SIR – You must have known the gauntlet thrown down to the Packaging Federation in February’s Backpacking column would be picked up – “newly energised” or not. The growth of supermarket power is seemingly unstoppable – not only within the UK but globally.
Just as the oil majors gained strength through supply chain control in the last century so the supermarkets, especially in the UK, have emulated them.
While the current battle for control of the convenience stores is yet another manifestation of the ultimate goal of total supply chain dominance, it only represents a continuing decline in independent grocers – the number fell from 150 000 in 1961 to 60 000 by 1981.
The packaging sector has benefited significantly in volume terms from supermarket growth but at the expense of increasing pain through competition from imports and consequently reduced margins. One has only to compare Tesco’s turnover, up 44% to £21.6bn in the last five years, with that of the total UK packaging conversion market, down by 6.6% to £8.6bn, to see the gross imbalance of power.
Supermarket dominance has not only seen lower grocery bills, but also growth in service sector employment. This, too, has its downside for packaging manufacturers, who must often compete in the youth labour market, where sitting behind a supermarket till seems to have more kudos than working on a packaging conversion line.
So, where should we stand? Well, we should recognise the big retailers as a force for good as well as evil. We would not have seen packaging innovations in chilled and frozen foods, ready-made meals, MAP and improved food safety standards, without them.
However, with their power should come some humility. Consumer power will eventually hit home – witness numerous ongoing GM campaigns, the increasing popularity of specialist food shops, and the growing use of Internet shopping for many goods.
To conclude, whether addressing politicians or supermarkets – and indeed packaging users or protagonists – the emphasis should be on the benefits, not apologies or apparent excuses for the burdens of packaging.
This is best achieved by reinforcing the added value of packaging and dispelling the too frequent attitude of cost plus within the supply chain itself. The “newly energised” Packaging Federation can hopefully help by refocusing effort away from the usual internal material bashing culture to the more mature packaging value added focus. This is key to courting the consumer who, alone, can ultimately curb supermarket excesses.
The details of any Packaging Federation lobbying campaign in this arena will be subject to discussion with Packaging Federation members, but two federation reports – one an update on the UK market, “Even More for Even Less”, and the other on “Adding Value and Providing Solutions” – are in the pipeline.
Ian Dent, Packaging Federation CEO