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.
BUYING AND
PROMOTING BRITISH
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.
SAINSBURY'S
LOCAL SOURCING
INITIATIVE
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".
SAINSBURY'S
SUPPLIER DEVELOPMENT
PROGRAMMES
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.
PARTNERSHIP SCHEMES
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.
ORGANIC SOURCING
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.
— 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.
ENVIRONMENTAL ISSUES
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
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