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Andrew Fearne: Wye College, University of London, London, UK
David Hughes: Wye College, University of London, London, UK
Introduction
UK food retailers are among the most sophisticated in the world and the demands which they place on their suppliers, particularly their suppliers of own label produce, render the British food manufacturing industry one of the most efficient and innovative in the world. The implementation of efficient consumer response (ECR) and category management (CM) heralds the dawn of a new era in which value creation is the priority, with supermarkets and food manufacturers working together to exploit the diverse opportunities which exist in a cosmopolitan marketplace in which (relatively) affluent and increasingly diligent consumers are running out of time to purchase, prepare, cook and consume their food.
Historically, the fresh produce industry has lagged some way behind the manufacturers of fast-moving consumer goods (fmcg) in its approach to marketing and merchandising, seemingly resigned to the status of commodity traders. However, the ascendancy of the multiple retailers and the key strategic importance of own label products has elevated the fresh produce industry to a position where suppliers have a genuine opportunity to break out of the commodity trap and take the fresh produce category out of the trading environment.
This insight from industry examines the factors that have driven the UK fresh produce sector towards a culture of innovation and value creation and identifies the key distinguishing characteristics of some of the most successful fresh produce companies.
The research on which this paper is based involved structured interviews with managing directors of some of the country's most successful fresh produce suppliers - importers (fruit) and pre-packers - to establish how they perceive the relationship between suppliers and retailers and to identify some examples of best practice in the industry.
Key drivers in the UK fresh produce industry
The role of fresh produce in the strategies of the major supermarkets has changed dramatically over the past ten years. Understanding the factors driving the growing importance of the fresh produce category provides the key to understanding their approach to vertical co-ordination and the steady move towards fewer larger suppliers operating in dedicated (if not exclusive) supply chains for specific supermarket customers.
There are four key factors that have driven...