Examination of Witnesses (Questions 740-749)
MR DAVID THOMAS, MR GEOFFREY BROWN, MR PAUL FARROW AND MR MARK KERR
WEDNESDAY 10 APRIL 2002
740. My final question is this: are you doing anything in terms of your menu offerings to recognise the interest at the retail level in, firstly, organic production and, secondly, vegetarianism?
(Mr Thomas) Vegetarianism, very much so, and have been doing for a considerable amount of time. I think we have moved light years on from even ten years ago in terms of our vegetarian offerings. Organic is still not an area that our customers are asking about. In the research that we did some 18 months ago it was way down in terms of those issues that were in their minds. I would think organic and nutritional values, particularly for children, are things we are going to have to accommodate as we move forward.
741. What about GM?
(Mr Thomas) GM was an issue 18 months ago, and coincidentally the last major research we did in this area was about 18 months ago, and GM was the second most frequently asked for piece of information. The consumer has a very short memory. When BSE first struck, our steak mix in Beefeater was 33 per cent and it dropped to 20 per cent, but in two months it was back to over 30 per cent.
742. So you serve somewhere in your ingredients GM-modified substances?
(Mr Thomas) No, we do not.
743. Just to develop some things on a number of the points you have been making. First of all, hopefully the market as opposed to the share of the stomach will increase in your favour, you are a large organisation so you will want to grow equally as much, but you require very specific cuts of red meat in particular, therefore it is important the people who supply you are able then to sell all the other bits, hopefully profitably, which of course affects the price at which they can sell to you. That is going to require greater and greater scale because you are going to require more and more. Is that not actually going to be predicated against the UK producer because increasingly they are not going to be able to supply the scale of the specific cuts that you want, because they are not going to have the market for the remainder of the animal to give you the price you require? So it is actually likely in the scenario you are painting that you are likely to have to increase your imports and decrease your domestic sourcing?
(Mr Farrow) Firstly, we really cannot under-estimate the scale of production in places like Argentina, Uruguay, Australia, et cetera, and it is that scale and then those countries' ability to be able to sell profitably the other bits we do not take which makes it worthwhile, as we have already identified. In some ways, to a point, the current position in the UK allows us to take advantage of UK producers, UK farmers, selling their products into supermarkets where they do take the full carcass.
744. But when the position changes and the percentage of what you call the share of the stomach changes, that would make it harder?
(Mr Farrow) Yes.
745. Therefore, overall, you are likely to be forced, if that is the right word, to source from an imported situation rather than a domestic situation?
(Mr Farrow) Quite possibly.
746. So in terms of the way in which the market is going, and because you want very specific cuts and you have to try and keep your prices right, it is going to be challenging to the domestic red meat market to provide that cost effective sourcing for you?
(Mr Thomas) I think it would be fair to say that is correct, albeit we would welcome working with the farming industry to see whether there are products which come from the fore quarter which are going to have appeal to our consumers, other than mince. So if that is the scenario that we are painting, then the industry should be looking to see whether we can create a new consumer demand. Consumers are very adventurous, they are very sophisticated in terms of eating out these days, they eat virtually across the globe, and new products can be created. We should not be looking back, we should be looking forward, and with the right attitude maybe we can find it.
(Mr Farrow) There are certainly firm signals in the development of and demand from our consumers away from the traditional prime cuts of meat and into the recipe dish, and traditionally, the recipe dish and that type of product takes far more meat from the fore quarter.
747. The conversation we had earlier with the IGD about the Food Chain Centre was I think important. You represent a very substantial part of food consumption in the UK, will the catering industry be involved in the food chain centre and, if it is, what things do you think it ought to be focusing on as far as your sector is concerned?
(Mr Thomas) We certainly very much want to be involved. Mark, do you want to come in?
(Mr Kerr) The Curry Report identifies the fact the food service sector needs to be involved, and we have already had very preliminary chats with the IGD about how that might happen. The second point that is worth making is the point about the fragmentation of the industry. That is going to be a challenge for the IGD and for other members from the food service sector, to find a way of involving the whole sector. With regard to how we might participate and what might come out of it, there is a lot around the topics we have been discussing today about increasing the understanding of what the food service sector's requirements are, and looking at the research which has been done amongst the consumers, so that everybody is exactly clear that those requirements are right and the reasons why they are right. So there will be a lot to be done but there is certainly a significant role. A challenge is to deal with the fragmentation of the industry and we have to be cautious because companies like Whitbread have the resources to get involved in some of this work but we also have day jobs. Some of the SMEs are going to find it much more difficult. So we will do what we can to help the IGD identify communication channels but it is not going to be easy, and it will take perhaps longer than people might anticipate. Just a last point from the previous session, the question of resources was raised, and there is an interesting part in the Curry Report about the Government part-paying for these things. The food service sector will happily get involved in participating and providing people and time, but I think it would be a mistake to think people would be desperately keen to put their hands into their pockets to provide any money.
Mr Jack: You have anticipated my last question so thank you for that comment.
748. You have the mid-term review of the CAP, you have the World Trade Organisation, you have the enlargement of the European Union, so there are all sorts of people who are talking, not least ourselves, about the way in which the CAP and farming are going to change. Do you say to yourselves, "Here is a chance to get in there to create the sort of supplies and structure we want", or do you say to yourselves, "We will just have to live with whatever they come up with at the end of the day and find a way of managing it"? What sort of mental attitude do you bring to all these discussions? Do you regard yourselves as fatalistically having to cope with whatever the politicians turn up? Does anybody listen to what you say? Do you really think what you say has an influence? Do you think the food industry has not been successful enough in persuading people that it has a point of view and it matters?
(Mr Farrow) There was a question which was raised previously about the opportunity of co-operatives, and certainly I think we have a role to play of some real value in helping the understanding of the farmer. I think it is less a question of whether they buy into and understand what our consumers want, more one of adaptability. But I am sure we have a role to play in helping them understand how we can aggregate some of that scale and make that work into our business.
(Mr Thomas) We have a voice and we should express that. We are not fatalists, we want to influence our own future for the benefit of our shareholders. That is why we are more than happy - and very much appreciate itbeing invited here today so we can express our views. The food services industry within food is the Cinderellainvite us anywhere and we will acceptbecause we have a story to tell. We unfortunately sometimes get ignored and that is perhaps our own fault in many instances. Because of our size and our future size we should, and we intend to, ensure that all those who have a say hear our opinions, whether they go any further with them is another matter.
749. Thank you very much for coming. Thank you in particular for the information you gave us in advance, which was extremely helpful, and we are grateful for that. Anything you can do to make the farmer believe the customer is actually his friend rather than his enemy, which is what most of them seem to believe at the moment, would be extremely helpful. Anything else you want to let us know, please do so. We may well come back to you and ask for more information but we are very grateful to you for coming to speak to us today.
(Mr Thomas) Thank you very much indeed.