Blog: Dean BestLearning lessons from Uniq; retailers squabble from Perth to Paris

Dean Best | 31 March 2008

The problems at Uniq, the UK-based food group, are pretty, well, unique but stand as a reminder of the dangers of over-expansion to the rest of the industry.

Uniq, the sandwiches-to-desserts maker, announced a move into profit last week but had little else to report that would have cheered investors. The City remains concerned at the problems facing Uniq and that anxiety was heightened when the company decided to scrap its dividend.

Questions are also hanging over Uniq's ability to be a pan-European operator. One analyst told us that Uniq has neither the "management depth or the scale" to be a success on the Continent - a somewhat unflattering assessment of the company's capabilities and businesses it has acquired in recent years. A possible solution, the analyst argued, would be to offload the continental operations and focus on the UK but, in the current economic climate, it is hardly a seller's market.

Uniq's problems, however, aren't just in Europe. Domestically, the company could suffer as Marks & Spencer, its largest retail customer, embarks on a supplier review. A quarter of Uniq's turnover comes from M&S, which itself is in the middle of a challenging trading period. Uniq, much like the rest of the food industry, may be suffering from cost inflation but the business is also being impacted more than most by the ever-increasing buying power of the major multiple retailers it supplies.

Debate over retail power is bubbling up in Australia. The Australian food retail business is dominated by two groups; market leader Woolworths and close rival Coles. Local industry watchers have long complained that the existence of two powerful grocers hurts suppliers, restricts choice for consumers and pushes up prices. Responding to these concerns, the Australian government has launched a probe into the sector and, ahead of the report's findings in July, opposing sides have been trading blows.

Recriminations also swirled around the French retail scene last week. The French government has already set out its stall to reform the sector and, against this backdrop, a split in the industry has emerged. Independent retailers Leclerc and Intermarché have quit as associate members of the country's grocery trade association, blaming strategic differences with retail giants such as Carrefour and Auchan. Leclerc's outspoken chief Michel Edouard Leclerc dismissed the association as a "club for hypermarkets".

And, with the scare over the safety of buffalo mozzarella causing concerns from Tokyo to Toulouse last week, there is never a dull moment on our industry, it seems.


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