How locally produced, speciality food will be holding its own

Nobody can doubt the appeal of “pile it high, sell it cheap” food retailing at times like these. But while cut-price snacks and two-for-one ready meals will continue to drive the checkouts this year, locally produced, speciality food will also be holding its own at the till.

Fuelled both by our growing appetite for flavour and innovation and by pressure on supermarkets to tick key environmental boxes, sliced white is in many parts of the country already rubbing shoulders with sun-dried ciabatta and mousetrap with marinated goat’s cheese.

Yet while cynics would argue that artisan - with its implication of low food miles, loving preparation and traceable provenance - is just another short-term fad for the multiples, independent producers are divided.

For the many SME butchers, bakers, brewers, preserve-makers or chocolatiers who have graduated from kitchen table to full-scale production unit, clearing the hurdles to supermarket distribution remains a far-off dream.

But while the promise of greater retail exposure is attractive - particularly via Waitrose, which has arguably done more than the rest to establish its artisan credentials - not all suppliers relish being a David among the Goliaths.

Based in Suffolk, the drinks business James White supplies both the retail and wholesale trade with a large and colourful menu of organic drinks, such as Beetroot Juice and Fruit Coulis. When it comes to the supermarkets though, the company proceeds with caution.

“Although I supply Tesco, Morrisons, Sainsbury’s, Asda and Waitrose, I have quite deliberately kept my distribution through the big supermarkets at a modest level. I fear that if I get too reliant on them, they will begin to push me around,” says Lawrence Mallinson, managing director.

“While I recognise that doing business with the big chains can be very profitable, I sleep better at night knowing that they represent only 30 per cent of my business.”

Mallinson believes that however attractive the returns can look on paper, many artisans are naive about what a supermarket deal can mean.

“I think it’s great that the multiples are embracing speciality food, but in my experience, maintaining a decent profit can be hard when you are put under constant pressure to go as cheap as possible.”

“The multiples are constantly on the look-out for price reductions and can afford to be more tenacious than you are. However many crates or pallets they say they will order in future, if you aren’t making a decent profit now, you have got your sums wrong,” he adds.

While short-termism is a perennial concern – “there’s no room for sentimentality in business and if a supermarket decides to de-list you tomorrow, you’ll have to deal with it,” says Mallinson - a more insidious issue is imitation.

“There is a danger that artisan producers are used as unpaid new product development houses. Whether your product is a unique chutney or a new truffle chocolate, you may find that the supermarket mimics your idea, sticks an own-label on it and sells it at a cheaper price.”

For Inverawe; the award-winning specialist smokehouse based in Argyll, on the west coast of Scotland, a five-year collaboration with Waitrose – which currently has 25 per cent of its business - has proved positive.

Last Christmas, the family firm’s smoked salmon was distributed in 30 of the supermarket’s London branches while its smoked Loch Etive Trout made its debut in 19 of them.

Says Inverawe director Patrick Campbell-Preston: “Our relationship with Waitrose is based on a sound cultural fit and the fact that they understand our core values.”

“As long as we hang onto our artisan heritage and don’t come under pressure to go mass market or step up production to an impractical degree – neither of which would fit in with the current Waitrose ethos - we are happy to maintain what is in effect an exclusive arrangement with them and develop it further.”

While the logistics of supplying products to all four of Waitrose’s UK distribution centres can, he says, “be challenging” for the business – which employs about 80 people for most of the year, but steps this up to 130 during busy periods - Campbell-Preston believes that the advantages are overwhelming.

“We’ve had deals with other multiples, but this one has proved the happiest so far. Although we have a thriving mail order business, Waitrose gives us coverage among a new and wider group of consumers.”

Over at the Guild of Fine Food; which represents around 600 independent retailers and the same number of artisan producers, director John Farrand believes that the choice between chasing profits via a supermarket deal or staying out in the cold; albeit fully independent, may soon become less stark.

“Independent retailers, such as farm shops and delis, are using attractions, such as restaurants and playgrounds, to create shopping destinations in their own right and may yet give the supermarkets a run for their money.”

“While some artisans want to create lasting brands and need supermarket deals to make this happen, for others, artisan food is a way of life and making a good profit is far less important than sticking to principles.”

While all supermarkets face criticism for blandness, Waitrose has already tapped into 2,000 speciality lines from 460 producers via a local and regional sourcing programme rolled out in 2001.

But how genuine is its artisan stance and can it last as the fast-growing, 221-stores chain moves from niche to mainstream?

“At a time when the offer of most big supermarkets is so similar, we see quality products as a real point of difference for us,” says Richard Hodgson, commercial director.

“While some artisan producers feel confident about supplying a lot of stores and others less so, we appreciate that many dislike the whole idea of becoming commoditised.”

“But whether their production is geared up for five stores or 105, artisan food is a major plank of our bid to be the UK’s most innovative food and wine retailer and we are keen to build up positive relationships with these smaller firms.”

While Hodgson says that a large number of suppliers “responded favourably” to the store’s request for a two per cent price cut last year, he denies there is constant pressure to go cheap.

“We believe we set the right prices when it comes to speciality food and we certainly see no need to put undue force on smaller suppliers. These are not usually key value items such as eggs, milk or bacon and as such, there is a large degree of leeway.”

For higher-priced artisan products to thrive in the long-term, they must do more to shake off their perceived elitism. And just the same can be said of Waitrose.

“We’ve got a very middle-class image, which doesn’t always help us in the current economic climate,” says Hodgson.

“We make no apologies for stocking high-priced artisan lines, but when it comes to staples, we are just as competitive as Sainsbury’s. Whether you’re looking for Pot Noodles or our asparagus and parmesan frittata, you are welcome.”