Retailer recognition is lifting potatoes from the doldrums

Retailer recognition is lifting potatoes from the doldrums

Steven Maxwell

Potato supply chain - Leon Mundey, Greenvale
Greenvale’s Leon Mundey

Consumer concern over carbohydrates has often worked to the detriment of the potato sector despite the product being a staple of the traditional British evening meal. But, buoyed by the announcement of new, longer-term supply deals, potatoes are fighting back. Produce Business UK finds out more

Major players committing to new investments and expansion into ever-more convenient product options are leading long overdue potato fight-back by the potato industry. One such example is grower-packer Branston, a Lincolnshire-based company that is in the midst of high-profile investments and product extensions.

Found in 1968 as farming cooperative, Branston has operated as a limited company for the last 25 years, supplying loose and bagged fresh potatoes to UK retailers from three sites. Nine years ago, the company, which processes some 300,000 tonnes of the product every year, moved into the prepared potato market, specialising in ready to cook and microwaveable products.

According to managing director James Truscott, Branston invests millions of pounds every year to improve operating efficiencies and product quality, including a £1.7million washing and grading line at its Perth site in Scotland, which Truscott says will improve quality and grading from the facility as well as increasing operational capacity.

The company has also invested £4m to extend its prepared operations to increase following strong growth and a move into the peeled potato market as part of an agreement with Tesco’s largest potato-based ready-meal supplier Samworth Brothers.

“We are taking secondary product that traditionally we would have sold onto the market, peeling it and supplying it to Samworth for their cottage pie and other products,” explains Truscott.

“We’re very excited about this. It’s an excellent way of utilising more of the crop and achieving a lower waste, higher sustainability supply chain.”

Potato supply chain - Branston new line at Scotland site
Branston has invested £1.7m in this new line at its Perth site

Supply deal

Branston is among the British potato growers set to benefit from Tesco’s recent announcement of longer term, three-year supply deals with a number of potato suppliers, which Truscott says has given the firm confidence to increase capacity. “We’ve always worked on the basis of partnering with customers for long-term relationships, on the back of which, we’ve never been shy to invest in growing our business and improving our offer,” he emphasises. “To the extent we’ve now got a three-year deal for a higher volume than we had before, it gives us more confidence to continue that investment.”

Truscott also believes such announcements are a recognition from retailers that commitment from both sides is needed to achieve sustainable supply chains and enable suppliers to invest more bravely in the knowledge that the business is there for the foreseeable future.

The announcement has also been welcomed by fellow potato supplier Greenvale, which serves as part of the Tesco Sustainable Farming Group. Marketing director Leon Mundey says the move will provide stability and security, which in turn will help suppliers manage their businesses better.

For Greenvale and its parent company Produce Investments, Mundey says 2015-16 has been a busy year with the company consolidating packing and production into two locations in the Scottish Borders and Cambridgeshire.

The firm also formed a new Greenvale growers group, Vale’s Growers, with the aim of providing a platform for a strong, coordinated supply base across the sectors where it has a presence.

A major supplier of fresh potatoes – and the largest handler of organic potatoes – Greenvale works across retail, wholesale and food processing. It is also extending its new potato capacity through the acquisition earlier this year, by Produce Investments, of early season producers Rowe Farming of Cornwall and The Jersey Royal Company.

Potato supply chain - Greenvale tractors
Greenvale is expanding production capacity too

More commitment required

However, not everyone in the sector is convinced enough is being done by retailers to secure the future of potato growers. Jack Ward, chief executive of the British Growers Association, says that while longer term contracts are a positive step, a better understanding is still needed between producers and retailers.

“We are heading in a very difficult direction at the moment where money is being sucked out of the system, money that should be going into investment and new development,” he argues. “Unless we get that, we’re going to reap the consequences two, three, four years down the line and that’s not good from anybody’s point of view; growers or consumers.”

Ward says intense competition between retailers is squeezing fresh produce prices, while he argues that the National Living Wage has hiked grower costs by 7%. “A British supply base is hugely important – most of the retailers will stock British when it is in season, as it is just simpler and easier, but we don’t want to see any further erosion of the supply base,” he says. “As a growing industry, we want to build that back up, but in order to do that we need investment and to do that people have to be able to generate a return, and at the moment I think many growers are just not seeing that.”

Potato supply chain - Greenvale just lifted

Encouraging signs

In general, Branston’s James Truscott says the UK potato sector is in a better place than a few years ago. One particular nadir was the difficult 2012 season when poor weather resulted in low yields and lower quality products the high prices of which led to a significant drop in sales.

“A year or two ago you were seeing double digit declines in volume,” says Truscott. “That is much better now. You’ve 1-2% decline. It’s still a decline but its at a much more manageable level.”

Greenvale’s Leon Mundey says retailers adopting an everyday-day-low-price strategy rather than intermittent promotions has helped boost sales of salad and baby potatoes, and in turn is helping improve the fortunes of the category as a whole. “We are seeing shoppers making choices based on their preferred varieties rather than what is on promotion and this has for example resulted in the strong growth of Charlotte potatoes,” he says.

“If you combine all the different elements within potatoes, it’s the biggest single category with produce, but it’s also a category that has experienced long-term steady decline,” says Truscott. “To the extent that we haven’t reversed that decline, that is still a concern and we are working very hard to find opportunities for growth wherever we can, and I think we are seeing some quite encouraging signs.”

One of these has been the recently completed Cornish new potato campaign, which Truscott says has been a tremendous success thanks to increasing public awareness of the qualities of early varieties produced in Cornwall.

However, he says there remains a need to fight against negative publicity surrounding potatoes and other carbohydrates, which Truscott argues should be countered by emphasising their role as part of a healthy, balanced diet.

He says producers have also dragged their heels as a category to innovate in response to ever greater consumer demand for more convenient products. “Potatoes have been quite slow to respond – it’s probably why we are seeing good growth in our prepared category because it answers demand from customers in terms of quicker cooking times,” explains Truscott. “There are loads of opportunities to do that in the fresh category as well. We’re seeing good growth in baby and miniature because they are more convenient and quicker to cook.”

Truscott remains optimistic about the category despite the challenges it faces because it retains a strong place in British affections. “You talk to anyone about their favourite potato dish and their eyes light up,” he says. “When you’ve got that at the core of what you are doing, that’s really helpful.”



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