Welcome to our ‘weekly news in brief’, covering the latest from UK retailers and manufacturers.
RETAIL NEWS
Central England Co-op stores to offer umbrellas to queuing customers
Central England Co-op has purchased a stock of umbrellas for all its stores, to keep customers waiting outside dry during wet weather. The retailer, which has more than 260 food stores across 16 counties, said it wanted to make sure shoppers having to queue because of social distancing measures did not have to worry about the rain. It is the latest in a range of measures put in place by Central England Co-op to support its communities during the coronavirus pandemic.
Store manager Matt Simpson said: “Our members and customers have been fantastic at working with us to ensure that we all keep safe and healthy during these uncertain times by adhering to social distancing measures.
“However, due to the unpredictable nature of British weather, we thought it best to ensure every store has a set of umbrellas for customers to use if they have to queue while waiting to enter our stores.”
He added the umbrellas would be sanitised between each use. “Hopefully, the umbrellas will not be needed as we all enjoy a bright and hot summer,” he said.
The move follows the recently rolled out second phase of social distancing measures at the retailer, including permanent hand sanitiser stations at the front of all stores and a one-way system put in place with the help of signage and the reformatting of shops.
These new measures will sit alongside a raft of others already in place, including over 1,000 plastic screens at till points and 7,000 face visors issued to staff.
Source: The Grocer 18th June 2020
Tesco sells Polish supermarket business
Tesco has agreed to sell its business in Poland as it continues to scale back its international operations. The UK supermarket giant is selling its 301-store Polish business to Danish retail group Salling Group for £181m. It said the sale would allow it to focus on its central European markets of Czech Republic, Hungary and Slovakia where it commands more of the market. The company has also retreated from Thailand and Malaysia so far this year as it curbs its global ambitions.
"We have seen significant progress in our business in Central Europe, but continue to see market challenges in Poland," said Tesco chief executive Dave Lewis.
"Today's announcement allows us to focus in the region on our business in Czech Republic, Hungary and Slovakia, where we have stronger market positions.”
The company said it had also made "good progress" in selling its remaining Polish property outside of the deal with Salling. It said it had raised £200m over the past 18 months by either selling or agreeing to sell 22 stores.
In March, Tesco sold its operations in Thailand and Malaysia for $10.6bn (£8bn). The supermarket chain had 2,000 stores across both countries, under the Tesco Lotus brand, and sold them to Thai conglomerate CP Group. That sale generated enough for a special dividend for shareholders.
Source: BBC News 18th June 2020
Waitrose hits major milestone in online expansion plan
Waitrose has revealed that its online business has processed more than 150,000 orders in a week for the first time. The figure is more than double the amount of weekly orders it was achieving at start of this year and comes after a concerted effort to expand its ecommerce operation as it prepares to end its partnership with Ocado.
The retailer also revealed that it was adding 150 new delivery vans to its fleet to enable it to increase its delivery slots further during the coming weeks.
Waitrose has been scaling up its online operation since the beginning of the year and nearly 90% of UK postcodes can now order from Waitrose.com.
In February, the group announced that a further 24 shops would be made delivery shops between now and 1 September when its delivery contract with Ocado ends. Three of the 24 shops went live with a delivery service this week, taking the total to 173 sites. As with other grocery retailers, Waitrose has seen a surge in demand for online delivery during the coronavirus crisis. The retailer has been giving priority to elderly and vulnerable people, while trebling deliveries from its ‘Rapid’ service to 7,000 per week.
Waitrose.com director Ben Stimson said: “The expansion plans we had in place for Waitrose.com have allowed us to respond as best we can to the huge surge in demand in recent months – especially from vulnerable groups who need home delivery services.
“We’re seeing a fundamental shift to many people’s shopping habits, and we’re incredibly proud of how our shops have scaled up our online operations at such speed.”
Source: NamNews 17th June 2020
Holland & Barrett slumps to multimillion loss ahead of coronavirus healthy eating boost
Holland & Barrett slumped to a multimillion-pound loss last year amid lower margins and exceptional costs before the business was boosted by a surge in demand during the coronavirus crisis. Annual figures for the year ended September 2019 showed the healthy foods retailer fell to a pretax loss of £25.9m compared to an £80.1m profit the prior year. This was mainly due to £37.7m of exceptional costs related to the impairment of previously capitalised costs for a major IT change project, the impairment of a previously capitalised new business venture and provisions for several legal disputes.
Without these exceptional costs, the company was EBITDA positive at £56.2m – nonetheless a significant drop from £138.4m the previous financial year. Furthermore, distribution costs rose 2.3% during the year, while administrative expenses were up by £58m to £89.3m, contributing to the profitability slump.
Revenues increased 2.6% to £715.6m, a slowdown from the 6.4% turnover increase in financial 2018. The negative results sparked a sell-off of Holland & Barrett’s bonds last November, prompting lenders to reportedly urge Russian billionaire Mikhail Fridman – who acquired the chain in 2017 – to inject new funds into the retailer.
Credit rating agency Moody’s also downgraded the company following the “weaker than expected” performance in 2019. Holland & Barrett, however, reported strong levels of trading during the coronavirus pandemic with “unprecedented” online demand for its specialist dietary items and supplements over the lockdown period.
As focus on vitamins and healthy eating increased amid fears of catching the virus, the retailer focused on accelerating its online capabilities while it continued trading from nearly all its 1,660 stores, without having to furlough any staff members.
Source: the Grocer 17th June 2020
MANUFACTURING NEWS
PepsiCo to retire Aunt Jemima brand over concerns about racial stereotyping
PepsiCo is retiring its Aunt Jemima brand amid mounting concerns over racial stereotypes and racial injustice following the killing of George Floyd. Aunt Jemima is sold in the US and offers pancake mix, syrup and other breakfast foods. It is owned by the Quaker Oats company, a subsidiary of PepsiCo. It was founded in 1889 and the face of black woman, which has been updated over the years, has featured on the packaging since the early 1890s.
“We recognise Aunt Jemima’s origins are based on a racial stereotype,” Kristin Kroepfl, chief marketing officer of Quaker Foods North America, says. “While work has been done over the years to update the brand in a manner intended to be appropriate and respectful, we realise those changes are not enough.”
The Aunt Jemima image will begin to disappear in the last three months of this year, with a name change announced at a later date.
Mars has also said it is “evaluating all possibilities” around its Uncle Ben brand. The company tells Reuters: “As a global brand, we know we have a responsibility to take a stand in helping to put an end to racial bias and injustices. We recognise that one way we can do this is by evolving the Uncle Ben’s brand, including its visual brand identity.
“We don’t yet know what the exact changes or timing will be, but we are evaluating all possibilities.”
Source: Marketing Week 18th June 2020
2 Sisters suspends production at UK site amid Covid-19 outbreak
A “cluster” of coronavirus cases have been confirmed at the 2 Sisters chicken processing plant in Llangefni, North Wales. As of today, the poultry facility will close for 14 days, with staff being asked to self-isolate during this time.
According to its website, 2 Sisters produces around a third of all poultry products eaten every day in the UK. The company’s portfolio includes brands such as Fox Biscuits and Holland’s Pies, and lists Waitrose, Marks & Spencer, Morrisons and Aldi among its customers.
In a statement on its website, the company said: “The health, safety and wellbeing of our colleagues is ultimately the thing that matters most at our business. We are a responsible company with people at its core. Without our people we are nothing.
“Therefore in light of the current Covid-19 cases at our Llangefni site, we have decided to take the necessary action to clearly demonstrate how seriously we take this issue by doing the right thing.
“Doing the right thing means from today (Thursday June 18th) we will temporarily suspend production at our Llangefni site with immediate effect for a period of 14 days.
“We will not tolerate any unnecessary risks – however small – for our existing loyal workforce at the facility.”
The company also announced that it has been working closely with Public Health Wales, Anglesey Council, the Health & Safety Executive, FSA and the Unite union, who have provided advice, scientific knowledge and support on the matter.
Source: FoodBev Media 18th June 2020
Peanut butter sales overtake jam as Brits turn to ‘healthier’ fare
Sales of peanut butter have overtaken those of jam in the UK, IRI data has revealed. Supermarket sales for peanut butter totalled £98.9m in the past year, while sales of jam were £96.9m [52 w/e 25 April 2020]. Brands are putting this boost down to peanut butter’s versatility and health credentials.
“Peanut butter offers an easy and tasty way to add more nutrition to breakfast and snack choices – which more consumers are beginning to recognise,” said Whole Earth brand controller Kirstie Hawkins.
3V Natural Foods MD Paul Fraser said peanut butter had “come into its own” for lunches and snacking as well as with the recent rise in scratch cooking, noting its ability to make stir fries and curries “a bit more exciting”.
During lockdown, demand across the board has increased, with peanut butter gaining a 35.5% increase in sales over the 12 weeks to 25 April [IRI]. Pip & Nut founder Pip Murray said nearly half of its sales were attributed to kilo tubs, adding it had been “astonishing to see the shift” towards buying bigger packs.
Similarly, Fraser said sales of Meridian’s 1kg tubs had “absolutely rocketed”, He added it had been hard to maintain supply with the trend towards bulk buying, as shoppers wanted to limit trips to the supermarket. However, lockdown isn’t the sole reason for peanut butter’s success this year, said Fraser. “Nut butters have been in growth for a while, and relatively gaining share in the breakfast spreads sector,” he said.
Source: The Grocer 18th June 2020
Tenzing launches its first television campaign
Taking advantage of Channel 4’s Greenhouse Fund, offering small and medium-sized businesses match-funded commercial airtime, energy drink brand Tenzing has announced its first ever television ad campaign.
‘The Power of Nature’ will air over nine weeks, spanning June, July and August, telling the story of of Sherpa Tenzing and the energising brews of Himalayan Sherpas.
Tenzing founder Huib van Bockel said “In normal times we would not have been able to afford a campaign, but because most major brands have reduced their budgets, the advertising rates have gone down so significantly that we’re now able to air our first ever TV campaign.
“Purely from a business perspective this makes a lot of sense for us, where normally we would be drowned out by the industry titans, our healthy energising alternative can now cut through. “When the big dogs stop barking other voices get their chance to be heard.” Supporting the campaign on Channel 4, the brand is also targeting its key demographic on Youtube, and Google with the video.
Source: Marketing Week 19th June 2020
WIDER INDUSTRY NEWS
Bank pumps £100bn into UK economy to aid recovery
The Bank of England will pump an extra £100bn into the UK economy to help fight the "unprecedented" coronavirus-induced downturn.
Bank policymakers voted 8-1 to increase the size of its bond-buying programme. However, they said there was growing evidence that the hit to the economy would be "less severe" than initially feared.
The Bank's Monetary Policy Committee (MPC) also kept interest rates at a record low of 0.1%. The move comes just days after Bank governor Andrew Bailey said policymakers were ready to take action after the economy suffered its biggest monthly contraction on record.
The UK economy shrank by 20.4% in April, while official jobs data showed the number of workers on UK payrolls fell by more than 600,000 between March and May. The Bank said more recent indicators suggested the economy was starting to bounce back.
Minutes from the MPC's June meeting said: "Payments data are consistent with a recovery in consumer spending in May and June, and housing activity has started to pick up recently."
However, Mr Bailey warned that the outlook for the economy remained uncertain. He said: "We don't want to get too carried away by this. Let's be clear, we're still living in very unusual times."
The minutes added: "While recent demand and output data had not been quite as negative as expected, other indicators suggested greater risks around the potential for longer-lasting damage to the economy from the pandemic."
The extra monetary stimulus - known as quantitative easing (QE) - will raise the total size of the Bank's asset purchase programme to £745bn. Policymakers said the injection would help to support financial markets and underpin the recovery. However, Andy Haldane, the Bank's chief economist, voted against the increase. He said the recovery was happening "sooner and materially faster" than the Bank expected in May.
Policymakers said the jobs market was likely to remain weak for some time, with a risk of "higher and more persistent unemployment". Millions of workers have already seen their pay packets shrink as a result of lower pay for furloughed employees. A survey by the Bank said other companies had postponed or cancelled pay rises this year.
Mr Bailey said: "Even with the relaxation of some restrictions on economic activity, a degree of precautionary behaviour by households and businesses is likely to persist. The economy, and especially the labour market, will therefore take some time to recover towards its previous path."
Mr Bailey also addressed the recent fall in UK inflation in an open letter to Chancellor Rishi Sunak. Inflation, as measured by the consumer prices index (CPI), fell to 0.5% in May, from 0.8% in April - well below the Bank of England's 2% target. Mr Bailey said weak inflation had been by driven by falling oil and energy prices, as well as a global drop in economic activity. The Bank expects inflation
to return to target within two years.
Samuel Tombs of Pantheon Macroeconomics expects the Bank to increase QE again later this year.
"Unemployment looks set to rise sharply in the second half of this year and to fall back slowly thereafter," he said. "The resulting prolonged weakness in domestically generated inflation likely will necessitate the MPC doing more to stimulate the economy in the winter.”
Source: BBC News 18th June 2020
Meal kits and grocery boxes saw surge in popularity during lockdown
New data from purchase intelligence platform Cardlytics reveals delivery services like takeaways, meal kits and grocery boxes have seen a huge growth in sales as a result of the coronavirus pandemic. The data is based on the purchasing habits of 22 million UK bank accounts, 11 million of which use delivery services.
The introduction of lockdown opened the door for online retail and delivery services to flourish. Spend on do-it-yourself meal kits and grocery boxes like Hello Fresh, Gousto and Mindful Chef more than doubled, growing by 114% in April compared with last year, as people sought to recreate restaurant recipes at home.
Takeaways also experienced a spike in demand in April. Overall spend on the likes of Just Eat, Uber Eats and Deliveroo increased 39% as consumers swapped their meals out for TV dinners.
Beyond lockdown, the popularity of delivery services has been on an upward trajectory and showing no sign of slowing. Consumer spend on delivery services rose 15% in the last year (April 2019 – April 2020) compared with the same period a year prior, driven by a higher number of transactions per customer.
Shoppers continue to be attracted by the convenience of paying for their meal kits or takeaways at the click of a button. In the last year consumers spent 36% more on meal kits from the likes of Able & Cole and Graze than they did the year before, whilst takeaway services such as Just Eat, Deliveroo and Uber Eats enjoyed a 21% rise in spending across the year to April 2020.
Duncan Smith, Commercial Director at Cardlytics UK, said: “The gradual rise of the UK’s door-to-door economy has become a relentless surge. Just as working from home has dramatically impacted the importance of workplace technology, so too has lockdown transformed the role of delivery services. More and more brands are embracing this approach as this economy becomes the new normal for us all.
“More of us than ever before are choosing to dine in, try at home, or do-it-ourselves, and with brands offering more choice and more delivery options, it’s unlikely the number of us ordering to the comfort of our sofas will go anywhere but up, even after lockdown lifts.”
Source: NamNews 18th June 2020
News brands celebrate record daily readership
National news consumption has reached a record high, according to the latest data from PAMCo, with combined print and digital readership surpassing 30 million for the first time.
Combined daily readership increased 18% between April 2019 and March 2020, with monthly and weekly national readership growing to 48 million and 45 million respectively. Digital readership was up 35% year on year (6.6 million readers) to 25 million.
The Sun has the largest reach of all print and digital related content, reaching 10.7 million people every day. This is followed by the Daily Mail (9.4 million), The Guardian (8.8 million) and Metro (6 million).
“As the global pandemic took hold at the beginning of the year millions more readers turned to sources of news, analysis and information they knew they could trust,” says Tracy De Groose,
executive chair of Newsworks, the marketing body for national newspapers.
“And encouragingly for our news brands and our journalism this was at a more frequent rate than ever before. All the indications suggest that this more regular daily demand for high quality journalism has continued into the second quarter of the year.
Source: Marketing Week 17th June 2020
BRC-Opinium consumer coronavirus tracking survey latest findings
The British Retail Consortium (BRC) and Opinium, who have been tracking consumer behaviour and sentiment towards coronavirus, have released some of their most recent research findings.
The responses were all taken between 12-15 June and include: Respondents feeling comfortable about making purchases in-store rose to 63% for groceries (20% uncomfortable) and 41% for non-groceries (17% uncomfortable).
This is up from 51% for groceries and 25% for non-groceries at the start of the May. Visits to larger supermarkets rose from 59% (start of May) to 66%, small supermarkets from 35% to 50% and to DIY stores from 19% to 29%.
Immediately prior to stores opening, 13% of respondents intended to visit shops to browse or purchase, while 44% only intended to visit the shops if necessary.
The most popular safety measures in stores were regular cleaning (34%), compulsory hand sanitising (33%) and one-way systems (30%)
On the wearing of masks, 44% of respondents currently wear them, with a further 26% intending to wear them in stores in the future. This compared to 36% and 31%, respectively, the previous week.
BRC CEO Helen Dickinson commented: “Coronavirus is fundamentally changing our experience of shopping. The public are making their own judgements about how to stay safe and retailers have made significant investment in safety measures in stores. Ultimately the future of thousands of shops and millions of jobs depend on the public’s decision to go out and support shops across the country.
“Retailers have spent millions of pounds making stores safe for customers and it is essential that the initial burst of enthusiasm seen on the high streets this week continues in the months ahead.
“It will continue to be a difficult time for retail, but with the support of the public and Government, the UK’s largest private sector employer will continue to play a vital part in all our lives.”
Source: Marketing Week 19th June 2020
MERGERS AND ACQUISITIONS
PepsiCo acquires stake in free-from brand Rude Health
PepsiCo has acquired a 9% minority stake in UK-based free-from brand Rude Health for an undisclosed figure. Rude Health markets a range of milk alternatives as well as breakfast cereals, crisps, biscuits and flours. According to figures provided by Rude Health, sales of the company’s dairy-free drinks alone have increased 120% over the last three years.
Source: FoodBev Media 18th June 2020
Swedish vegan brand Oumph snapped up by newcomer LiveKindly Co
Plant-based brand Oumph, which is sold in the UK by Tesco, Asda and Whole Foods Market, has been acquired by recently launched brand collective The Livekindly Co for an undisclosed sum. The brand joins the recently purchased Fry Family Food Co and LikeMeat in the growing portfolio of The LiveKindly Co, which said its aim was to build an “ecosystem of founder-led plant-based consumer brands”.
Source: The Grocer 17th June 2020
Exponent launches Vibrant Foods to consolidate brands
Private equity player Exponent has created a new venture to consolidate brands TRS Foods and East End Foods, acquired by Exponent last year. Both companies sell largely plantbased goods, which the group plans to add to via the acquisition of health-focused growth brands.
Source: The Grocer 18th June 2020
