Blog: Globalising retail industry can benefit national food makers
Katy Askew | 15 August 2012
The relationship between food manufacturers and retailers is frequently touched upon in our pages.
Often, the focus is on pricing negotiations. Particularly in markets like the UK, where there are a few very dominant grocers, retailers are depicted as wielding disproportionate power over smaller food manufacturers.
Take the current spat between Wyke Farms and Morrisons, which has seen the smaller scale dairy processor lose Morrisons shelf space to larger players thanks to an "auction process" that was held by the retailer. Wyke is rallying consumer support behind it by summoning the power of new social media trends through a Facebook campaign, Wyke MD Richard Clothier told just-food yesterday (14 August).
However, there are also many examples of how food manufacturers can develop their partnerships with retailers to mutual advantage.
UK baker Warburtons, for example, was able to gain its first international footing by leveraging its long-standing relationship with Tesco. Warburtons made its first move into international markets last year with trials in Tesco stores in the Czech Republic, Slovakia, Hungary and Poland. The UK-focused baker was thus able to benefit from the international presence of one of its key UK customers.
And today came news that Warburton's has secured a listing with Casino to supply its 270 French Monoprix stores. It seems likely that, in time, Warburton's may also hope to leverage this relationship by expanding its supply agreement to include Casino's other French formats and, indeed, its international banners.
In order to achieve this level of trust between food manufacturers and retailers, food makers must become preferred suppliers by demonstrating their reliability, quality, consumer appeal and - of course - competitive pricing.
Ticking all these boxes is no mean feat and there is undeniably a high level of tension between retailers and manufacturers as a result. However, if national food makers can foster excellent relationships with international retail customers, they may be able to reap the benefits of the globalisation of the food retail industry.
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