Little and large The multiples have much work to do to in selling their shelves to small suppliers who can give them the local' input they need. Ed Bedington reports The big supermarket chains are keen to show how they have become best buddies with Britain's small producers. They like to peddle the idea that "localness buyers" are keeping store shelves brimming with quality foods sourced from local suppliers. And for many, this is an accurate picture of life in today's slow food lane. But there are plenty of other small operators who are not so willing to jump into bed with the big boys on the promise of massively increased profits. There are signs ­ faint for now, but increasing ­ that the refuseniks are growing in number, which must place a question mark over the ability of the supermarket chains to be champions of all things local. With problems and frustrations ranging from unsympathetic buyers to distribution nightmares, it's hardly surprising many suppliers refuse to get involved ­ even when they are turning down the chance of a listing either in stores around the country or around the corner. Those that do take up the opportunity should exercise caution, according to Jo Cummings of promotional body A Taste of the South East. She says the multiples have a lot of bridges to build first. "People have had their fingers burned. Quite a few producers have gone out of business after investing in their company and then being left high and dry when the supermarket pulls out. Trust needs to be built up." One of the main criticisms made in last year's Competition Commission report was the way the multiples treated their suppliers. This in turn prompted the decision to draw up a code of conduct for the supermarkets, on which the food industry is still consulting. Given the interest in local suppliers by the big chains, a sympathetic code of conduct is something producers will be looking out for. The area where supermarket buyers and small suppliers clash the most is on pricing. The latter think their products deserve a premium; the former are accused of trying to negotiate lower prices on the grounds they offer high volumes and high visibility. Mark Humphrey, general manager of Twineham Grange, a parmesan cheese manufacturer in Haywoods Heath, West Sussex, says he is under pressure to keep prices low: "I have been told by one buyer that if they could source the same product in Italy cheaper, then they would drop me. "Support is not very forthcoming. They are more willing to promote their own private label products, and quite often let ours go out of stock for long lengths of time. I have even seen stores where promotional material for their own brand products has hidden ours from view." Humphrey says supermarkets need to look more sympathetically at the local suppliers' situation. "There needs to be improvements on pricing, distribution and promotion. They can't keep screwing us down all the time. There needs to be more regional control in the supermarkets, and less control from head office," he says. Cummings says the fact supermarkets are showing interest toward local sourcing is important, but that they need to work towards resolving existing problems. "The interest has grown and grown. About four years ago, to get a multiple to a trade show was like trying to move the earth. Now we are even getting multiples requesting producers to get in touch with them through newspapers. "But distribution is still a major problem. The logistics for suppliers to deliver is a serious hurdle." Sue Harvey, trade development manager for A Taste of the West, agrees. "There's a definite objective among multiples to increase local produce, but distribution is a big issue ­ trying to get products from one area to a central point is difficult for some producers. "The supermarkets need to realise they can't treat local producers as big players." Humphrey has suffered from distribution problems, making deliveries to Manchester, only to see them then end up in stores on his doorstep. He says delivering to London would help cut down his own costs by almost a third and allow the supermarkets to save money as well. Other suppliers accuse the multiples of deliberately passing on the extra costs of distribution to producers by opening more and more depots around the country and expecting suppliers to deliver to each one. Sainsbury acknowledges logistical difficulties and says it is beginning to implement measures to reduce the problem. Regionality manager Jane Wakeling says: "At the moment we have one supplier in Cornwall delivering direct to his local stores, rather than driving to the nearest depot up in Bristol. We are also looking at ways to get larger suppliers to work alongside smaller operations to improve distribution." Tesco says it too recognises the difficulties in distribution. Last year the company launched a major local sourcing project, identifying producers who could supply both on a local and national basis. A spokesman says it has already introduced one solution: "We recognise distribution is a problem and it's one we're addressing, which is one of the reasons we do back hauling, which means once lorries have made their deliveries they will call at suppliers on the way back." Tesco says local products have proved a huge hit with customers and because it is something they heavily promote in store, producers have actually picked up new business from other people. The supermarket chain says building good relations with suppliers is vital: "We want and need close relationships with our suppliers so we can get products customers want. We want suppliers to grow and develop through us. Everyone starts off small, we're used to dealing with people of all sizes, but we give companies the chance to grow." But growth is also a factor that puts off some manufacturers. Companies that have to invest significant sums into their businesses to be capable of dealing with supermarkets fear they are putting themselves in jeopardy. Take Roger Johnson, director of Sussex Valley Cuisine, which makes mayonnaise for national independent stores and also for a number of leading London stores. He is one of those who sees no point in risking rapid expansion to service the multiple retailers. "I don't supply supermarkets. To do that, I would have to gear up and spend money on new equipment and systems. And if I do that, I believe I'm then at their mercy. If they drop me, I'll have spent a lot of money for nothing, and if they want a price reduction, I will have no choice but to say yes," he says. But Johnson remains realistic: "The market is diminishing, and perhaps in the future I would have to consider working with supermarkets, but at the moment, my business meets my needs." Maureen Browning is one producer who would love to be able to supply the multiples but she has been scarred by bitter experiences. As the owner of Basing's goat milk producers in Cowden, Kent, she despairs of supermarket buyers after bad experiences with Sainsbury, Safeway and Somerfield. Browning reckons to have spent thousands of pounds and countless hours travelling to head offices for meetings with buyers in her temperature-controlled van, with samples of ice cream and yogurt. She says: "We've been promised listings by buyers on a number of occasions ­ we've even been given a supplier code ­ but it's always fallen through because buyers leave or they just drop you. It's very upsetting and you wonder if it's all worth it. "We've even gone so far as to have produced special packaging for them because they've asked for it, but then they don't want it. When supermarkets say jump, you just ask how high'? I'm fed up, but I'll probably still have another go." She is not alone. Paul Millham, owner of the Hurtwood Tea Company, near Dorking, is a small producer who shares Browning's practical attitude. He admits his product ­ a high end, speciality tea which has little competition ­ puts him in a stronger position, but he says he is still at the multiples' beck and call. "I'm afraid the supermarkets dictate policy and you either run with it or pull the plug. We're being squeezed from both ends, by the retailers demanding lower prices and by the fact the prices of raw materials are going up and it's the producers that are feeling the pinch. "Once you start supplying the supermarkets you have to go in with your eyes open. If you want their business you have to perform, otherwise you're out. I want to supply other supermarkets and I will do whatever it takes, you have to, you have no choice." Ironically, one of the reasons supermarkets are so keen on local foods is because want to make sure consumers do have a choice. There is a perception among shoppers that local food ­ particularly when it is organic produce ­ is somehow more tangible and trustworthy. This is not a new trend ­ an IGD survey identified it way back in 1998. But it is accelerating, not least because consumers are starting to become more aware of the origin of the food and drink they buy in the wake of food scares such as BSE. Little wonder the supermarkets are keen to cash in on the interest in local foods, and are pulling out all the stops to encourage more small suppliers to come on board. For now, some of their plans have been put on hold temporarily as the industry grapples with the outbreak of foot and mouth disease, which has closed off vast swathes of Britain's countryside. Somerfield, for instance, has found itself being forced to cancel a series of roadshows it was planning to hold around the country, linking up buyers with local farmers. The company wants to identify more local food working in conjunction with the NFU. It currently works with more than 600 small businesses whose products generate sales of £10m annually in 600 stores. Somerfield's localness director Peter Neuman says the company sources a large amount of products by word of mouth and customer recommendation and that it is simply "inundated with suggestions". He claims it is also flexible when it comes to dealing with the problems local sourcing throws up, like distribution: "We are able to make arrangements on an individual basis, to suit the supplier. For example Cobblewood Mushrooms in Selby, Yorkshire, now makes a daily delivery to our store each morning." Overall Somerfield values local sourcing highly for, as Neuman adds, it doesn't only benefit the supermarket: "We are keen to increase the range and variety of local foods, and also give small start up businesses the chance to get their products onto local shelves." However he refutes some suppliers' claims that they could be dropped at any moment and says he is careful to make sure potential suppliers don't waste time and money. "I do a lot of my work first over the telephone as I'm conscious a lot of producers have their work cut out for them." But despite Somerfield's positive outlook, Food From Britain's regional affairs manager Kirstie Berridge says some of the multiples, although interested in stocking local produce, are often put off when it gets down to the nitty gritty. She points out that a system that worked well for Somerfield was the use of a third party facilitator who would source goods and then bring them to the chain. Berridge explains that it provides a good buffer: "Buyers would only deal with the third party and suppliers would have a solid contact point who was capable of negotiating deals like 30 day payment terms." The third party system took a lot of the detailed work out of the hands of both supplier and supermarket but led to supplier complaints that this was sometimes where the system fell down, particularly over payments. Over at Sainsbury, Wakeling is also aware of the need for clear lines of communication and, while not employing a third party, says the company has established a raft of trade development managers on a regional level who provide an easy contact point for producers wanting to supply the company. It says this strategy and its flexibility have helped increase the number of local lines by 25%, with JS stores now stocking more than 2,500 different products around the UK. Wakeling says Sainsbury is extremely pro-active when it comes to local sourcing and is constantly looking for new opportunities on a regional level but not just for regional sales, it is looking for products it can sell nationally. "We have a comprehensive suppliers' code of conduct which regional suppliers are covered by. We also have trade development managers who work in the field and a dedicated HQ team devoted to local producers." However, despite the opportunities which are opening up within the multiple markets, some firms are determined never to get involved. Tony Walker from Sussex Teas is one operator who wants nothing to do with them. "They would damage our relationship with the delis and tea shops. I feel it would be breaking our loyalties with the smaller operators," he says. However, Food From Britain's Berridge says producers need to be realistic. "Supermarkets are not going to go away and they're a huge part of the market. They're becoming more flexible in their dealings with producers and suppliers need no longer be so frightened of dealing with the multiples. "Obviously people don't want to put all their eggs in one basket, but if you're sensible you wouldn't do that. If you're a growing business you wouldn't want to miss out on the opportunities available." Despite the concerns of small suppliers, there are many like Berridge who would argue that the benefits of having a product listed in a multiple far outweigh any associated risks. And remember: Mr Heinz had to start somewhere­ {{COVER FEATURE }}