RDC(3) FD - P1

Rural Development Sub Committee

Inquiry into the Production and Promotion of Welsh Food

Response from Anglesey Sea Salt Co.

Response to the Rural Development Sub-Committee on their inquiry into the production and promotion of Welsh food (and drink).

We are answering from the point of view of a small, niche artisan business producing hand harvested sea salt and selling to top end retail and catering outlets in Britain and 20 other countries.

Main challenges of production are:

• Rising energy prices

• Rising packaging prices

• Rising labour costs

• Meeting regulatory and food safety guidelines which are ever more stringent and costly

Challenges of labelling and branding:

• Increased competition as more companies jump on the 'niche, handmade, provenance, ethically produced’ bandwagon.

• Challenges of different regulations in different markets

• Balancing the need to produce a bespoke package for different markets with the costs of holding more stock and increasing design costs

• Trying to cut down on packaging but being forced to pack in smaller units for customers such as M&S and then paying them to dispose of the boxes

• Trying to come up with a greener alternative to our current tubes but needing something to preserve the integrity of the product and stand out on the shelf

• Challenge of short runs of labelling to high standards

Marketing and promotion:

• Rising costs against falling sales

• Increasingly complex world- where is it best to spend our limited resources?

• Lack of information for some of our markets

• Cost of exhibitions; despite IBW’s help it is still a serious issue to take a stand at the overseas exhibitions and everyone is agreed that you need to make more than one visit to establish a market.

Retail:

• Listing fees

• Transport costs

• Maintaining a sufficient margin for distributor, wholesaler and retailer

• Payment terms being stretched

• Stores joining forces to improve their buying power- Waitrose and Booths- which will actually mean that the producer will get squeezed even more

Opportunities:

• Selling in Europe, but only if the countries aren’t themselves suffering from the recession; our most important customers- Italy and Spain- are being hit badly and although the weak pound is helping it is not enough in itself.

• Selling locally: we have always sold more in countries with a higher GDP so although we have a loyal Welsh customer base it is not sufficient to make up for the lower sales elsewhere.

• We aim to be the salt of choice in all Welsh products but experience has shown that manufacturers will not always pay the price for a premium Welsh ingredient, eg. Collier’s Butter which proudly boasts that it is Welsh through and through but uses cheap Mediterranean sea salt after doing all the development with our sea salt

• Organic food: I think this USP appeals to a small niche of consumers; many are unwilling to pay a premium and others do not understand its importance.

• Local food: we have been very pleasantly surprised by the success of our local Producers’ market, held monthly in the local school. It is attracting locals and visitors to buy 'proper’ food as a regular thing rather than just as a top up shop.

• Food quality initiatives: True Taste is currently undergoing a review which should sort it out in terms of its award criteria and classifications which I believe are confusing to the consumer and winner alike. Whilst I agree that an award is helpful in differentiating products, there are a lot of awards out there and I am concerned that they are beginning to lose their currency.

Current economic climate:

• We have seen our sales drop off a cliff. We have lost 3 1/2 jobs so far and more are threatened. Our staff are currently on a 4 day week returning to full time working in February.

• The consequences of losing jobs are obvious from the employee’s point of view, but equally catastrophic from the business point of view. With fewer staff we all have to work harder which is possible for a limited time before it begins to impact on performance, missed opportunities and stress. If a business is weakened too much it will fail, and if it limps on until the end of the recession it may not be strong enough to grow again. When staff are lost, skills are also lost.

• The companies that are most likely to fail are the specialist, high end niche products and the micro businesses that can’t cut their overheads any more. These are the businesses that add massively to the value added product mix and reputation of Welsh food and drink, these are the companies that have the potential to create employment when the economic situation improves.

How should WAG be responding?

• By monitoring the situation and building up a picture.

• By offering support- financial and moral. Higher percentage of financial help to attend exhibitions, especially those addressing markets that are relatively unscathed by the recession, e.g. Gulfood; quicker payments of grants; higher percentage grants to attain useful standards such as BRC; ditto to buy equipment.

• Moral support by offering advice, networking opportunities, facilitating joint buying opportunities. By offering paid training opportunities to help employees facing a 4 day week and to build up skills bases of businesses to enable them to be fitter in the recession and to be ready for the upturn.

• By making more regular visits to producers

WAG policy

How effective has it been?

From our point of view it has been unfortunate that we are unable to access the manufacturing grants as we are not classed as a food, despite the fact we take a raw material and process it into what most people would consider a food. We know our competitor in Cornwall accesses EU money for High growth businesses.

I am also unsure of WAG’s policy of which food and drink businesses they support- it needs to be more transparent. TASSC is not always invited to exhibit with True Taste; why is this? There could be A and B lists of agricultural and other foods.

If resources are limited then what are the criteria for supporting a business?

Since the WDA has been absorbed into WAG it is increasingly complex to access help, advice and contacts and some people are unwilling to help with any problems or issues which they do not consider part of their remit. A simple organisation chart with job functions and post holders would be very useful. (This was asked for and agreed in November through our regional contact, but has not arrived as promised)

All the initiatives would be more effective if they were communicated better, if the trade understood what the principles were underpinning them and if they felt more enfranchised and involved. True Taste will benefit from industry input; the current branding exercise will benefit from being rolled out to all food and drink producers in Wales. WAG needs to engage with micro, small, medium and large businesses to improve quality standards and marketing.

Increasing awareness of Welsh produce at home and abroad:

I have a lot of anecdotal evidence to support the success of IBW and others to promote Welsh produce abroad. There is more awareness of Wales as a country that produces good quality food and drink; certainly the distributors we deal with are predisposed to work with us as a Welsh company, and the fact that we can access help towards exhibitions also makes us more attractive as we can help with marketing on an ongoing basis.( It would be useful to be able to access grants towards working on and contributing to a distributor’s stand as we are sometimes asked to do so and are unable to get help towards anything other than having our own stand under True Taste.)

We used to be the envy of the rest of Britain for our cutting edge and stylish stand designs at exhibitions but we are definitely losing our competitive advantage as other regions catch us up and even overtake us. The Welsh Deli concept pioneered by True Marketing works well at such events as The Restaurant Show and Taste of London and consideration should be given to using it more often as a cost effective way for small producers to showcase their food and drink. As it also comes with training and encouragement to pass on contacts it is a very good introduction for those new to selling at exhibitions.

Food Supply Chain:

Business to business could be facilitated by a website to post sales enquiries such as UKTI has with its business alerts. Some forum for business networking would also be useful; there are specialist fora and clubs but someone to organise joint product development could be an interesting concept. M&S invites its suppliers to events to discuss NPD and joint working; could WAG use its market research to identify niches and gaps in the market and then facilitate meetings between interested parties, and source European funding to support it?

Good Practice:

The best practice is displayed by True Marketing who do a lot of informal introductions and facilitate meetings between similarly minded businesses. As already discussed, they also promote sharing best practice and contacts at exhibitions and workshops.

Menter Môn has also helped a number of food businesses on Anglesey and helps to put similarly minded companies in touch with one another.

Slow Food is an interesting world wide concept which is part credo, part informal marketing, part networking group. It aims to promote foods that are 'good, clean and fair’. Welsh produce should try to work to these principles, reflecting as they do everything that is important in our society. Slow Food also protects 'endangered’ foods that are regionally specific and encourages the making of traditional foods rooted in their region and culture. It encompasses every stage from the growing, harvesting or making to the preparing and eating.