Amid greater supply volatility, the role of the supermarket buyer has changed

“The world has changed,” says Richard Crampton, commercial director, food & convenience at Sainsbury’s. “It’s becoming harder and harder to get the things we want from the sources we want them from.”

So how are retailers adapting to an increasingly volatile supply chain to ensure that food stays on the shelves? And what’s the relationship like between buyers and sellers these days?

Wake-up call for sustainability of supply

After countless shocks, the supply chain crisis of 2021/22, when UK supermarkets experienced major shortages on eggs, salad and countless other items, was arguably the final straw. And it’s brought about a shift in how many supermarkets do business, particularly with fresh foods suppliers, including a notable increase in long-term partnerships.

Just last month, Sainsbury’s announced a 10-year deal with protein supplier Cranswick, offering longer-term contracts and more financial stability for the supplier’s 170 farmers. A £61m cash injection into farm equipment also improved animal welfare.

The flagship deal of this kind, though, and one that suppliers across the country are trying to replicate, is the Aldi 20-year partnership with apple grower AC Goatham & Son. Ged Futter, director at The Retail Mind, says if he was a supplier he would be “constantly talking about it because that’s a game-changer”.

”Long-term supplier agreements create stability, consistency and resilience across the food supply chain,” says Aldi’s chief commercial officer Julie Ashfield. ”Today, collaboration, shared investment and joint planning allow our suppliers to invest with confidence - whether that’s in more sustainable production, expanded capacity or innovation.”

These new partnerships are not without their sceptics, however. Many call these so-called “investment” announcements just window-dressing. Lee Stiles, secretary of the Lea Valley Growers Association, is one such sceptic and says, “they’re not investing in anything, they’re just buying”.

“The word investment is certainly PR,” he adds.

But while Crampton acknowledges supplier relationships are nothing new, it’s moved at least 50% of its own-label COGS to long-term partnership contracts in recent years. That’s unprecedented. And the relationships are also becoming “more sophisticated”, he says, “allowing a different level of investment into infrastructure projects, productivity and ESG, which is managed in partnership [with] the supplier”.

It’s a point echoed by a senior buyer at another major supermarket, who notes a different style of thinking and skillset for buyers “beyond the value proposition and margin - especially in agricultural categories”.

It’s a far cry from the good old days. “We had a world where abundant food supply was taken for granted, so you didn’t need such long contractual wrappers,” Crampton remembers. “Because there was enough food, it was easy to procure it.”

As a result, for many years buyers exploited the bountiful supply with impunity. It was not uncommon, one former buyer told The Grocer, for supermarkets to summon suppliers to London for a dressing down – recalling an incident where a buyer threw a subpar potato at their supplier’s head.

The rise of the discounters soured relationships even further, adds another supermarket veteran. “The old big four enjoyed long-term relationships even if they were not called that, but there was trust on both sides until that point.” Relations became “more transactional” amid the escalating price war.

Indeed, negotiation tactics grew so outrageous that, in 2013, the Groceries Code Adjudicator (GCA) was brought in to enforce the 2009 Groceries Supply Code of Practice, to ensure retailers treated direct suppliers lawfully and fairly. And the GCA says it’s seen an improved perception of overall retailer compliance from an average of 74% in 2014, shortly after the GCA was established, to over 90% in 2024 – though arguably it was the Tesco accounting scandal that brought about the biggest shift in behaviour, as it pioneered long-term contracts with fresh food suppliers in return for lower prices as part of its turnaround under its then new CEO Dave Lewis.

But even though supplier relationships have deteriorated somewhat since the cost of living crisis, long-term contracts continue to increase in number and sophistication, with experts singling out M&S, Waitrose, Tesco and Sainsbury’s as among the most enlightened.

Of course, it’s not only an enlightened position. There’s also a strong element of self-interest to these long-term contracts. “Retailers are very reliant on the growers, because there isn’t a massive amount [of product],” says Futter. “There’s no excess out there in the market. It doesn’t matter what sector in produce you’re looking at, farmers are going out of the industry, and that’s giving retailers less choice,” so it’s only natural to want to avoid being a “victim” of the shortages again.

As Sainsbury’s director of agriculture, horticulture & aquaculture, Gavin Hodgson, says of its “huge capital infrastructure investment” in Cranswick, “the key ingredient is to reduce volatility and uncertainty”.

Significant infrastructure investment in AC Goatham will also boost confidence in farming for the future, adds Aldi. And this is more important than ever as farming confidence reaches an all-time low, according to the NFU’s most recent survey – although there’s also an obvious contrast to be drawn between the 20-year contract and its ongoing dispute in the High Court with brussels sprouts farmer W Clappison.

In the crisis of 2021/22, it was “supply chain resilience” – the ability to “get eggs on shelf when others couldn’t” that transformed the fortunes of St Ewe Eggs, managing director Martin Glinski believes.

Since then, “there’s been a lot of change”, he adds, with weekly rather than quarterly or half-yearly conversations – and not just at buyer level, but even higher up. And all of it aimed at simply keeping product on shelves.

“Security of supply is absolutely paramount,” says former Sainsbury’s exec Judith Batchelar, director of Food Matters International. “Whether it’s extreme weather events, geopolitical challenges, shortages of skilled people – we live in a more uncertain world.”

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And it’s not getting easier, with this week’s Liberation Day a further reminder. While years ago it was “utopia”, adds Batchelar – thanks to the free market and other trade deals – under the Donald Trump administration “we have entered a world of tariffs and quotas – and all these things have complicated doing business”.

That’s on top of Brexit, where divergence in regulation since leaving the EU is “really difficult”, she adds.

This works both ways, such as when salad was short, and Spain chose to export to more favourable partners than the UK. Futter explains that Spanish exporters would have been thinking: “If I’ve got less availability, why would I want to give it to my most difficult customer?”

Climate considerations

Climate change also looms large over proceedings. It was, for example, the key cause of the salad shortage. And sustainability has a number of facets. For buyers, category management also means thinking about “greenhouse gas emissions and climate risk, as well as climate adaptation – and those are complex topics”, says Batchelar.

It’s not just box-ticking. Retailers are now required to report their scope 1 and 2 emissions to support the UK’s target of hitting net zero by 2050. It’s recommended they report on scope 3 as well, which ultimately means working within their supply chains to bring those emissions down.

“There’s a bigger regulatory burden,” says Batchelar. “You have to show you’ve taken all due care and attention to make sure you’re complying with the law.”

As Aldi’s Ashfield agrees, it is not “an optional extra but as a key factor in securing long-term, responsible supply partnerships”. 

Several retailers have announced major projects in this area. Tesco has partnered with milk suppliers Arla and Müller to launch its Future Dairy Partnership to accelerate reduced carbon emissions, enhance animal welfare and restore nature.

“So long as you have limitations on supply, you cannot go back to the old model very easily”

John Allen, Kite Consulting

Waitrose has launched its Net Zero Farm Fund, which offers £500k to help farms transition to net zero emissions.

“I think it’s really important that, as Waitrose, we’re sending the signal to our suppliers, farms and growers that this is the direction we all need to go in – and we’ll support you on the way,” explains Simon Winch, head of environment at Waitrose. “We need to throw the kitchen sink at climate change – we can’t just outsource this.”

Doing this work, while fitting with Waitrose’s values as a business, also has a “clear and obvious commercial imperative”. “It’s in our interest to make sure we can continue putting product on our shelves and into customers’ hands”, Winch adds.

Sainsbury’s Crampton agrees “it’s a super rational thing to do”, but it can’t be done alone, which is why so-called “reach-through partnerships” are so important, as they enable buyers to work all the way through to packer, manufacturer, distributor and farmer. “And that’s what makes a difference, because you’ve got much better control of how an animal is treated, how a crop’s grown, how the land is used or the impact on the environment,” he explains.

Another major risk is around biodiversity loss. Last year, Waitrose unveiled its Farming for Nature programme, which supports its goal to source all its UK meat, milk, eggs, fruit and vegetables from farms using regenerative practices by 2035. Waitrose is working with LandApp to provide baseline data on what Waitrose farms are looking like now, from which farmers can work to “restore biodiversity and those ecosystems on which we all rely”, says Winch.

M&S runs a similar Farming with Nature programme to improve wildlife and soil biodiversity. As part of this programme, it recently launched low-carbon parsnips on to shelves, which had 47% less carbon in the growing phase and more pollinator activity compared with a standard field, as recorded by AgriSound technology.

This is what Batchelar calls the “adaptation agenda”, which can provide buyers with a “competitive advantage” and is “best practice”. Incorporating sustainability into the buyer function is “not common compared to merely mitigating risk and looking for alternative supply,” she adds. But it’s just as important in the long term, she argues.

Glinski agrees. “I don’t think all supermarkets have changed. The ones that are winning [financially] are the ones that are being more proactive, and the ones that aren’t winning aren’t.”

Supermarkets struggling financially are “trying to grab on to the old way of doing business because they’ve got no choice”, adds Allen, meaning they tend to be “struggling with this whole sustainability piece”.

‘The need to pay more’

One way proactive retailers are making a difference is through the establishment of more sustainable farming groups.

Tesco formed its first in 2007, with the Sustainable Dairy Group, but now has them across key agriculture supply chains such as milk, cheese, beef, lamb and potato farmers, and it recently relaunched its pig group. Buyers work with sustainable dairy groups to ensure that dairy farmers are getting paid a fair price. Allen says supermarkets are “now building climate resilience into their supply chains, and they’re willing to invest” a couple of extra pence per litre to do so.

There’s a “premier league” of operators such as M&S and Waitrose who have been in this a long time and are paying “well” for security of supply and sustainability. Tesco and Sainsbury’s are also doing good work, Allen adds, as they recognise the need to pay more and are doing so.

Ultimately, building in this extra funding allows service levels at the mults to remain solid as they’ve built up relationships with their farmers. Those that haven’t, Allen warns, will see service levels “compromised when times are difficult”.

And those difficult times could be just around the corner. “I still see it being turbulent for the next couple of years,” says Glinski, pointing to specific challenges in the egg supply chain such as the slow phasing out of cages where seven million hens are still kept.

“That’s a significant chunk to come out of supply,” he warns, which means it must be built into a bigger sourcing plan. And some buyers are not as prepared as others. “It’s the ones that leave it right to the last minute and realise they have a 10%-15% gap in their supply due to product coming out that don’t do as well,” he adds.

Other challenges are also on the horizon. There’s the new consultation on the Land Use Framework to consider, for English farmers at least, with growing concerns about what it could mean for self-sufficiency and profitability.

Some reports indicate up to a tenth of farmland could be repurposed for more sustainable usages such as tree planting, and it speaks volumes that a similar policy proposal in Wales led to protests that ultimately saw the policy’s abandonment.

So is this just a flash in a cyclical pan of buyer-suppler relations? Allen doesn’t think so: “So long as you have limitations on supply, you cannot go back to the old model very easily.”

Supply challenges aren’t going anywhere, if anything, the Trump administration means they’re likely to worsen. It means collaboration is key to keeping stock on shelves. Once again, the evidence may be plain to see only when the next crisis hits. And how far away is that?