Books: The fear chain that binds suppliers to supermarkets

This book sets out in illuminating detail the abuses of power that occur in food retailing. It's a gripping read even for those not in the business, reports Craig Sams

by
Last Updated: 31 Aug 2010

I have supped (with a long spoon) with supermarkets for nearly 30 years - as a supplier. When they listed Whole Earth peanut butter in the 1970s, it gave our niche natural foods company the trading volume that enabled us to develop a wide range of innovative natural and organic food products, such as the first no-sugar-added jams.

Some manufacturers launched inferior copycat versions that nearly killed the category. In 1989 Nestle Sun Pat invested £5 million in launching its Wholenut version of Whole Earth peanut butter and one supermarket delisted us before even seeing which one would prevail (Wholenut bit the dust five years later). Our Green & Black's chocolate struggled for acceptance in the early 1990s - then Lindt launched a similar range and one supermarket delisted us immediately, giving over our space to Lindt's non-organic versions.

So why do I still love these rogues? How, having been kicked around by various supermarket buyers over the years, can I support their ruthless activities? Because they are also the foundation of most of the success I've achieved in the organic food business. Bullying, shameless stealing of ideas, switching customers to inferior own-label versions, price-squeezing and pressuring for 'marketing' support happens regularly among organic and natural food wholesalers and retailers in the UK, Europe and the US. That's the food business. Indeed, it's most business.

Shopped, by campaigning food writer Joanna Blythman, sets out in illuminating detail the abuses of oligopoly power that occur in the retail food sector.

She has researched carefully and obtained the trust of suppliers, who describe their experiences of what Patrick Holden of the Soil Association calls a 'fear chain, not a food chain'. The facts she sets out are stark and believable, the abuses she recounts are frightening, and the insight into how food reaches the consumer's plate is fascinating.

This book will appeal to those health-aware and conscientious shoppers who already favour regional, local, seasonal, varietal, artisanal, fairtrade and organic foods. They will be dismayed to find that behind the scenes, practices don't always reflect the marketing picture they see in-store.

But I suspect that more book sales will be to food industry management and that it will be compulsive reading for supermarket buyers. Some of the references are thinly veiled, and where Blythman can name names, she does.

Shopped is a textbook introduction to the situation that has emerged since supermarkets shifted power from manufacturers towards retailers and so towards consumers. This goes back to 1972, when Tesco deliberately broke the law. The government faced prosecuting them - and supporting higher food prices - or dropping Retail Price Maintenance and allowing supermarkets to set their own, lower, prices. Supermarkets then nurtured smaller suppliers to balance the power of the big manufacturers. Larger stores ensured the shelf space to allow more niche products to gain exposure.

The organic market didn't take off until supermarkets gave it a push - the corner shop, village post office or local greengrocer never had enough space for anything but mainstream lines, and even most healthfood shops viewed fresh organic produce as a waste of space and money. It was what Blythman describes as the 'Big Brother' innovation of loyalty cards that made supermarkets realise that the average organic customer spent twice as much per store visit and bought higher-quality, higher-margin lines across the board. They also realised that organic 'box schemes' and farmers' markets were drawing away these desirable customers, and so reacted quickly to lure them back.

In the bad old days when a supermarket buyer made decisions without the benefit of these sophisticated technologies, corruption was prevalent and big companies routinely 'bunged' buyers to get their products on the shelf and their competitors' off it. The food industry today is refreshingly free of such corruption and compares favourably to industries such as defence, aerospace and construction.

With half a dozen companies selling 80% of Britain's food, supermarkets enjoy oligopoly power and status. This has led to concentration in the supply chain - manufacturers merge to balance supermarket power. Primary producers suffer, with innovations commoditised in a short time. But consumer preference for traceable products with a regional personality strengthens the hand of the producers and processors, which build on this emerging market. The success of brands such as New Covent Garden Soup, Green & Black's or Yeo Valley shows that producers can ally with processors and use the power of brands to communicate directly to the all-powerful consumer, over the heads, but via the shelves, of supermarkets.

Blythman generously gives her targets a right of reply (exercised by all except M&S and Somerfield) to defend their good name and state their ethical policy. On own-label replacing branded stock, on local sourcing, loyalty cards, category management, playing off imports versus domestic producers and extorting money from suppliers, this book brings the clarity of a courtroom to the issues by allowing the 'defendants' to state their case.

This brave move gives the book greater authenticity and strengthens the author's credibility. A gripping read, even if you're not in the grocery trade.

Craig Sams is chair of the Soil Association and president of Green & Black's Chocolate. He is author of The Little Food Book

Shopped: The shocking truth about British supermarkets

By Joanna Blythman

Fourth Estate £12.99

MT price £9.99 (see panel).

Find this article useful?

Get more great articles like this in your inbox every lunchtime