are also changing—by 2010, single person households will account for 35.5 per cent of the population and multi-person households will increase by 30 per cent between 1996 and 2011. Even in more traditional two person households, women are more likely to be economically active and the age of motherhood for the first time has increased from 24 in 1972 to 29 in 2000.

  One of the results of these shifts is that there has been an erosion of the "meal occasion" as individuals with busy lifestyles find it harder to come together to eat. There is a real sense of time pressure as more members of the household are working—and working non-traditional hours as a result of the growth in evening and weekend working. Members of the family are eating at different times and, in some cases, different meals.

  Current trends demonstrate a move for consumers to "more convenience". This may be in food preparation with the emergence of ready meals and other convenience foods, or in purchasing food, whether this is over the internet or through stores opening when consumers want to shop.

  Research undertaken by the Henley Centre suggests that 66 per cent of customers find food shopping a chore and are looking for more convenient alternatives. The research also suggests that, whilst consumers are becoming more affluent, their shopping choices have resulted in a far smaller proportion of total disposable income being spent on food overall, with the proportion being spent in staples or basic ingredients falling at an even greater rate.


  Henley Centre research suggests that, generally, consumers have become wealthier and are accordingly spending a smaller and smaller proportion of their income on necessities.

  Taylor Nelson Sofres market data research demonstrates that in the late 1990's the amount households spent on leisure goods and services moved closer to the amount they would have traditionally spent on food and non-alcoholic drinks. The amount being spent on food and drink has fallen from more than 25 per cent to around 15 per cent.

  Market data also demonstrates that, over this period, convenience foods were the fastest growing food sector. Whilst flours, bread and cereals experienced steady although comparatively low growth, this period is characterised, as one where cooking from scratch and eating together is more of an aspiration than a reality. Consumers are also indicating that they wish to spend less of their free time shopping for these types of staple products—with consumers overwhelmingly characterising such shopping as a chore.

  What is apparent, however, is that some consumers are becoming more concerned with what can be termed as the "integrity" of the post-farm gate, ingredient products they are buying. Characteristics including where and how it was grown, whether it is a "farm assured product" are increasingly being demanded by consumers and being used by them to differentiate between products. Retailers are responding to this requirement by providing more information on products.

  Asda believes that the future will be marked by consumers spending less and less of their disposable income on staples, matched with an increase in their desire to be able to purchase such products as conveniently as possible. The purchase of these products may, for example provide the impetus for further growth of internet or digital TV based shopping where staples are purchased on, for example, a standing order basis with personal time and effort minimised.

  This contrasts with an expected growth in consumer interest in the seasons and varieties of products. Whilst basic products will be stocked all year round, special emphasis will be placed on particular products and varieties of products at particular times of the year. For example, we would expect retailers to be stocking many different varieties of a fruit at the time when that fruit would be naturally harvested in the UK.


  Convenience foods are the consumer success story of the past decade. Taylor Nelson Sofres market data research shows that total sales of pre-packed ready meals are growing at around 28 per cent year on year, compared with a 5 per cent growth in basic ingredients, with the overall market for convenience foods growing 43 per cent since 1990. This food trend is probably best illustrated by Henley Centre research which suggests that the average time taken to prepare a meal in 1980 was two hours, this has now been reduced to 20 minutes.

  The trend towards convenience foods encompasses a range of products and food outlets. The increase in fast food outlets is reflected by the fact that one in seven meals is eaten outside of the home.

  At Asda, we define "convenience foods" as "ready to heat" meals like pizza, curry, "meals made easy" and chilled and frozen meals; we also include "ready to eat" food such as sandwiches, salad bars, rotisseries and cafes. The market has been embraced by retailers because of the significant growth achieved to date and because of the belief that this trend will continue. In the UK, Taylor Nelson Sofres Mealtrak data estimates that the takeaway market for world foods alone is worth around £5 billion and that this will continue to grow by around 12 per cent year on year.

  The outlook for the short and medium term is more growth. In "ready to prepare" and "ready to make" lines this will tap into the desire to cook from scratch and eat together. Retailers will provide, for example, vegetable kits, meat kits and stir-fry ranges. Asda also expects a return to familiar or traditional foods but presented in a new way.

  The requirement for "integrity" of foods will mean that customers will require higher quality ingredients used to produce simpler, more familiar dishes, in a convenient format—expect, for example, traditional "bangers and mash" in ready meal form where the quality or "integrity" of the base ingredients is highlighted in the packaging.


  Asda research suggests that that there is a growth in customer demand for "healthier" foods. Fat content is the number one issue for adults with 60 per cent claiming that they are trying to cut down on fat intake.

  Sugar is a secondary concern but a priority for mothers with small children.

  Product development has therefore tended to focus directly on these issues. There has also been significant pressure for companies to focus on salt levels found within processed food products, as salt is associated with strokes and high blood pressure. This prompted Asda to adopt a salt reduction campaign. We reviewed all of our 4000 processed food products and reduced the sodium contribution to customers' diet by an estimated 8 per cent, based on a balanced diet.

  As there is no universal definition for "healthy" foods, customers can be easily confused. Independent customer research conducted for Asda has shown that products labelled healthy must meet the needs of committed and occasional (generally healthy eating) dieters. For this group:

    —  food with an absolute fat claim such as "less than 5 per cent fat" are wanted and expected to be totally healthy (saturated fat, salt and sugar also taken into account)

    —  foods with relative claims such as "25 per cent less fat" are recognised as healthier treats, compared to full fat norms. There is no desire from consumers for these to be as controlled as those with absolute fat claims.

  In the future, we expect the demand for "healthy" and "healthier" options to continue to grow. Asda has committed to the extension of our own "Good For You" range that complies with the stricter expectations outlined above with regard to levels of fat, sugar and salt.

  Consumers are also demanding better information on labelling of such products and we expect to see retailers adopting a far more comprehensive approach. Labelling of our "Good For You" products include a nutritional information panel; the fat, salt and calories per serving are stated in a clear box and other key nutritional claims are declared on the pack front.


  In response to both Government and consumer demands for greater visibility of supermarket support for UK producers at many different levels, Asda has a local sourcing initiative. With an objective "to be Britain's leading supermarket for local products" from a consumer, supplier and Government perspective, Asda defines local products as:

    —  those which are made locally, grown locally and reared locally;

    —  are a local taste or delicacy and recognised by consumer as local; and

    —  for which there is significant customer demand.

  Products must satisfy at least one from each of these groups of criteria.

  Asda has prioritised the local sourcing programme by focussing on one region at a time and, in parallel, on different product areas where we know there is a strong potential consumer demand. We then launch the products in a coherent and structured manner with strong marketing support.

  The Welsh local sourcing initiative, for example, will be launched on St David's Day in order to maximise the marketing impact and consumer awareness.

  We will continue to develop this regional approach throughout this year and expect every store to have at least one local supplier by the end of the year. Asda will continue to support the local products through local marketing support and Asda "best of...." branding.

  In many cases, Asda is supporting the commercial development of smaller local suppliers to ensure that they can deal with different requirements. These requirements are driven essentially by regulatory requirements regarding food production, packaging and transportation. Asda has worked closely with suppliers to help them develop systems and process to comply with regulations. We have also revised our own systems and processes, when appropriate, to make these more workable for smaller suppliers. Suppliers will also be invited to training days at Asda's head office on matters like financial awareness, electronic ordering and local marketing. The training is designed to assist them in their own business development.

  Key success factors for the future development of local sourcing are the commercial success of the existing local brand products brought into store and ability of potential new suppliers to achieve the required regulatory production, packaging and delivery standards. We expect there to be an increased consumer demand for locally produced goods but to be commercially viable the product offering must be right in terms of cost and quality, as well as "localness".


  Asda recognises that there are challenges facing all participants in the food chain if we are to meet the changing consumer trends outlined in this paper.

  The Policy Commission on Food and Farming recommended that a permanent Food Chain Centre be established to bring people together from across different functions. The Food Chain Centre would act as a forum for challenging existing practice across the chain and for parties to work together to develop new, effective approaches.

  With this in mind, Asda has already established a project which has been developed to shorten supply chains in order to bring greater integration between parties. The project is initially focussing on the fragmented livestock sector and we hope that this will provide a model for wider application in the near future. We expect the Centre to develop projects of this type and we look forward to participating on both a strategic and practical level with this type of development.

  Asda endorses the establishment of the Food Chain Centre as we believe that consumer requirements will only be met if parties along the food chain develop better relationships that can then be more responsive to consumer demands. All reform should be driven by the objectives of bringing food production closer to the requirements of the market and the choices of customers.


February 2002

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