Best bits: Vion UK exit set to strengthen rivals
Cranswick and Hilton Food Group could benefit from cuts in capacity in UK meat sector
There is no doubt the combined company became a significant supplier of meat products to UK retailers. But, four years on, amid over-capacity in the sector, claims of intense competition and after a series of attempts to reshape its enlarged UK business, Vion has decided enough is enough.
Last week, Vion announced it would quit the UK, blaming excess supply and "extremely challenging" trading conditions.
Vion's problems were well known. It has been at the centre of one of the more controversial plant closures in the UK this year but the decision to completely exit the market - where it has 38 sites and employs 13,000 people - was a surprise.
That said, industry watchers have reflected on the problems Vion has had with Grampian. One City analyst told just-food earlier this year owning Grampian had not been "an easy ride" for Vion. Another described Grampian as "a basket case".
Vion's UK employees will be concerned about their future, although the company says it is in "detailed" talks with "a number of interested parties, including management" about the sale of some of its assets.
In the short term, Vion's plans to exit the UK could strengthen the hand of Cranswick and Hilton in their negotiations with retailers on price increases amid pressure on feed costs. Retailers will be keen to shore up supply. Cranswick's first-half results, announced this morning, has provided evidence of this, with the sausage and bacon supplier saying "constructive" talks with retailers on price had helped it offset higher feed and pig costs.
Later this week, we will publish our latest category crunch two-part feature, which focus on the UK pork sector and will take an in-depth look at the industry, including the pressure from costs, the upcoming EU rules on animal welfare and NPD.
Meanwhile, the UK meat sector has received an apparent boost with the news that Russia has lifted a 16-year ban on British beef and lamb imports.
Moscow brought in the ban amid fears over BSE and the opening up of the emerging Russian market to UK beef and lamb has cheered the country's government and farmers.
The news follows a GBP50m deal struck in May for the UK to supply pork to China.
Last week, we interviewed Owen Paterson, the UK's Secretary of State for Food, who insisted the potential of the country's food industry was "absolutely enormous".
Paterson had just returned from China, where he was part of a trade delegation to showcase the UK's food and drink exports. UK manufacturers, he said, must target overseas markets, particularly developing countries like China. EBLEX, the organisation for the English beef and sheep industry, was part of the delegation and told just-food from Shanghai it was planning to develop a "more sophisticated" approach to marketing its products in China to build on its presence in the country.
Notably, Paterson told just-food he did not agree with claims the UK government could do more to support the country's food industry and enable it to compete on an even international playing field, which will raise eyebrows among some in the sector, facing competitors in countries like Ireland battling hard for the growth in the east.
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