By Tom Woolman, poultry industry consultant, Cadenza Management Services
Concerns were expressed about the future direction of retailer Morrisons by NFU president Minette Batters at EPIC on 6 November. The business recently appointed French retail guru Remi Baitiéh as its new CEO. He worked his way up through French retailer Carrefour, recently running its operations in Argentina, Spain and Taiwan. It is now hoped that he can work his magic with Morrisons.
I desperately want to like Morrisons. Its integrated supply chain means that it should be able to deliver on cost and long term partnerships in a way that other retailers can’t. Yet, this has potentially held it back as the supermarket price war has intensified, with previous CEO David Potts commenting that the business was effectively ‘negotiating with itself’. It proudly claims to be British farming’s ‘single biggest direct customer’, frequently combining the yellow and green of John Deere tractors with its own branding in photographs. The truth is I’m not sure egg farmers supplying into Morrisons have felt much of a benefit over the past two years.
The advantages of integrating supply chains are often taken as gospel, allowing value to be generated all through the processes of food production and delivering a competitive margin at the point of sale. However, as I cast my eye over the latest set of financial results from UK poultry companies, I’m not sure I can see much correlation between being an integration and turning a profit. Will this still be touted as a key strength for Morrisons going forward?
In some respects, Morrisons appears to be more focused on spin than actual substance. I question some of the publicised claims made around the NestBorn system of hatching on farm, as an example. These are stories which easily attract the attention of the media, but the operational realities shouldn’t be over-simplified for the sake of some good publicity. Compare that with Tesco, which has been engaging and working with the poultry sector over the past 10 years, firmly but privately driving up standards around traceability and food safety. Remarkably effective, but trying to avoid headlines rather than write them.
I wonder what the future for farmers will be who supply Morrisons under this new leadership?