What were the biggest issues in the food and drink retailing sector over the past year? The key event has quite rightly been the debate about the future of farming. We welcomed the findings of the Policy Commission's report and hope this will act as a real catalyst of change. Next year, the key issue for supermarkets will be, as ever, to offer quality food at good prices for consumers and at a fair price for our suppliers. However, there is a lot more work to do to drive out inefficiencies in the food chain.

Tony Smith, sales director, Unilever Bestfoods UK

We have witnessed a slowdown in growth to a level somewhere around
2% or less. As retailers fight to grow, or even maintain their share, retail price has been a major weapon. As a result, everyone has seen the pressure on their margins mount. Next year, price pressures and therefore margin pressures will prevail. The slowdown in the underlying growth in the economy will heighten this pressure as the battle for share continues. Against this background, we must continue to innovate and invest to ensure future growth.
Steven Esom Waitrose manaing director

Waitrose has always enjoyed long term relationships with its suppliers, but 2002 will be remembered for having brought this fact further to the fore, as customers became increasingly interested in who produces their food. Local sourcing rose up the agenda too, encapsulated in the ethos that lies behind the unique Waitrose Small Producers Charter. Looking ahead, the current focus on quality locally produced food will continue, as will the appeal of organic and domestically sourced food. But so will customer's interest in all our suppliers.

Drummond Hall,
chief executive,Dairy Crest

Markets, especially in the commodity cheese sector, have hit 10-year lows and this has meant that the issue of the milk price has taken centre stage. Retailers and processors have worked together to support UK dairy farmers, though this pricing initiative remains complex and fragile. The future of the dairy industry continues to be in the development of branded and added value products, while opportunities exist for those more active in NPD to form stronger partnerships with the retailers and recognise the importance of supply chain initiatives. Jerry Marwood,Spar UK managing director

Retail crime will remain a huge problem for neighbourhood retailers unless we can convince the government, the police and other local agencies to work more closely with us. The added cost of bureaucracy and compliance with legislation means we have to become more profitable. With Tesco having a much greater market share, competition for the customer's cash will increase.Via T&S, Tesco will bring consistently high store standards to the sector which all neighbourhood retailers will be expected to emulate.

Sylvia Jay, director general, Food and Drink Federation

The issues that faced us are not going to go away in 2003 ­ FMD, sustainable development, nutrition and obesity, increasing regional activities and involvement at EU and international levels on food safety, CAP reform and trade arrangements. 2003, like 2002, will see us contributing to CAP review and WTO agriculture negotiations in the hope of creating an ever more level playing field on which UK food and drink manufacturers can operate, and of avoiding getting ensnared in wider trade disputes.
James Lambert, chief executive, Richmond Foods

Deflation was the biggest challenge for food manufacturers and it is likely to remain a key issue throughout 2003. Consumers are constantly looking for better value from the multiples and this brings associated price pressures. The only manufacturers to thrive will be the biggest brands or new product innovators who also manage to achieve production efficiencies. I would like to see a real improvement in packaging design so it conveys a quality message and helps consumers looking to purchase better tasting products.

Ben Gill, president, National Farmers' Union

"Now that foot and mouth is over, things must be a lot easier." This is a statement I have heard a lot during 2002, but which could not be further from the truth. Not only are we faced with rebuilding our herds and flocks, but we still have the task of turning around the fortunes of a crisis-stricken industry. One key issue must be resolved: how is it that, with food prices elsewhere in Europe no higher than in Britain, their farm gate prices are higher than ours? Solve this, and we can put the entire UK food industry on to a secure footing for the future.
Colin Graves, chairman and md of Costcutter

The increasing levels of crime and vandalism in our stores have been a key issue with retailers throughout the UK, and the response both from the government and police is appalling. Other key issues in 2002 which require action are the amount of bureaucratic red tape with which retailers are being burdened, and the increasing effect of bootlegging into the UK market. The first key issue for next year will undoubtedly be competition from the multiple sector. Independents in general must sharpen up quickly and react to this threat positively.

Jonathan Grant-Nicholas, Greencore communications dir.

Big issues for 2002 were auctions, factory gate pricing ­ ensuring that genuine supply chain benefits were achieved ­ and focusing on the supply chain to improve availability and cut wastage. Innovation was also key. Next year we expect to see more of the same, plus a possible cost push due to increased cost of raw materials if the pound falls as a result of a decision to enter the euro. Food chain security is also something that manufacturers need to take very seriously in line with the potential ongoing terrorist threat.
Alastair Sykes, Nestlé chairman and chief executive

My watchword for 2003 is profitable growth. My resolution for next year is to work closely with all our retail partners to restore value and growth in a number of key categories. We will introduce new concepts and products in a holistic way to achieve this. Let us work together to make next year one of value enhancement, growth and success.

Carlos Criado-Perez, chief executive of Safeway

A key issues last year was reacting to the slowdown in the market while driving forward with our long-term growth strategies. Looking forward to 2003, the market is likely to grow even more slowly while our customers expect better quality, wider ranges and more attractive stores - all at lower prices. The challenge to the creativity and commitment of our people will be the biggest yet.

Alan Toft, director general, FWD

We have taken our campaign to encourage suppliers and wholesalers to work closer together up another gear. The FWD alerted the Policy Commission on the need to weigh the expansion of superstore corporations into the local shop sector against the wider social implications. I forecast an increase of 1%-2% on the £17bn value of the wholesale market by the end of 2003. More investment will be made by suppliers to protect their turnover from superstore power, while wholesalers will be galvanised into new levels of creativity and efficiency.

Joe Jimenez, Heinz Europe president and CEO

As the market becomes increasingly competitive, marketing becomes ever more vital. Last year we faced the continued drive to take costs out of the supply chain, which Heinz has been successfully managing across its European business. Looking forward, a key issue for next year will be to continue to drive top and bottom line growth through accelerating innovation, and a raft of new products is planned.We will also be identifying those products that could be pan-European, and leveraging them accordingly.
John von Spreckelsen, chief exective, Somerfield

Supermarkets are facing diminishing returns on capital investment in renewing existing stores and building new ones, while deflationary pressure on prices is squeezing margins and making this an even tougher market for everyone. The real winners are consumers who are benefiting from increased value, quality and choice. However, Somerfield and Kwik Save are realising greater benefits from the group's store improvement programme, and are experiencing healthy growth and exceptional returns on our investment as we create new fresh stores.

Sue Garfitt, director of category planning, Britvic

2002 was another successful year for the soft drinks industry, with both
volume and value showing good growth. With per capita consumption continuing
to increase year on year and soft drinks playing a bigger part in consumers
lives, the outlook remains positive. In a market where household penetration is nearly at 100%, the challenge will continue to be innovation in its broadest sense. For retailers, focusing on the right strategies to meet the needs of their shopper profiles and supporting those with the appropriate tactics, properly executed, could drive more sales immediately.










Terry Bedford,sales director,
Londis

The Tesco and Co-operative Group insurgence into small convenience retailing will accelerate the demise of the independents. For those that want to survive and profit, there will be a further polarisation of trading towards symbol groups. To maximise footfall and volume, independents must continually invest in state-of-the-art retail technology and store redevelopment, particularly focusing on growth areas such as home meal replacement.The demise of the multiple off-licence sector will continue, and more local wine specialists will convert to convenience trading out of necessity.

Malcolm Hepworth, chief executive, retail division, the Co-operative Group

We have continued to campaign on key issues, calling for a radical rethink of the regulations governing nutrition labelling and with the Co-op Chocolate Report, campaigning for Fairtrade chocolate and an end to exploitation. We also switched our entire range of own label block chocolate to Fairtrade. I would like to see the rest of the retail industry follow our stance in giving customers well balanced, clearly communicated, and sensibly comprehensive information to enable them to make the purchasing decisions which reflect their personal priorities in terms of ethical issues.
Martin Glenn, president,
Walkers Snacks

The number one economic issue was thankfully a non-issue ­ "how long will consumer expenditure remain buoyant?" The discovery that Acrylamide (a possible carcinogen) has been found in cooked foodstuffs from coffee to crisps created lots of media interest. Interestingly, the consumer reaction was jaded; it's yet another scare. The likely issues for 2003 will be a surprise increase in unemployment as the extra NI costs bite; higher costs and flat sales triggering a big fallout in the grocery market; and serving the London market will prove a real challenge as Ken's road tax comes in.

Andrew Cosslett, md, Cadbury Trebor Bassett

2002 has been a successful year for Cadbury Trebor Bassett. It was our first full trading year following the integration of our two companies that had taken place in June 2001. Not only have we achieved good growth and market share gain, but, importantly, there has been growth for the total confectionery market market which is great news for everyone involved in this sector, from manufacturers, wholesalers to retailers. I am confident that this trend will continue in 2003 as British consumers continue their love of confectionery and manufacturers bring innovation and brand-building to the market.



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