While changes in technology are making their mark, it is concerns about quality, contamination and security in the lengthening supply chain that top the list of concerns for professionals in the food and drink sector.
Food and drink is the largest manufacturing industry in the UK, according to the Food and Drink Federation. It generates £92bn annual turnover and employs 400,000 people. And it seems that things are looking up in the sector. Global Ambitions, a recent study by Lloyds Commercial Banking, found that England-based businesses have plans to invest, innovate, create new jobs and expand.
No less than 89% of respondents said that they expect to grow over the next five years, to develop new products, and to enter new markets, in Western Europe, the Far East, Asia and the Middle East, and to create nearly 70,000 new jobs in England over the next five years. Investment in production capacity, marketing and brand awareness will be required but UK manufacturers have advantages including product quality and brand heritage, according to Melanie Leech, Director General of the Food and Drink Federation – but that reputation has to be protected.
Raw material and supply chain security should be a major priority. While the ‘horsegate’ scandal earlier in 2014 did not claim any lives, it demonstrated that something is wrong. If meat products can be contaminated with ingredients that simply should not be there – sometimes, up to 100%. That’s not accidental; it’s fraud.
Gone without trace?
The introduction of the EU-wide Track and Trace regime, nearly 10 years ago, was supposed to have ensured that it would be easy to identify where product came from, at every step of the chain, and to make measures such as recall much faster and more effective. The e.coli O104:H4 outbreak in Germany in Spring 2011 exposed those aims and beliefs as shallow and misplaced.
The German food safety system itself was shown up to be inadequate. It is not unfair to say that the responsible agencies had, for several weeks, no idea where the e.coli had come from, or how. They had inadequate procedures for obtaining evidence and finding out. Unfounded accusations against Spanish suppliers caused a $200m-a-week economic blow that was the last thing that country needed. Eventually, fenugreek seeds, imported from Egypt and sprouted at a farm in Germany, were identified as the source. But not before 3,950 people were affected and 53 died, 51 from Germany itself.
Too long, too complex
There appears to be a growing consensus that supply chain length and complexity makes failures inevitable. According to the Stericycle European Recall and Notification Index for Q2 2014, the overall number of notifications across food rose nine percent compared to Q1. There were spikes in certain industries: recalls in meat (non-poultry) increased by 71% and were led by New Zealand, with 44% of meat recalls during the quarter, mostly to do with frozen lamb. Reputational damage to businesses and in consumer perception can be crippling. Joydeep Sengupta is global practice head of Retail Consulting for Consumer Products, Hard Goods, at ITC Infotech, which specialises in providing IT solutions to the banking and finance, consumer packaged goods and other sectors.
“The 2013 horsegate scandal cost ABP Group over £80m in contracts with Tesco and Aldi. Hudson Foods lost a $25m contract with Burger King after a previous e.coli contamination,” he observed. “These adulteration cases were all due to a lack of visibility to complex global supply chains and a dearth of adequate testing, supplier audits, and inspections.” IT solutions are part of the solution but they have to be made to work effectively. A company called Muddy Boots supplies Web and mobile-based software systems to manage and maintain quality assurance and compliance throughout the food supply chain from grower to retailer. Its has more than 2,000 food business customers in over 40 countries around the globe, including Marks & Spencer, Waitrose, Unilever and Coles Supermarkets in Australia. It has embedded a business intelligence system into its solutions.
“We needed an embedded analytics system that would allow us to give our customers optimum value from both the data we capture, and from third party data – such as a food processing plant and a retailer,” said Jeremy Pile, technical director. “Increasing visibility and real-time insight allows our customers to understand how a producer is performing, ensure products match the required quality specification, and then make qualified business decisions.” Muddy Boots claims that its Logi-powered dashboard gives teams a real-time view of its supply base performance of its supply base. Morrison’s claims that it has enabled it to drive significant efficiencies through waste reductions, as well as to identify and mitigate risk. But the world is changing, according to Will Hayllar of OC&C Strategy Consultants.
“Producers and suppliers are trying to work out how to reconfigure their businesses in an industry that is becoming a ‘channel’ landscape,” he said. “With the rise of discounters, changes within retailers themselves, the growth of online shopping and changes in shopper behaviour, there is a longer-term trend to ‘tailored’ offers. Manufacturers are prioritising effectiveness over efficiency and the future may not be about the absolute lowest cost.” Longer and more complex supply chains; increasing variation; more choice – it all starts to sound like the auto industry.
Lessons from auto
“It is very much the same process – auto has a lot of lessons for the food industry,” Hallyer said. There are headaches for suppliers, who have to be careful about producing exactly the same SKU for different markets; they have to avoid read-across. Different sizes and package flexibility are among the favoured solutions. But the change is fundamental.
“One of the things that food manufacturers are just now getting into is working out where scale efficiency is very important and how to marry that to tailored finishing,” he explained, and drew comparisons with the ‘shared platform’ solutions adopted across large auto companies like VW and even across different OEMs. But one area where he does not expect a big shift is in ‘own-label’ products. “If manufacturers have the opportunity to produce under their own brand, and that brand means something to the customer, then that is probably the first choice. If a private label is not differentiated then the consumer will not protect your business.” In a diverging market, confusion and uncertainty will offer opportunities to those agile and best prepared to see them and exploit them.
It’s a tasty – if confusing – world.
Hoppier – tailored flavour
Anyone who has sampled different beers around the country will know that flavours, textures and fizziness vary. Cambridge Consultants’ Hoppier project takes personalisation pretty much to the ultimate level – the individual consumer.
Hoppier looks like a conventional beer pump but with something that looks like the container that holds coffee in an espresso machine – and it performs a similar function. Ordinary IPA bitter forced through a container holding ground hops will taste very much more hoppy, and in about the same time it takes to pour an ordinary pint.
Edward Brunner, head of food and beverage systems at Cambridge Consultants, explained that this is an example of how it transfers its expertise in fluid technology and beverage systems between different industries.
“Pressure is fundamental to extracting flavour in espresso machines; part of our investigation was to see whether it does anything for beer,” he said. “As a result, we have speeded up the dry-hopping process and, by adding extra hops at the point of dispense, their volatile aromas are as fresh and intense as possible.”
The possibilities are pretty wide. Coffee is an obvious one, whether for Porter (stout) or for seasonal beers. Fine-tuning in order to satisfy local tastes is another; the attraction to the beverage supply chain is that personalisation can be done at the point of sale, rather than on a large scale at the brewery.
Britvic progresses from renovation to innovation
Britvic plc, the soft drinks company, has strong brand recognition but its product development had, for years, been based on ‘renovation’ rather than innovation, according to Ounal Bailey, director of strategic consumer innovation. A new strategy and varying experience has taught the company some valuable lessons – some easier and some quite painful.
Robinson’s Fruit Shoot, a ready-to-drink squash/cordial packaged in a very colourful bottle, featured a new ‘magic’ sports cap, which didn’t release liquid until it was sucked. You could turn the bottle upside down and it wouldn’t leak, which was expected to appeal to both children and their parents. Unfortunately, it didn’t work as expected and a recall became necessary.
A major lesson Britvic learned was the need to restructure its product development process, to enable it to innovate successfully and quickly, and to identify problems before they could become crises.
A four-person team identified the need for a common procedure and an end-to-end process in place. Adopting a common terminology would greatly reduce the risk of failures in communications. Understanding of the differences between design and manufacturing and between manufacturing’s wants and needs and those of the consumer, were also essential.
“We now have an overall technical framework and an action plan in place,” Ms Bailey said. “We have introduced formalised review points and put in a lot of work to ensure we have a rigorous and robust process.” The new structure and approach was ‘live tested’ on the launch of Robinson’s Squash’d, a handy-sized squeezable, non-drip bottle. It works.
“Consumer research led us to believe we had something outstanding in the marketplace. So far, so true,” she said. “We now have an organisational understanding that risk brings reward but we can mitigate risk through effective systems. We have also been able to increase speed of development. We no longer worry about systems; we can simply get on with the job.”
Mash Direct: perfect mash-up
Mash Direct was established 10 years ago and has one of food and drink’s shortest supply chains. Raw material comes from the owner-family’s own farm in Northern Ireland, or from near neighbours. It is processed on site, packed, and sent to retail outlets including supermarkets and convenience stores, catering outlets and food manufacturers across the UK and Ireland, as well as Dubai, Abu Dhabi and New York. The company only sells under its own name and thus retains control of quality and brand reputation.
From its original mash and spring onion product, Mash Direct offers a range of mashed root vegetables, from dish accompaniments up to veggie burgers, blended together and ready to heat then eat. Jack Hamilton, son of founders Martin and Tracy, explains the ‘Mash Direct difference’.
“We approached manufacturing from the vegetable perspective,” he said. Quality was a key focus from outset. “We couldn’t find what we wanted on the market so we designed our own steam cookers.” As soon as produce is harvested it is sent for cooking and then blast-chilled. The short distance from field to packaged product stabilises the product and eliminates the need for artificial preservatives, colourings or flavours. Mash Direct’s ambition is to continue to grow, which means innovation.
“We cannot afford to lag behind; we have to keep ahead of fashion,” said Hamilton. “We also have to invest in capacity. Our major customers need us to supply them at all times; we make sure we have 20% capacity to spare.”
Mash Direct’s portfolio currently extends to 40 products and rising. It has built a new 25,000 sq ft factory and is expanding into it, a bay at a time. Ten years ago it had four employees, all family members; now, it has 140. Freshness and a focus on quality seem to have caught the market’s taste buds.
Blippar, a recent addition to the range of apps for smartphones and hand-held devices, is squarely aimed at food consumers. Select Blippar, point the photo lens at an example of a growing range of linked products and you will see recipes, contents and even a ‘trolley game’, in which you have to collect the ingredients needed to make the product.
Blipping the label on a Heinz Tomato Ketchup jar opens an augmented reality recipe book. You can turn the pages, download recipes or watch a video of the recipe being made by a chef.
A Pepsi can featuring Messi’s face can be blipped to play a football game, watch exclusive videos and link to The Beautiful Game album in iTunes.
 Published September 2014