Examination of Witnesses (Questions 920-939)
4 DECEMBER 2003
MR RICHARD
ALI, MR
DAVID CROFT,
MRS SUSAN
BROMLEY, MS
PENNY COATES
AND MR
DAVID NORTH
Q920 Chairman: Can I begin by asking
Mr Ali a question, you just illustrated the fact that your organisation
includes within your membership all of your colleagues who are
witnesses here today, what was interesting in the evidence that
we received from each of you in terms of the written submissions
was that your evidence from the consortium stated that diet is
a matter of personal choice and ultimately it is a matter for
the consumer to decide how he or she wishes to live. Tesco and
ASDA, who are within your consortium, are both clear that as retailers
they wish to play a positive role in tackling obesity, echoing
the Department of Health's view, "industry has a responsibility
to make it easier for consumers to choose a healthy diet".
I have not mentioned the Co-op but we will touch on the Co-op's
perspective on this because you have been looking at this seriously
as an issue for a long, long time and we will reflect on why at
some point. I was interested in what appears to be a tension between
the emphasis in your evidence, Mr Ali, and the evidence from your
colleagues on this particular point about where the role of industry
is and how much it is down to the individual to address this very
serious public health problem.
Mr Ali: I am surprised
you thought there was a tension there. I think certainly where
we are coming from as a consortium is to say when a consumer walks
into one of our members' shops or indeed a non-members' shop or
a fast-food outlet, a slow food outlet, one of the numerous other
food outlets that there are, people make a purchase choice themselves.
Where we see the role for retailers is to make sure that everybody
has access to a full range of food products from which they can
choose a balanced diet. The Food Standards Agency has produced
an excellent poster, which I have here—and if you have not
seen it I will show it to you later—which shows the balance
of good health, which quite clearly shows eat lots of fruit and
vegetables, eat lots of cereal based products, eat meat, eat grains,
et cetera and eat fatty products sparingly. It is quite straight
forward. What retailers want to do is have as many of those products
on their shelves as possible so that people can make the choice.
The key point on that of good diets is that no food should be
prohibited. You can eat chocolate, you can eat high fat diary
products as part of that healthy balanced diet but I think the
point is eating in moderation. When you walk into a retailer or
a fast-food outlet you make the choice, therefore ultimately the
balance that you choose is up to you. What we want to do is have
an environment in which competition can thrive to provide consumers
with that large choice. We want to be able to encourage consumers
to make that right choice. In our evidence we made it clear that
retailers do a number of things to encourage people to understand
that they need to eat a balanced diet. What we would also like
to see would be a joined-up approach across Government and across
the United Kingdom. Many of our members, as you know, operate
throughout the United Kingdom, they are not limited to Scotland,
Wales or indeed Northern Ireland and therefore a consistent approach
across the United Kingdom and a joined-up approach on the issue
of obesity, especially where you have two sides to the equation,
diet being a big part but exercise is quite clearly a big part.
The more we have a joined-up approach and scientifically credible
consistent messages come out of Government and we get consumers
to say, "yes I must eat of choice a balance of foods"
then what retailers will do is try and provide that huge range
of foods and innovate on areas. We all know that more of us work,
more women work, there are less women at home during the day and
nobody wants to spend lots of time either shopping or preparing
food anymore and therefore if we can innovate and put on the shelves
all of those convenient products that are healthier than the standard
alternatives then I think we all win. Industry is definitely part
of the solution. The only point we were making there was that
ultimately unless you have the public's buy-in to make the final
choice it is very difficult to achieve what we all want to achieve,
which is a reduction in obesity, a reduction in overweight and
an improvement in the nation's health.
Q921 Chairman: Would you say in the consortium
you can identify distinctions between the approaches of individual
members to this issue? Obviously we are aware the Co-op has taken
a particular perspective on a range of issues which is interesting
but somewhat different from some of your colleagues who are here
today. How do you cope with the collective view of your consortium
on an issue where within your membership there are some very distinct
approaches being taken, some of which are commercially brave I
would imagine, they certainly were at the time these decisions
were taken.
Mr Ali: I think
all of our members, this goes from the biggest to the smallest,
are committed to providing that range of products. The actual
activities that they will do, whether that is taking part in weight
management programmes or putting healthy eating leaflets in store
or investing in their own brand products really depends on who
the retailer is and more importantly who their customers are.
If you are a smaller boutique retailer and you do a mass market
type product you are probably not going to sell, similarly if
you happen to be a smaller retailer that does not have their own
brand products quite clearly you are going to try and do other
things, such as making sure fresh fruit and vegetables are always
available in your shop and promoting them. I do not think that
any of these are at odds, it is purely making sure that once you
identify who your customers are—and we are all different,
there are 58 million of us—when you walk into a shop you
are going to be faced with the widest choice possible. For instance
some of our members do spend lots of money innovating on healthy
eating products, others will spend time campaigning on fresh fruit
and vegetables, across the board they are each doing things. We
did send you a copy of our Eat Well Drink Well which lists a huge
range of activities that each retailer is undertaking in the healthy
eating area.
Q922 Chairman: In your evidence you indicate
that diet is a matter of personal choice, it is ultimately a matter
for the consumer to decide how he or she wishes to live. You must
be aware this free choice is very much affected by the commercial
operations of your members and the way in which items are presented,
packaged and sold within the retail outlets, do you as a consortium
in looking at health issues, obviously representing the interests
of your consortium to Government on occasions, ever attempt to
influence your members on how they may perhaps market their products
in a different way that would ensure that this personal choice
you emphasise is a healthier choice than it is at the present
time?
Mr Ali: We have
collective discussions where we sit and say, "what do customers
want, what is useful for customers to make an informed choice?"
I stress "informed choice". Our retailers, our members
are at the forefront of pioneering nutritional labelling, they
were the ones that designed GDAs, Guideline Daily Amounts, it
is not a legal requirement but we discovered consumers found it
helpful, it is not much use to read the back of a pack where it
says "this has so many grams of fat", so what! What
does that mean? If it has 10 grams of fat what does it mean? What
retailers did was to sit down collectively and say, "what
is going to be useful for our consumers?" It was to put on
a pack a Guideline Daily Amount, for men with a 2,500 calorie
diet I believe the figure is 95 grams, so at least you can put
it all in context. Unless you have the context to put information
into it is very difficult to make an informed choice.
Q923 Dr Naysmith: What use are labels
that say things like low fat and less fat when there is no indication
of what that means in relation to other products?
Mr Ali: Certainly
on our members' pack if you are talking about low fat products
those are effectively defined within both FSA guidelines and also
in industry practice, if you were to say this has low fat clearly
you are talking between 5% fat and 3% fat, those things are all
defined.
Q924 Dr Naysmith: The consumer does not
necessarily know that, do they?
Mr Ali: Retailers
try on pack to make quite clear what that information is to provide
context. For instance you would see on packets where it might
be a healthy option lasagne and it will say low in fat or lower
in fat. The lower in fat part will be on the pack and it will
say X amount less than the standard product. Retailers do not
want to hide any of this information from consumers at all, we
want to promote healthy eating, we want to promote healthy option
brands because that encourages people to make a choice.
Q925 Dr Naysmith: The point I am making
is that lower in fat just means lower than the other thing you
are selling next to it, which is higher in fat. We really have
to get the message across, do we not?
Mr Ali: I come
back to my central point no bad foods, I love sausage sandwiches,
I think they are fantastic—
Q926 Dr Naysmith: I prefer bacon myself,
but I know what you mean.
Mr Ali: —but
I would not be particularly clever if I ate nothing but sausage
sandwiches. Lasagne can be part of a healthy, balanced diet but
we should be eating five portions of fruit and vegetables a day,
we should be eating diets high in grains, et cetera, et cetera.
What we are saying is people like lasagne, and if retailers can
produce a healthier lasagne that must be good, unless, of course,
Government and society says we do not want people to eat lasagne,
but I feel that is a different philosophical question.
Q927 Chairman: Can I put to Ms Coates
and Mr North the issue of the conflict between the ethical position
here and the fact that we are all aware of the need to promote
healthier eating and we are all aware of the difficulties we have
with obesity. If you look at America you can see where we, if
we are not careful, will go, how do you square up the issues of
the interests of your shareholders and the profits that your companies
make with the need to also consider these key issues of health?
Ms Coates: I would
say that we try and offer all products. Our reason for being is
to try and lower the cost of living for people and make all foods
and some non-food items accessible to everybody. What we would
not do is compromise the quality or the honesty of the products
that we sell. What we try and do is provide choice that customers
want and make sure that we label it as honestly as we possibly
can. We do an awful lot of work, as you know, to try and make
our products healthier and more nutritious and also promote healthy
items. I do not pretend we do not promote non-healthy items, we
promote a whole range of products across the store. We are always
on a mission of trying to reduce the cost of living and that applies
to all items equally. We do an awful lot of research with customers.
I have run five research groups recently specifically on understanding
obesity and what it means to customers. I ran them with lower
social demographic groups and the findings were they understood
the contributors to a healthy life-style, they understood it to
be less stress, to take an appropriate amount of exercise and
to eat a balanced diet. They seem to understand that in doing
that there were some compromises they had to make. They generally
knew what was healthy and what was not. They were also very time
pressured, I received comments like, "when I get back from
work I have the children to feed, my first priority is to get
something that they will eat and get it on the table. I cannot
send them out to play because it is not safe on the street".
There are a whole range of issues that seem to contribute to that.
In the main we just try and provide things that appeal to people
and give them as much information as possible to make them healthy.
The biggest issue I could see coming out of the listening groups
was not so much on understanding what was healthy it was more
the motivation to do it. In thinking a bit more about this myself
even things like Five a Day, which I think is a great initiative,
feels like a rule book. I think the challenge that we have as
a wider group is to really motivate people to want to be healthy.
Most people have the tools there, it is just a case of finding
a way to make them want to do it rather than some of the other
things they do. That is where I personally see the big challenge.
Mr North: I think your question,
if I can go back to it, was one about how retailers might square
what you saw as a conflict between corporate objectives, as I
think you put it—
Q928 Chairman: A possible conflict, I
am not saying there is a conflict.
Mr North: Our view
on that is to see it from a slightly different perspective, which
is to begin with our core purpose as a business, which is to provide
value for customers to earn their lifetime loyalty. Where that
leads us to then is to say what is the most important way that
we can contribute on an issue like obesity, it is probably the
same, most important way we can contribute on any issue, which
is first of all to understand our customers, to communicate with
our customers, to understand what it is that they want, what it
is that they are concerned about and then to respond to that.
For example what our customers tell us both through focus groups
or through customer question times or in their purchasing habits
is there are more single households, there are more people who
say they have less time to either buy food or to prepare food
or to cook. Our response to that is to say, how can we make it
easier for these groups or indeed for others in society to eat
more conveniently and more healthily. Just to give one example,
it is a commonly quoted example, that of washed salads. The retail
industry has responded I think to that demand for greater convenience
but also a demand for healthier food by producing products like
washed and prepared salads. A recent initiative we had was to
talk to our customers who come to our smaller sized stores, the
express stores, and ask them to help us produce the products they
wanted for those stores, and we have adjusted our washed salad
ranges as a result of that. Last year we sold 100 million packets
of washed salad. The second area that retailers can contribute
is to provide the widest range we can of nutritious food at the
greatest value, the sort of points that Penny was making. We think
that is a way of helping people to achieve the balanced diet that
they want. Going back to your question about marrying corporate
objectives with tackling obesity or nutritional issues, the best
example I would give there is we are very proud and pleased that
our fruit, vegetables and salad sales grew last year by 7.5%,
that is a like for like figure rather than an overall figure,
which we think must contribute to people's ability to lead healthy
lifestyles. The third area, which is one that we have already
touched on this morning, is to provide meaningful and accurate
information as best we can. Again, what our customers tell us
is that they do want to lead healthier lifestyles and they do
want us to help them do that. The way that they best want us to
help them do that is to provide information that helps them to
make choices, that means providing the sort of nutritional information
that Richard was talking about this morning.
Q929 Mr Jones: When you said that your
sales of salads had gone up were you describing the value that
you have sold which have gone up or the total amount? When you
prepare a washed salad you are adding value to the product, you
are actually selling less salad than a lettuce would contain but
the cost has gone up.
Mr North: I was giving you volumes
figures on a like for like basis. I was not providing the Committee
with value figures, I was providing it with volume figures but
providing them on a like for like basis, which means that is adjusted
to take into account the fact that we have more stores this year
than we had last year. It is the most meaningful volume figure
I could give you.
Q930 Mr Bradley: On that 7.5%, do you
break that down by socioeconomic groups, is that increase comparative
across all groups or are there particular groups where that increase
has increased more than other groups?
Mr North: I think
that is a very interesting issue. I think the best answer I can
give you, which is not a direct answer, so I apologise for that,
is if you look at our customer profile across the socioeconomic
groups the first thing we find is that our customer profile pretty
much mirrors United Kingdom society, which is something that we
are proud of and we try to maintain. If you then look at our sales
of fresh fruit, vegetables and salads that too pretty closely
within a percentage point if you divide it into affluent, mid-ranging
and then low income broadly speaking categories also pretty much
mirrors both our customer profile and the socioeconomic profile.
I can try and provide you with an answer to your specific question
but I think the point that underlies it, which is an interesting
one, is that actually low income groups, middle income groups
and high income groups pretty much balance our their profile in
terms of their purchases of fresh produce.
Q931 Chairman: Before I bring Doug in
can I ask the witnesses of the Co-op, some time ago you took a
decision to move towards the promotion of healthier products and,
shall we say, reduce the promotion of less healthy products in
a number of ways, coming back to the point I was making about
the tension between the ethical interest and the commercial interest
did the commercial interest have a bearing on the decisions that
you made about the direction that you have gone? When you made
that decision was it a factor in moving in a healthier direction
or is this just perhaps a coincidence?
Mr Croft: It was
not a decision that was motivated by commercial gain, I think
it was motivated by the origins of the co-op movement and the
fact that as a consumer organisation with a strong consumer representative
on our body the directions that we take have historically continued
to reflect very closely what our members are telling us and what
information we gained from various types of research from focus
groups to much larger market research exercises as to the perceptions
of consumers about products that they buy, about supermarkets
generally, about the sort of directions that supermarkets should
take. What we have done over the last 10 or so years is consider
quite actively the different perceptions that our members and
consumers have and look at the various aspects of our retail operation
in the terms of the product range and the types of activity in
terms of promotional activity that we are involved in to take
a much closer account of those and support consumer interest in
diet and health amongst many other aspects of corporate and social
responsibility. If there is a knock-on benefit in terms of commercial
benefit to us then that is a bonus from our perspective.
Q932 Chairman: You have not noticed the
fact that you have taken these steps as being commercially damaging
in any way?
Mr Croft: No, absolutely
not.
Q933 Chairman: It could be argued, as
we have discussed with a number of witnesses, that moving towards
a healthier brand of products or healthier attitudes in relation
to promotion and sales techniques would not necessarily be against
your own commercial interest?
Mr Croft: I do
not think it is against our commercial interest. Certainly our
performance over the last two or three years has been of continued
growth, which is very encouraging from our perspective. I think
that there are also aspects of delivering the sorts of products
and the information that consumers expect about products within
our stores that is complimented by other aspects, such as store
service and presence in local communities, and so on and so forth
that add to that benefit.
Mr Amess: I hope, Chairman, this is not
repetition, but my questions are directed towards Tesco and Asda.
I was shopping last night at Tesco's Metro in Canary Wharf—I
do use Tesco stores regularly—but throughout my time as
an MP I have found, in terms of lobbying, Tesco to be a very aggressive
and powerful organisation. For instance, on Sunday trading, I
remember an exchange with your, then, chairman. We had a very
robust conversation, because I did not owe my being a Member of
Parliament for Basildon to Tesco, and then to find that every
customer being given a little card telling your MP you had to
vote for Sunday trading was not on. I also found in that constituency
that, instead of having a reasonable amount of exposure to Tesco,
we ended up with not one superstore, not two superstores but three
superstores. Also in Basildon, Tesco decided they wanted to have
the post office in the Tesco store—and that was the first
time it had been done anywhere in the country—and I found
out a few weeks ago that Tesco apparently does not want the post
office any more there. The reason I am directing my questions
towards Tesco and Asda is you are very big players in the market.
When you want something, you go for it. I have listened to a little
bit of what you have said. We know you are here this morning to
do your company's bit, and all of that is understood—just
as we as MPs are here to do our bit—but do your two very
powerful companies feel they have any responsibility in terms
of obesity and people living healthy lives? In other words, we
all know about these healthy products, which are wonderful—and
you are going to tell us it is a growing market—but are
your two organisations absolutely serious? Do you see it as part
of your moral duty to the general public—in that you are
so powerful, so influential, with your computer vouchers for schools
and all of that—do you feel that both your organisations
have some real responsibility in this area?
Chairman: It was quite a lengthy question.
We would welcome briefish answers.
John Austin: The press release has already
been issued, no doubt.
Q934 Mr Amess: You are so cynical. There
is no press release.
Mr North: I will
begin. There were a number of points raised there. On the question
of size and scale, I think all I would want to say really is that
we respond to what our customers want and we are in a situation
where our customer numbers are still growing and I think that
will then be reflected in the number of stores that we have around—
Q935 Mr Amess: You respond to what your
customers want. I need to reflect on that statement. Okay.
Mr North: Perhaps
I could help on that.
Mr Amess: I think you lead customers.
Q936 Chairman: David, let Mr North answer.
It was a long question. Let him answer the question, to be fair.
Mr North: On that
particular point—and I am sorry if we are drifting slightly
away from the specific issue of obesity—
Q937 Mr Amess: Not at all. This is all
to do with obesity, for God's sake.
Mr North: On that
particular point, I think if one were to look at the supermarket
or the grocery sector over the past, say, 10 years, what you would
see is some players increasing their market share and some players
decreasing their market share. I think that tells us, as retailers
who are very focused on our customers, that if you fail to focus
on what customers want, then you will not succeed. If, however,
you do manage to address and understand and respond to what your
customers want, then you will succeed. I think that is our approach
to grocery retailing. On your point about the post offices, I
think, like other people—
Mr Amess: Forget that. That was a complete
red herring. I have actually heard the answer.
Q938 Chairman: We will leave that one
behind.
Mr North: But the
post office is going through what they call a reinvention—
Q939 Mr Amess: Forget it. Nothing to
do with obesity.
Mr North: That
is a separate issue.
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