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2 June 2014 | Gurjit Degun
Some retail buyers in the food industry are not interested in building relationships with their suppliers, according to a food manufacturer.
The comment is included within a report, due to be published later this month by procurement outsourcing provider 4C Associates, into purchasing practices in the food and drink industry. Anecdotal research by the firm found manufacturers believe some retail buyers are “mostly” concerned about price.
Milan Panchmatia, director at 4C Associates, told SM that this is putting “increasing pressure” on producers.
Panchmatia also explained the horse meat scandal has led to an increased focus on manufacturers’ working practices. 4C held a roundtable discussion with industry procurement leaders in May, which heard from manufacturers who believe retailers should move away from the cost and think more about quality.
“All of the people said, ‘we have to be super careful’ because the retailers will push back onto them, but actually sometimes it’s because of cost pressure that things get put by the wayside,” said Panchmatia.
The research also found the price of fresh produce could rise because of high corporate social responsibility standards and cost pressures in the UK. Panchmatia explained some of the lower cost sources of supply for fresh foods, such as South Africa, no longer want to sell to the UK because they can get higher prices in other markets such as China and Russia.
“This in turn forces either production locally or from other sources of supply that can meet our standards which leads to higher wholesale and retail costs,” said Panchmatia.