Talks are being held with Britain’s biggest retailer to boost the amount of Scotch Beef and Scotch Lamb it sells.
A new global buying system introduced by Tesco is being blamed for Scotch-branded retail packs having virtually disappeared from its stores across Scotland and often only British or imported meat being available.
Lumphanan sheep farmer Sandy Tulloch voiced his concerns directly to new Tesco beef and lamb agriculture manager Peter Kennedy at the annual meeting of the McIntosh Donald Tesco Producer Group in Aberdeen.
He said his wife had returned home from a shopping mission and told him it was “very difficult to find Scotch Lamb in Tesco”.
He added: “It’s a pretty sad situation when your competitors are wall-to-wall with either Scotch or British.”
Tesco chief executive Philip Clarke promised better relationships with farmers and the UK supply chain in the wake of the horse-meat scandal earlier this year.
But the retailer – under considerable City pressure due to an ongoing poor performance that saw first-half profits tumble by almost a quarter after underlying sales declines in the UK and every one of its overseas market – is not delivering on the pledge, according to farmers and farming unions.
The only Scotch Beef on the refrigerated shelves at Tesco’s flagship Danestone store in Aberdeen on one recent Sunday was mince. Everything else was labelled British and the majority of it was slaughtered and processed in Wales.
Tesco’s main meat processor in Scotland is Portlethen-based McIntosh Donald. Site director Alan McNaughton said it was fully aware of the situation and industry feelings on the situation, which has seen NFU Scotland repeatedly raise concerns about the lack of Scotch Lamb in particular. Mr McNaughton said: “We need to see a better regional range in Scotland. We’re working very hard to achieve that and in getting changes around the buying processes.”
McIntosh Donald is killing 2,700 lambs a week, but the bulk of that is ending up on Tesco’s shelves labelled British. “We need to see more of that branded as Scotch,” Mr McNaughton added. “On the beef issue we are fighting the corner. There has been some very challenging market conditions. But we’ve also not been helped by the new Tesco sourcing system.”
Mr McNaughton pointed to Scotch Beef trading significantly above the value of competitor nations. The differential with Irish had grown in recent weeks to £1 a kg, while for Northern Irish it was 45p and England and Wales about 30p. “In EU terms GB beef is now the dearest in Europe and Scotch is sitting above that,” he added.
“There are some real challenges, but we are taking them up directly with Tesco. McIntosh Donald is working hard to get the regional range improved and we are getting the ear of Tesco on that.”
Mr McNaughton said the challenge was in getting the new global buying structure to recognise that Scottish consumers wanted to buy Scotch.
Mr Kennedy had earlier conceded Tesco still had a lot to do in building stronger direct relationships with its supply base.
It had since the horse-meat incident set up a new agricultural team with five new managers appointed, including him, to cover specific areas. The others deal with pork and eggs, poultry, dairy and aquaculture.
He hinted at new relationships in the beef and lamb sector with the possibility of the retailer creating specific two-year contract deals for farmers who want to supply it with beef and lamb.
It continues to look for more Aberdeen-Angus, although Mr Kennedy and Mr McNaughton both recognised its deal for that in Scotland was no longer competitive as Bridge of Allan-based Scotbeef – the main Angus processor – had matched the Tesco price and was more generous on those grades where the retailer imposes penalties for cattle that do not hit specification.
Mr Kennedy said the beef market was growing, with a 4-5% sales increase achieved in the last year. The expansion was being driven by discounters, such as Aldi and Lidl, and the big four retailers – Asda, Tesco, Morrisons and Sainsbury.
He added: “The big opportunity for Tesco is in steaks, where we under trade in the market.”
In lamb it had a market share of 38%. But Mr Kennedy said sales were driven on promotions, often using imported New Zealand as has been seen in Tesco’s stores in recent months, despite it being the peak of the UK lamb season.
Mr Kennedy acknowledged Tesco’s recent blunder and apologised once more for one of its customer service agents telling one UK sheep farmer that the imports were necessary as UK lamb was out of season.
But Mr Kennedy sounded a warning on lamb, saying that Tesco had to remain competitively priced against other retailers and other meats if it was to avoid its customers from switching to other proteins, like chicken, fish and beef.
Quality also remained paramount to increase the frequency in which consumers bought lamb. Fat and too much waste on the plate put consumers off and farmers had to be aware of that.
He highlighted a recent campaign in which Tesco had promoted British lamb using the tag line of love every mouthful. It had celebrated the quality of lamb in stores across the country.
But the reality was that the lamb Tesco was selling, both in store and online, was from New Zealand.