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

Examination of Witnesses (Questions 500-517)



  500. So Nature's Choice and the growth of the organic market suggests very strongly that perhaps some customers are prepared to pay more for a more sustainable product?

  (Ms Neville-Rolfe) Certainly they seem to be prepared to pay a bit more for organics. What is interesting and what one is always researching is whether that is around perceptions of "eating the view" or around perceptions that they think it is healthier and safer. One of the really interesting things we discovered in this research was that poorer people were wanting to buy organics because they thought they were better for themselves and their children, which suggested it was more about health and safety than the environment, but I think there is more work to be done in this area.

  501. The market signal very strongly is that organics is going to grow.

  (Ms Neville-Rolfe) Our research tells us that it is going to grow and that is why we have said we can sell £1 billion worth, which is far more than all of us are selling together today, in five years' time.

  502. You cannot source it in the United Kingdom?

  (Ms Neville-Rolfe) 80 per cent comes at the moment from elsewhere, including other EU Member States, and there must be an opportunity there.

  503. There is an opportunity there and you have told us very consistently all morning that this is a real partnership and we need to send some strong market signals. There are plenty of market signals around. What are the problems? Why are farmers not producing the goods?

  (Mr Merton) First of all, I think our customers see environment slightly higher up the list which is why we pay a lot of attention to it for our customers. We see that in organics. Clearly, as Lucy said, there is a big requirement there. We also have an organic partnership club—called The Organic Partnership or TOP—where we actively work with our teams to do this. We have set an objective of getting our dairy and beef to be totally British sourced. We currently run at something like 70 per cent imported on organics. Our ambition is to get that down to 45 per cent by 2004. We are doing that with the work through The Organic Partnership to try and bring that down into that sort of region. There are things we are doing. It is high on our customers' agenda. That is why we are paying it a lot of attention. We have just won the award for being fourth equal in this area in the Business in the Environment Awaards, which is the leading supermarket for this sort of thing. Our customers have a slightly different view of what they expect of us.

  504. Okay, so you are trying.

  (Mr Merton) We are trying.

  505. There is no doubt about it, people are trying but why are producers not responding more quickly? The industry sector is in crisis, here is a big market opportunity, so why are the producers not responding?

  (Mr Merton) Clearly a lot of people are and many conventional growers are now looking at organics and they are putting new land down. We all know the conversion times and unfortunately because it is growing at 30 or 40 per cent a year, as fast as we put more land down for it the demand increases. It is a real issue but we are working very hard.

  506. The growth of organics has come in at a time of a fairly benign economic cycle. If the cycle turned down a bit do you think you would see the organics growing as quickly?

  (Mr Merton) I think it depends on the customer. Lucy's point is right. There are lots of people who want to buy more organics who maybe cannot afford it. Our job is to try to make it as efficient at whatever premium is necessary to bring it down. I think there are opportunities if we can make it more efficient and less expensive and you will see a further growth in organics.

  507. We are not entirely sure why people are buying organics because it is a number of factors?

  (Mr Merton) Yes it is.

Mr Todd

  508. Two of the three of you run store card systems in which you log all of my purchases at your stores and presumably all your other customers' purchases. To what extent do you analyse that data to prompt choice which you see as evidenced by the purchasing patterns that are available? I have often puzzled as to why you are not able to prompt, for example, local inclinations, organic choices, other environmental choices from the data that you have available from your customers.

  (Ms Neville-Rolfe) The answer is we do use it rather in the way that you describe. Certainly on organics when we wanted to extend the range to 1,000, we went and looked at data and discovered that people who buy organics also buy a lot of wine rather than beer.

  509. I do not buy organics.

  (Ms Neville-Rolfe) So we extended the range of organic wine. So I think we are getting better at mining the data for these uses and the people who shop with us should be getting vouchers linked to what they want to buy using that data. It is a good way of building up a relationship with customers.

  510. You should be able to swipe your card at the start of visiting the store—at Sainsbury's you can—and there get a whole series of prompts saying: "If you are interested in this kind of thing, we have got local produce from your particular area on this particular stall, organic produce here, the ones that come from a particular environmental project, whatever?. Those are the kind of things that you have the scope already to do?

  (Mr Merton) Yes.

  511. You try to sell me nappies and I do not buy them.

  (Mr Merton) The reward points system is the whole point in question. Yes, there is a huge amount of data to mine and get it right. As I am sure you will understand, it is highly dependent on technological advances to do all this. Quite often you have got data but you may not be able to get into it and mine it in a way to prompt the right debate. Going forward, as we get better and better at it I think you will see more and more of that—tailoring the offer for you as an individual rather than just a general member of the public.


  512. Let me wind up, if I may. When I go into Tesco in Kennington or Sainsbury's in Victoria Street or, for that matter, Waitrose in Saffron Walden or Morrison's or Safeway in Ripon, I do my best to fight my way through the organic section in order to get to some really good GM-enriched products. When do you think the supermarkets will get over their gutlessness on this and actually enable me as a consumer to exercise my choice to have GM-enriched products?

  (Ms Neville-Rolfe) I am sure we would all say the same in that we do not sell GM. We started with a system of honesty and labelling, which we thought was what customers wanted, but as things progressed we discovered they did not want GM and the confusion of having it in the store, so we took it out. We are monitoring that all the time. Things could change. While we have said we are not against biotechnology, the key would be to find a product (which happens on medicines) which brings a real benefit to consumers. If consumers can see a real benefit then it might be that things would change but at the moment I do not think that the consumers do see any major benefit, at least on food.

  (Mr Merton) I think, Chairman, to add to that, that is where we started because right from day one when GM first came out we launched tomato purée and we gave the customer the choice and told them the difference and it worked extremely well and initially customers preferred the GM product. All the subsequent press it got and what has gone on since that time has told us very clearly that customers are not comfortable at the moment.

  513. Headlines on the front of the Daily Mail "Frankenstein foods" and all that kind of thing?

  (Mr Merton) Yes. What we would see is that this is an on-going and changing debate and maybe there is more information in terms of the merits of GM that has got to come forward in order to change public opinion. If that happens then of course we would review our policies.

  514. Let me ask you a final question. Ms Neville-Rolfe mentions in her submission, and she has mentioned it two or three times today the pound/euro relationship, but in her submission she draws no conclusions from that as to the impact upon procurement policies. Let me put it to you if the pound were ten per cent weaker against the euro, what difference would that make? I am going to ask all three of you on your procurement policies, how much more do you think there would be in our stores if that relationship were different or, without politicising it, if we were euro members? How crucial to your procurement policies is that exchange rate and how responsive are your procurement policies to changes in the exchange rate?

  (Ms Neville-Rolfe) I think over time if the price of imports goes down, as it does when the euro weakens then there will probably be more imports in some areas. We find in terms of buying British that we like being able to buy from a source that is traceable, that we know. If you get short term changes in the exchange rates you tend not necessarily to move your product abroad. I think if you had a big shift of 20 per cent, the sort of change you have had over the last three or four years, you would inevitably find that for UK imports as a whole.

  515. We have organic milk. Some people do not buy organic milk, some people do. Some supermarkets are importing organic milk from Germany whereas in the United Kingdom there is a surplus of organic milk, so if I buy milk which I regard as non-imported milk it may well be that I have organic milk in the carton. How does one explain that? It is very difficult when the Government is throwing large amounts of money at people to convert and farmers are thinking of converting to explain that. Is that an exchange rate issue or subsidy issue?

  (Ms Neville-Rolfe) We buy our organic milk in the United Kingdom but the fact is we do have a European market and food does flow from country to country and you will have imports coming in at some times. We are not suggesting that we never import anything. Obviously we import a lot where it will not grow in the United Kingdom or is out of season.

  (Mr Merton) May I add something here. I think price is one element of the customer offer. I referred before to quality, service and price being the three key elements. There are tiers of quality, there are tiers of service and obviously price is an important factor to the consumer. Part of that also is about choice for the customer. As Lucy said, we buy 100 per cent British organic milk. Assuming that something like that came forward from imported, although our policy is to have all British milk, we might offer that choice to the customer and stock both and let them decide. I think that would be far more constructive.

  516. You would offer them German organic milk and English organic milk?

  (Mr Merton) We are committed to British. We are already 100 per cent British on our milk and we intend staying that way. Assuming that something happened in the way that you describe, and you talk about German organic milk being available, if it was a customer requirement—and let's say the high street was selling German organic milk—we might give the customer that choice, explain to them the difference and let them decide.

  (Ms Coates) We supply 100 per cent milk from British farmers and there are no plans at present to do what you suggest. We do invest quite a lot of money in buying British. Our meat and livestock are 85 to 90 per cent British and we do pay to do that, we support British farming, that is our heritage.

  517. Thank you very much indeed for coming before us. If you have anything you wish you had said which you have not, please let us know. If there is anything you have said which you wish you had not, it is a bit late, but we would be very happy to receive any further thoughts. We may contact you later. I think there are some points of clarification and bits of further information you promised us and we look forward to receiving those, but thank you for coming here today.

  (Mr Merton) Thank you.

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