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

Memorandum submitted by J Sainsbury plc (A 63)

  I thought I would take this opportunity just write to the Committee to follow up on several of the points raised.


  To clarify our British sourcing policy, Sainsbury's has been committed to supporting British farming for 130 years. We have a policy of buying British and labelling British wherever we can. We sell over £6 billion worth of British food each year. Of foodstuffs that can be grown in this country, we source over 90 per cent from Britain. We source 100 per cent British fresh pre-packed pork and pork sausages, fresh free-range chicken, eggs, fresh milk. We invest heavily in promoting British products through price promotions, in store promotions and the use of marketing logos. Wherever possible we use industry backed quality assurance logos and we were the first supermarket to give a commitment to using the NFU's Red Tractor logo.


  In addition to our British sourcing policy we have a dedicated regional sourcing team to source locally produced foods from all parts of the country—from local trade fairs, local delicatessens, farmhouses, creameries and other local producers. Sainsbury's now stocks over 3000 local lines for sale in their locality and, if they are particularly popular, across the UK. We source these from around 400 local suppliers. Local sourcing is worth around £60 million a year. In recognition of the fact that more and more customers are telling us they want to buy local foods from their local supermarket, the team is constantly looking for new lines. We have worked with Food From Britain and regional food groups such as Taste of the West on a number of local sourcing initiatives. These local products are supported in store with clear labelling and point of sale information promoting "Quality Food from Scotland" or "Quality Food from the West Country" for example.

  It should be clarified that if a local product is really successful and becomes a national product we no longer include it in our local sourcing statistics. By helping smaller suppliers to deliver quality specialist local products to a wider market, we believe we have made significant contributions to local economies. We also worked with the IGD and BITC on a local sourcing guide entitled "Growing Rural Business".


  Our Supplier Development Programmes aim, through a combination of support sessions and hands on assistance, to enable local suppliers to understand how to manage supplying large UK supermarkets. We also have Regional Development Managers who are briefed to identify promising local products and bridge the gap between these suppliers and our buyers. They also suggest partnerships with large suppliers close by to help offer advice and support.

  Our first supplier development programme in Scotland in 2000 involved 10 local suppliers. There has been a 75 per cent increase in business for the original participating companies since the first programme began. This has increased their business by over £20 million. Simon Howie Butchers in Perthshire now delivers a range of products for the meat counters directly to two stores each morning therefore reducing food miles. Within one month of this partnership beginning, we saw a 100 per cent uplift in sales at the counters without any noticeable down turn in aisle sales.

  We have over 800 local lines from Scotland from around 104 local suppliers. We currently source around £318 million per year from Scotland in total. Local product sales now account for just over 6 per cent in our stores in Scotland. Sales of these products are up over 15 per cent year on year.

  We have around 60 Welsh suppliers and stock 265 local products. Turnover with these suppliers accounted for £97 million last year. Our current Welsh Supplier Development Programme is scheduled to deliver £3 million. A small company based in Gwent called Real Crisp, who joined our Welsh Supplier Development Programme, has now extended their range of authentic kettle crisps to a number of stores in the South West representing a six fold increase in their business. This illustrates how we are helping to add value for local suppliers and in many cases help niche local products become mainstream.


  As I mentioned during the Select Committee evidence session, we are working on a number of initiatives to help ensure the whole food chain works together.

  Sainsbury's pioneered the Livestock and Meat Partnership Schemes in 1991 and we are committed, in the tenth year of the scheme, to continue to bring together farmers and customers needs in reconnecting farming with the food chain and the consumer. Four Sainsbury Partnerships in Fresh Food have now been established: Partnership in Livestock, Partnership in Produce, the Dairy Farming Forum and The Organic Partnership. These schemes ensure a dialogue between Sainsbury's suppliers and their farmers and provide support mechanisms and create opportunities to listen to the concerns of the industry and try and find solutions.

  Future commitments for the Partnership schemes will focus on the following to ensure a profitable and sustainable food and farming industry:

    —  SHORTENING THE SUPPLY CHAIN—reduce the transport of animals to centralised slaughter plants to reflect the distribution of livestock across the UK. This supports the prosperity of rural communities by maintaining economic throughput of its abattoirs.

    —  TRANSPARENCY WITHIN THE SUPPLY CHAIN—a policy to ensure all parties understand the complete process from farm to fork, enabling commercially informed decisions to be made.

    —  RECONNECTING THE FARMER WITH THE CUSTOMER—for example, regular programmes of visits by Sainsbury's to farms, and by farmers to plants and stores and sharing consumer data generated by Sainsbury's with suppliers and farmers.

    —  SHARING BEST PRACTICE—continue to provide an open forum to discuss ideas and generate informed debate to benefit all parties.

    —  ENHANCING THE LIVESTOCK PROCUREMENT CHAIN—to deliver total product integrity and farm assurance from birth.

  In order to communicate this, we have launched a nationwide road show visiting over 100 beef and lamb farmers in England, Scotland, Wales and Northern Ireland. It will be seeking farmer's views on the company's plans to initiate a major boost to its partnership in Livestock scheme. In addition new business plans are currently being compiled by Sainsbury's, with farmers and processors to ensure that the targets set are realistic. The content will highlight areas such as the quality specification required by Sainsbury's and the volumes for the year ahead. Fulfilment of these plans by farmers will result in a loyalty bonus being paid.

  To illustrate how this delivers real benefit, the Partnership in Livestock initiative enables Sainsbury's to work with ABP who supply Sainsbury's "Taste the Difference" beef range to get a better deal for farmers. Farmers are now paid on the day they bring livestock to slaughter, therefore they do not have to wait to be paid.

  A pilot scheme has been carried out with veal farmers in Dorset which has proved a successful vehicle to help solve some of their problems. By working with them through our Partnership scheme they are now able to understand exactly who our customers are and what they want and use this information to develop new products and to refine their existing ranges, in fact we have just launched a new veal product as part of our Taste the Difference range.


  The Organic Partnership, with 20 of our key organic suppliers, tackle a range of issues including how we can improve availability of British organic food, reduce supply chain costs and also plan long term. It also shares market information of consumer habits and is a way of reconnecting all parts of the food chain to work collaboratively, share information and best practice. Through TOP we are working hard to remove costs and reduce premiums and we are also striving to make full use of the complete organic crop and to take costs out of the chain. For example all excess apples from Organic Farm Foods are sent for use in Luscombe organic cider. We also use surplus organic milk in a range of organic cheeses.

  We currently import 60 per cent of our organic food range (the industry average in Britain is 70 per cent). By 2004 we are looking to decrease this figure by a further 15 per cent to 45 per cent and pledge to ensure that key organic foods—meat and dairy—are 100 per cent British sourced.

    —  We have found:

      —  that 80 per cent of our customers at one time or another have bought organic products;

      —  customers also see products as being for everyday use rather than "special occasion" or "weekend use";

      —  7 per cent of our customers of organic products equal 60 per cent spend;

      —  15 per cent of all the yoghurts we sell are organic.


  In the area of sustainable land management we have a number of initiatives to support farming as a sustainer of the rural environment. We work closely with our suppliers to encourage responsible management of energy consumption and waste to reduce the environmental impact. Further down the food chain we aim to help farmers use environmentally sustainable methods of production (including Biodiversity Action Plans and Integrated Crop Management systems) and offer advice on care of the countryside. Last Autumn for example, with the Farming and Wildlife Advisory Group, we launched a virtual farm walk website illustrating examples of biodiversity best practice.

  We have just been named the leading food retailer in the Index of Corporate Environmental Engagement published by Business in the Environment for the third year running. We were ranked third out of the 78 FTSE 100 companies surveyed and improved our position in the overall ranking moving to fourth place of 192 companies that took part—up from fifth last year.

J Sainsbury plc

27 February 2002

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 30 April 2002