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Nuffield Farming Scholarships Trust

Alan and Anne Beckett

Trends in Healthy Eating and the Opportunities they


present for Arable Farmers

by

Edward Sweeting

Edward Sweeting N. Sch

Thornton Lands

Faxfleet, Howden,

East Yorkshire. DN14 7YR edward@fruitface.co.uk


In writing and studying for the Scholarship, I’m indebted to Alan and Anne Beckett for
supporting the award, and for their advice and continued support.

Thanks also go to the huge network of support from previous Scholars, and the indispensable
advice, support, patience, and encouragement of John Stones and all at the Nuffield Farming
Scholarships Trust.

To all those who helped directly and indirectly on the content of my report, many thanks for
your knowledge, expertise, and your willingness to share ideas. I hope that I can one day
return the overwhelming generosity and number of favours that have been called on.

To my family, friends, customers and colleagues, many thanks for your willingness and ability
to keep the business going in my absence. I was strangely pleased to find that I wasn’t
indispensable, and life carried on in my absence.

Edward Sweeting N.Sch


Contents

Introduction..........................................................................................................4

Executive Summary.............................................................................................5

A brief overview of the UK food market................................................................7

Countries Visited..................................................................................................9

Spain...........................................................................................................9

China.........................................................................................................11

Austria.......................................................................................................14

USA...........................................................................................................16

Back in the UK...................................................................................................18

Trends................................................................................................................18

Future options....................................................................................................24

Recommendations.............................................................................................28

Personal future..................................................................................................30
Changing diets, changing businesses
Introduction

I have a food business called Fruitface that supplies snacks and ingredients made from
seeds (mainly linseed) and dried fruits. From our first trials at the local farmer’s market, our
products are now sold direct to the consumer through farmers markets, web sales/mail order;
and into a variety of outlets including farm shops, independent delicatessens, department
stores, multiple retailers, health food stores and sandwich shops. One of the key selling
points for the food business is that the linseed used is grown and processed on the family
farm.

My family are arable farmers in East Yorkshire, growing around 2500 acres of conventional
arable crops - wheat, potatoes, vining peas, and oilseeds. I graduated from Newcastle
University after studying Agri-Business Management and Marketing. After working in
marketing for 7 years in the financial technology industry I was approaching my thirties, and
not relishing a future in the corporate world. So I decided to return to the North and to be as
involved in farming as possible. After looking at the resources available in the Howdenshire
area – which did not include a great farm location or a sophisticated local market – I
established a linked business, which has been successful on a small scale.

A combination of factors have helped establish and grow the business, with the deluge of
promotion from TV diet doctors for seeds and healthy eating playing a large part. With this in
mind I wanted to investigate the market further. The opportunities for arable farmers caused
by changes in diet and eating trends are the subject of this Nuffield report, kindly sponsored
by Alan and Anne Beckett. Are food fashions relevant, an opportunity, or irrelevant for arable
farmers? Should I continue with the same approach that has worked for farmer's markets and
smaller retailers? Hopefully there may also be worthwhile information for other farm
businesses.

Email: edward@fruitface.co.uk
Executive summary

With the introduction of decoupled support, and a range of incentives available to process
crops on farm, many arable growers are looking at their business model and wondering
where the future is. Even with recent rises in the price of commodities, the centuries long
trend towards lower farm employment and increased mechanisation and unit size will
continue. One option for farmers is to move along the food chain and develop on farm
processing. Or should growers stick to their current business of commodity production and
grow by moving into non food businesses?

Objectives

There were two areas that I wanted to look at in more detail.

1. Healthy eating is the biggest long term trend across the food industry in the developed
world. How food producing farmers respond to changing eating trends is key to their future.
What are future trends and will they involve products that UK arable producers can supply?

2. There are many examples of dairy and livestock farms that sell products direct and add
value by being farm based, vertically integrated businesses. I wanted to find out if arable
farms could and should do the same, and move away from commodity production to capture
value.

The study has been an amazing experience, with numerous highs. I’d recommend a similar
Nuffield study to anyone.

Conclusions

− Moving along the food chain and adding value by processing and selling a food product
direct requires a huge change in business model and skill set for the average arable farm.

− The UK retail food market is as concentrated as any in the world. It is dominated by the 4
multiple retailers, and anyone considering creating a food product must be aware of their
business methods and the market share that they have.

− In spite of the above, there are significant channels open to farm businesses through ‘non
supermarket’ outlets – farm shops, leisure outlets, food service outlets (including
restaurants and cafés), and direct sales.

− Despite the variety of foods available here and the power of the multiple retailers, there is
a small (but growing) food culture in the UK relative to other countries. When you combine
this with other trends – globalisation, immigration, easy travel, mass communication –
there is a strong desire and the ability among consumers to discover and rediscover
products and eating trends.

− Fad diets may provide entertainment for the media and consumers, but for food producers
they usually provide a brief but uncertain boost to sales. For producers the risk is that by
the time production has adjusted, the fad has moved on. For agricultural producers, the
long time lag before a crop can be harvested means a high level of risk in targeting a fast
moving market.

− Consumer tastes change quickly, but some underlying trends remain. The market for
healthy eating is growing rapidly. As the market is changing rapidly, there are many
financial opportunities arising for businesses. Agricultural businesses can take these
opportunities or someone else in the food chain will take them.

− The public perception of agriculture is generally favourable. Farm produce is regarded by


consumers as authentic, natural, and ‘healthy’. This can give farm-based businesses a
unique competitive edge.

− There are barriers to entry for farmers entering the food sector, ranging from technical
barriers of a lack of production capacity, plant, and capital; to barriers caused by
deficiencies in human capital such as lack of market knowledge and marketing ability.

− The value from positive PR and image enhancement that can be gained by supplying
healthy products is crucial for an agricultural sector that is too often seen as production
focussed and out of touch.

− It is very difficult for current farming organisations to court those who influence demand.
UK farming in general allocates too few resources to promotion and marketing, and the
traditional farming lobby groups struggle to effectively promote a diverse fee paying group
to such a competitive and increasingly diverse market.

− Adding value and providing a food product is not a suitable aim for all producers. Most will
be unable to respond or provide a unique enough proposition to attract consumers. Larger
arable producers will find it hard to adapt their business model. The greatest benefits may
come to smaller growers who have a different skill set to large-scale commodity
producers.

− Arable farmers produce natural, nutritious foods. It's after they leave the farm gate that
processing makes the products less healthy.

Recommendations

- For businesses wishing to add value and sell a food product, the focus must be on value
rather than production volume. The market must come first, then large scale production.

− There is a large skills gap for the majority of UK arable producers between commodity
production and food production. Market knowledge and marketing skills are crucial for
success in the food market, and the shortages have to be at first recognised, and then
addressed both at industry and individual level.

− For value to be appropriated from the rise in ethical consumerism, there must be a more
coherent approach to the marketing and production of UK products. How ‘local’ food is will
not be enough. Ethical consumers are educated and informed and will demand socially
responsible practice throughout the business. That means healthy products, responsible
sourcing, and an overall awareness of consumer demand.

− Efforts should continue to be made to educate consumers, media, and pressure groups
that UK conventional growers are producing responsibly. Lessons must be learnt from the
organic lobby – that science alone does not attract consumers; there must be an emotive
reason for buying.

− The diversity and range of today’s media is a challenge to all businesses. Celebrity chefs,
TV nutritionists, and journalists have a huge influence on eating habits in the UK. It’s no
longer sufficient for the NFU and levy boards to know the head of the FSA and have
access to Defra. It may be unfortunate, but the editors of Heat, Grazia, and Hello!
magazines have just as an important a role to play in reaching consumers. If the NFU and
similar organisations can’t offer credible support (due to conflicts of interest and perceived
bias) there is an opportunity for them to supply at least an information bank and database
of media contacts that farm based businesses can access.Producers may need to
collaborate amongst themselves, but they also should look to partnerships with external
pressure groups – such as the Slow Food, British and Fairtrade movements – to enhance
their own knowledge and credibility.

− Those farmers that do wish to enter the food chain must be willing and able to understand
the changing food market. Globalisation, mass media, immigration and other factors all
influence the food market. The traditional farmhouse diet is not the diet that most UK
consumers demand. Misconceptions about modern foods and eating habits have to be
put aside, and a more open attitude to food is needed.

A brief overview of the UK food market

When standing on a farm in an idyllic rural location anywhere in the UK, it can be easy to
forget that Britain has arguably the most sophisticated consumer economy in the world.
Consumers here are highly educated, wealthy, conveniently located, and kept informed by a
diverse and responsive media. At it’s heart the UK has one of the world’s great cities, where
people from across the world choose to live. The proximity to such an affluent marketplace
should provide an opportunity for UK farmers to sell food direct and thrive.

Unfortunately though, too many producers are disconnected from the rest of society and the
customer base. There are many reasons for this, and the need for food producing arable
farmers to engage with and educate themselves as well as consumers if they are to be
successful has been discussed before. It is still perhaps the key underlying theme for this
report. It is not an easy mission though, and this societal change from both consumers and
farmers will take time.

Retail food
Around 80% of food retailed in Britain is now sold through 5 supermarket groups. The rise
and rise of supermarkets has had an effect across the UK economy. There are very few
consumer industries that have not had to change to cope with their buying power and the
effects of globalisation to bring consumers and low prices together. The food sector has been
the most affected, with mantras like ‘everyday low prices’ and ‘every little helps’ being
simultaneously attractive to customers and challenging for suppliers.

A market where the two biggest suppliers aim for year on year price deflation for standard
products is obviously one where their suppliers will be under pressure, and this knowledge
has to be at the front of any plan to enter the food sector.

The particular business practices of UK supermarkets impact food producers in several ways.

− Buyer power is high in the UK. The concentration of buyer power between 5 main retail
chains –Tesco, Sainsbury’s, Asda, Morrison's, and Waitrose means that suppliers’
margins are tight. In addition, consumers are sophisticated and price sensitive.

- The supermarkets offer private label products, so that every successful product and
brand launch is usually followed by a supermarket equivalent. This lack of product
differentiation increases buyer power and competition, reducing supplier margins.

− - As mentioned, around 85% of the food retail market goes through 4 supermarkets, and
regardless of dietary trends, this is unlikely to change. In fact, indications and a recent
report from the investment bank Morgan Stanley, concluded that these multiple chains
would take 90% of the retail food market by 2016.

− There is a rise in number and quality of farm shops, food halls, garden centres that retail
food, and delicatessens, but this is still a very small section of the grocery market,
although growing.

Other potential channels for food retail include direct sales both online and through box
schemes, and farmers markets. These all play an important role in connecting the consumer
to the producer (and the producer to the consumer) but in overall volume, are relatively small.

Food service

The rise in affluence in the UK and the increasing trend towards eating out of home has
meant a rise in the value of ‘food service’ spending to around £33bn in 2003. In comparison
to the retail food market, here buyer power is relatively fragmented, with diverse distribution
channels including the large corporate catering companies such as Sodexho, Compass, local
authorities, pub and restaurant chains, down to small local bars, sandwich and takeaway
outlets. This diversity means that buyers have less power, and provides certain opportunities
to supply appropriate products such as muesli, cereal bars, and bread and flour. In general
though, these distribution channels control the direct access to their consumers and so
products supplied are unbranded and have lower profit margins; and farm produced products
have many similar competitors. The usual rules of economics apply: lots of suppliers with
similar products result in a competitive marketplace with pressure on prices.

So what should farmers do if they want to grow a business in such a competitive


marketplace? This was the question I really wanted to answer when I applied for the Nuffield
study in 2005. I had a small business that I wanted to turn into a much bigger one. Would the
same approach that had worked for the farm shops and delicatessens that we'd been selling
to work on a bigger scale? To answer this I wanted to visit countries and see businesses that
I'd admired from afar to see how their experiences could apply to the UK.

Different countries

As part of the Nuffield Scholarship, I travelled within the EU and to China and the USA. Each
country and region visited had a distinct system of food consumption, approach to health, and
lessons to offer.

I planned to see 4 separate countries that I thought could each offer lessons. Spain, because
of the generally held belief that the Mediterranean diet was the healthiest in Europe. China, in
part because the Chinese food system is based on health principles, as is their medicinal
system. And in part because of its huge potential to consume the worlds farm commodities.
The USA to see how a land with hundreds of conflicting diets was also the one with the most
obese citizens. And finally Austria, where wellness is almost a national obsession.
Photographs of my visits can be seen online at www.flickr.com , just search there for
“Nuffield2008”.

Spanish food market


In looking at the Spanish food market, and attempting to understand how producers there
gain added value, it’s important to understand the fragmented distribution system – retail
chains there have a much smaller proportion of the food market, with the majority of foods
bought by households from local markets and stores. Food culture here means that
consumers are willing to pay for quality food, in a way that UK consumers are not. The
Mediterranean diet is categorised by the use of fresh produce, with meal times and family life
structured around the family. In Spain this is common through the country. My tour here took
me from Madrid to Seville, and looked at the Mediterranean diet in general, and two specific
industries.

1. Olive oil production – in its way very similar to the nascent virgin pressed rapeseed oil
industry in the UK.

2. Jamon, the speciality air-dried ham.

The Mediterranean diet is known worldwide for the resulting longevity and low rate of heart
disease of its residents. Fresh fruit, vegetables, and low consumption of saturated fats, are all
part of the average diet.

Markets

One of the most impressive examples of added value production, and worthy of a Nuffield
study in itself was the production of air-dried ham (Jamon) in Spain, where it is a national
institution and a highly valued product.

There are several levels of quality, from standard to the most expensive with rigorous quality
controls and widespread consumer awareness of the eating qualities and the healthy
qualities of ham – there are beneficial nutrients in the oil, and high mineral levels through the
meat. Differences are partly caused by the pig breed, and partly by husbandry. Acorns in
particular have a rich flavour and omega 3 level and this is used as a marketing proposition.
The pigs are reared outdoors, in a relatively stress free environment. Interestingly, the
organic question was not in any way an issue for most producers, and consumers were
generally not aware of it.

Jamon

I met two producer's who were both interested in the health benefits of their products, and in
sharing their knowledge. Although they did actively promote their Jamon, I was surprised at
the level of demand within the general population for Jamon. As part of the tradition and
culture of Spain, every consumer I spoke to was fully aware of the different grades of Jamon,
production methods, and how it should be prepared and eaten. A similar level of knowledge
from UK consumers about any foodstuff would be very unlikely, and the power and
opportunity that comes to producers from having such a strong food culture was clear. The
outlook for small UK food producers would be very different if the UK consumer was as
passionate.

The producers I met sold through a mix of outlets, from local bars, restaurants, and shops,
through to distributors and agents who sold the product across Europe.

Olive oil production

I was fortunate enough to meet up with the International Olive Oil Council in Madrid, and tour
olive producers between Madrid and Seville, and speak to their marketing teams. Spain has
around 4.9 million olive trees in production, making it the world's biggest producer with
around 30% of the market.

Thirty years ago the olive oil available in the UK was usually on sale in chemists for use as an
ear drop. In 1984 the market for olive oil was estimated to have a value of £1million. It is now
a £140million market, with a range available in any grocery store and prices varying from £3
to £30 per bottle. Yet in Spain, traditionally the biggest producer of olives and oil in Europe, it
had been the archetypal commodity product, with a low quality level and lack of awareness of
its benefits and potential taste attributes. Membership of the EU has provided the funding and
structural guidance and the awareness of food quality prevalent through Spain has provided
expertise and local demand.

Olive oil is now a multi billion pound global market with a bewildering variety of brands from
large cooperatives to single estates. Value has been created and shared through the food
chain here. What can be learned from this outstanding lesson in adding value to an
agricultural commodity?

Romance

While this may not be something that most farmers see in their crops, the visions conjured up
by promotion involving olive oil are those of Mediterranean groves, with historic images and
evocative sights and sounds. UK producers need to think through the messages sent to
consumers – does technological superiority add value to UK production? In terms of
increased yield, then yes. But in terms of consumer appeal, no. Sports nutrition aside, the
appliance of science does not work for the vast majority of UK consumers.

The olive oil market is one that uses health and taste at the front of promotional activity. The
overall message is one of a romantic connection to the soil and the lifestyle of artisan
producers. In no way is the industrial nature and efficiency of modern agriculture
emphasised.

Chinese food market


The next trip took me to China, where the population of 1.3 billion people is making the leap
from an almost mediaeval agricultural economy to the most dynamic economy the world has
ever known. Though the agricultural system there is predominantly based on a mass of very
small producers using little or no technology, the average Chinese person's knowledge of
food is staggering in it’s breadth and awareness of the health benefits and cooking methods
required for each type of food.

With such a large country in every way, it is hard to generalise across the Chinese food
market. But the areas that I visited showed how fragmented the food chain is there, and how
the country is increasingly divided into rural and urban. I initially travelled to Beijing, where I
attended a farming and food exhibition courtesy of the Chinese Agricultural Ministry. This was
a great introduction, as I had the chance to meet representatives from each province, who
were all eager to show me their capability, and invite me to see their star producers. From
here I travelled to see farmers producing vegetables and wheat for the Beijing city region.
The standard of agricultural knowledge was high, though the level of the infrastructure varied
from ultra modern to extremely simple.

The level of interest and hospitality across my travels in China was outstanding. From Beijing
I travelled to the X'ian province. Here I met fruit growers and processors, producing extremely
high quality produce for the international market. Among other places I visited the county
which produces one third of the worlds concentrated apple juice. It gave me a tremendous
insight into the capability of Chinese exporters.

I then moved overland to Shanghai, and in cities like Nanjing saw the diversity of the
landscape, as well as getting an idea of the volume of people in China. There were cities I'd
never heard of with populations of 2 – 3 million people. Every spare piece of land seemed to
be cropped, with harvest storage often taking place inside peoples homes. And once in
Shanghai I took the chance to tour two regional supermarket chains there. The level of
sophistication and range of produce was amazing by any standards, and the respect given to
farmers absolute. They take their food security very seriously there. Unsurprising, given that
famine is remembered well by the current political leadership.

The majority of foods are currently sold from the producer to the local marketplace, where the
local shops, restaurants, and consumers will go to buy produce and meats. As there is a
preference for absolutely fresh ingredients, this means fish, poultry, and frogs still alive, and
other meats and vegetables as fresh as possible. This demand for freshness has obvious
implications for the supermarket chains that are setting up in the urban centres there.

So the food distribution system is fragmented, though evolving fast. As such, it’s hard to
predict exactly how it will develop, though the place that food has in the Chinese culture is
such that food is more highly valued than in the UK, and will remain so. High added value
producers from the UK should pay attention to this marketplace, as the Chinese demand for
high status western goods and brands is strong. I saw numerous examples of oils made from
seed grown in the USA such as safflower, evening primrose, and oilseed rape on sale as gift
items in the luxury areas of Chinese supermarkets. A definite opportunity for UK growers!

History

While in Beijing, I was fortunate enough to meet with Dr Dia Jiangping of the Beijing
University for Chinese medicine. The strength of the links with food and medicine are clear in
every restaurant – the average waitress there has a huge depth of knowledge on foods and
their nutritional qualities. This is not a recent phenomena. The development and diversity of
Chinese cuisine reflect China's long history. With each dynasty new recipes and techniques
were devised until the art of food preparation reached its peak during the Qing Dynasty (1644
- 1911).

Rather than the 200 numbers that we associate with a range of dishes on our local Chinese
restaurant menu, the Chinese see there being 8 cuisines across their country. These are:
Shandong, Sichuan, Guangdong, Fuijan, Jiangsu, Zheijang, Hunan, and Zuidang cuisine.
Cuisines from different regions are distinctive to them in the same way that French and
German, or Italian and Greek, are to the West. To the Chinese, we are very uncivilised for not
knowing this!

Chinese medicine

The Chinese believe that good cuisine has many benefits, and helps to prolong life, sustain
the constitution and boost energy. So food there has strong links to Chinese medicine.

Chinese medicinal cuisine is a long standing tradition. Early records show that it was in use
as far back as the Han Dynasty (206 BC - 220). The level of knowledge throughout the
country of which foods are good for certain health conditions is staggering to the western
visitor.
Through continual improvement over the centuries, it has developed into a practical science
of nutrition, though very different to western medicine. This is not a simple combination of
food and traditional medicine, but is a distinctive cuisine made from food and medicinal
ingredients following the theory of Chinese medicine. This not only became the means of
health-preservation among the Chinese, but also spread abroad, especially into Southeast
Asia.

There is a wide choice of foods that are used in many different ways to promote health and
well-being. It is estimated that there are more than 600 different kinds of medicinal food
ranging from cereals, fruits, vegetables, meats and marine products. Many of these will be
unfamiliar to foreigners who may be reluctant to try them; however all are perceived as
precious and effective as medicine. Many different ingredients are used to add to the appeal
as well as to strengthen effects of the cuisine. Wine, sugar, oil, salt, vinegar and honey, and
other commonly available items such as almonds, mandarin orange, or peanuts, all are
utilized in the cooking process.

Medicinal cuisine has different categories, from a soup to help lose weight to soups that can
‘add beauty’; and dishes that give strength, build the immune system, and rehydrate the
body. While many in the Western world are dubious of all the claimed benefits, it's hard to
dispute that the Chinese are generally not overweight, and on the whole value food in a way
that we in the UK value designer brands and luxury cars.

Dairy

Traditionally the Chinese eat no (or very few) dairy products, and it’s a country where food is
prepared fresh and ready to eat instantly. But times are changing fast, and the food used in
China has changed through history. With food, the Chinese are not nationalistic to the point
of resisting imports. In fact, foreign foodstuffs have been readily adopted through their history,
partly because of the low level of agricultural productivity. Wheat, sheep and goats were
introduced from western Asia in prehistoric times, many fruits and vegetables came in from
central Asia during the Han and the T'ang periods, and peanuts and sweet potatoes from
coastal traders during the Ming period. These all became integral ingredients of Chinese
food. In the same way, you can now see milk and dairy products becoming more prominent in
Chinese cuisine.

This adaptability is shown in other ways. One of these is the amazing knowledge the Chinese
have acquired about their wild plant resources. The Chinese peasants apparently know every
edible plant in their environment. Most would not ordinarily belong on the dinner table, but
have been adapted for consumption due to the lack of alternative. It’s easy to forget that
famine has been a regular feature of Chinese life.

The Chinese way of eating is characterized by ideas and beliefs about food, which affect the
ways in which food is prepared and eaten. As I was told by the head buyer of the Shanghai
supermarket chain, City Shop, if selling into the Chinese market, the overriding idea about
food in China is that the kind and the amount of food eaten is directly relevant to health. Food
not only affects health as a matter of general principle – as in the West - the selection of the
right food at any particular time must also be dependent upon health condition at that time.
Food is really a form of medicine.

Interestingly, despite the absolute focus on health, there seemed to be little attention paid to
the use of pesticides in production, and animal welfare did not register. Organic certification
has a long way to go in the dynamic Chinese market!

The bodily functions, in the Chinese view, follow the ‘yin-yang’ principles. Many foods are
also classed into those that possess the yin quality and those of the yang quality. When yin
and yang forces in the body are not balanced, problems result. Proper amounts of food of
one kind or the other may then be eaten to balance yin and yang. If the body is normal,
overeating of one kind of food would result in an excess of that force in the body, causing
disease.

Finally, perhaps the most important aspect of Chinese food culture is the importance of food
itself in Chinese culture. There are whole ceremonies surrounding eating duck, drinking tea,
and the family meal. You don't get this in the UK. I couldn't think of any culture as food
oriented as the Chinese. And this was as ancient as Chinese culture itself.

Western foods?

As mentioned above, the Chinese are interested in new food products, and the rise in fast
food chains and western style restaurants is a clear sign of this. Every busy street corner in
cities across China had a Macdonalds, KFC, or Pizza Hut there. The difficulty I had in
describing the local food movement in the UK to my translator out there illustrated for me the
opportunities for international businesses. They couldn't believe that customers might choose
food from the home market over exotic and more expensive imports.

For UK producers, there are few routes to market that are suitable for farm-based
businesses, with shipping costs and distribution being too complex to be truly viable for many
food products. This may change though, and there are certainly huge opportunities for luxury
goods in the Chinese market. This could easily extend to luxury foods in time.

But the influence of Chinese demand on farm commodity prices will be massive. The number
of Chinese moving from the countryside to the cities is forecast to be roughly equal to the
number of consumers in Western Europe and the USA combined. These people will need
feeding, and will demand cereal based protein – chicken, pork, and beef, as well as cereals
themselves. Dumplings and noodles are also made with wheat and are generally eaten once
prosperity rises, in place of rice. This surging demand is a point often made, but as the recent
rapid rise in world wheat prices indicates, not always fully appreciated.

So perhaps the biggest influence on UK arable farmers from dietary trends comes not from
the opportunity to supply value added niche products to UK consumers, but from the
increased demand for basic commodities from dietary and cultural trends in the Chinese
market.

Austria
Following from a mind expanding trip to China, my next visit was to a smaller and less
dynamic place, although one with some great lessons to teach, Austria. Here my objective
was to look at pumpkin seed production. The pumpkin has a similar place in Austrian culture
to the olive in Italy and the ham in Spain.
The seeds are grown in a particular region, Styrian, and are a cherished part of the local
culture. Harvest is celebrated, and the first pressing of the oil is carefully controlled and
monitored by the producers. They work together as cooperatives to market the seeds and oil
and add value by restricting supply to carefully managed and marketed outlets.

This works on many levels. The growers retain the value created as owners of the brands
that they produce, and consumers have an attachment with the products as a result of the
marketing efforts. Investment has been made in the technical process, with funding available
for machinery and processing equipment, but has also been made in long-term research
projects with local universities. The University of Graz has a strong research background in
the healthy properties of oils, and this partnership provides invaluable support to the pumpkin
industry.

Pumpkin Crop in Styria

In addition to the scientific base, the producers are also clearly focused on the intellectual
property of the business, which is reinforced through regional protection of the products
through the EU’s Protected Designation of Origin / Protected Geographical Indication
scheme.

The cluster of individual growers, who are open and collaborate willingly, while using the back
up supplied by the Universities and research departments available to them provides an
excellent production base. Again, the romance and the story behind the production of the
crop, reinforced by scientific research and a strong and patriotic food culture form the
platform for the successful marketing of an agricultural product into the food system.

I also took the chance to visit headquarters of the global drinks company, Red Bull. As a
functional drink Red Bull has in the space of 15 years grown from a small scale Thai tonic
drink into a £2billion business. An enterprising Austrian had seen it on his travels and decided
it would work on a big scale. The process of clever product placement, innovative word of
mouth marketing through student parties and sports and music related promotions has
played a huge part in the success. Marketing, not production of food and drink is the key!
USA
I travelled within California from San Francisco in the North to San Diego in the South.
Driving along the central valley in California I saw mile after mile of hugely productive
cropping. Kern county alone grows over 280 different kinds of crops ranging from annuals
such as wheat and cotton to orchard crops such as almonds and pistachios worth nearly $3
billion. Table grapes alone account for $600 million.

But this is a traditional agricultural economy, where the value does not always remain with
the primary producer. Despite the production capability and range of commodities produced,
the farmers I spoke to – growing grapes, almonds, or peaches – all faced similar issues to UK
producers. Strong supermarket buyers, weak negotiating positions, oversupply, and a lack of
marketing knowledge all work against primary producers and their potential to add value.

But there were some outstanding examples of agricultural marketing. In particular, I was
fortunate to visit PomWonderful, the pomegranate juice company, and other growers through
the Californian Pomegranate Growers Association.

PomWonderful is a company that grows the 14,000 acres of pomegranates used to make
PomWonderful's products. The orchards are owned and farmed by the company. This makes
PomWonderful the only vertically integrated company in the pomegranate business. The UK
has some examples of privately owned farm businesses that add value, but nothing on this
scale.

Research and marketing

PomWonderful provided over $25million dollars of funding to support academic research into
the health giving properties of Wonderful variety pomegranates. This research has been
conducted at leading universities around the world, including the USA, Italy, and Israel.
Twelve human clinical studies investigating POM Wonderful juice and extracts have been
published in peer-reviewed medical journals. These preliminary studies showed promising
results in conditions including heart disease, prostrate cancer, diabetes, and erectile
dysfunction. This $25 million compares with the – approximately - $13 million spent on
conventional marketing and advertising. This includes award winning advertising, great
product placement on TV shows such as Desperate Housewives, and a full range of alliances
with charities such as the American Heart Foundation.

And the results of this effort? The annual turnover of the company grew from $12million in
2003 to $93 million in 2006, with similar growth forecast for the last year. Admittedly, the
owners of the farm themselves are extremely successful and active entrepreneurs across a
range of industries including mail order, food processing, as well as commodity agriculture.
But the opportunities for positioning a natural food product as a health tonic are clearly shown
here. Knowledge and partnerships are the keys to success. The knowledge from clever
product design and correct use of imagery and marketing, the academic studies; and the
partnerships with external organisations, from grocery chains, to distributors, to charities, to
leverage the expertise the company had.

And the success has been despite widespread competition – one estimate had 350
pomegranate juice products on the USA marketplace at the end of 2007. The marketing staff
I spoke to at PomWonderful were clear on the importance of great execution of the business
plan, and not being too concerned about competitors.

'The Antioxidant Superpower'

Overall market structre

The USA has similar market conditions to the UK, but on a completely different scale.
Traders at the California farmers markets I attended thought nothing of travelling 250 miles to
attend a market. In the UK this would not be considered local! While the concentration of
multiple retailers is slightly diluted by the size of the overall marketplace, similar foods are
eaten, and the importance of convenience is massive. And the influence of the media, and of
fad diets is similar, if not even greater than in the UK. The lack of food culture and knowledge
about foodstuffs means that the USA and UK are more susceptible to fad diets than the
Mediterranean and Chinese markets.

Back in the UK
So what did I learn that was relevant to the UK? There were so many lessons and examples,
and in the next pages I've tried to distill some of that information and how it's relevant to the
UK market.

A look at trends

The concentration of outlets in the UK means that the outlets that foods are available through
remain similar, but the status of products sold does change. There are different trends at
work – low prices work for some consumers, while premiumisation has been a key trend, with
Institute of Grocery Distribution (IGD), figures putting values on the premium market of as
much as £13bn, with projected growth to over £19bn by 2011. This was based on a premium
definition that included the following product types: organic, fairtrade, locally & regionally
sourced, specialist/fine foods, retailers’ premium private label and premium branded
products.

The premium sector has been where most of the successful farm food businesses in the UK
have been aimed.

Local food has been a buzz phrase in the UK for 3 years now. If anywhere, it originated in
Berkeley, California and was championed by the chef and restauranteur Alice Waters at Chez
Panisse. A great lunch if you're anywhere near! Interestingly attitudes to local food varied in
the countries I visited. The Chinese couldn't comprehend why it made any difference to
demand. The urban Americans thought it was essential, although their definition of local was
generally local to their state – in the case of California that makes anything within 1000 miles
local! This makes the 30 mile limit of Waitrose seem quaint. The Spanish thought that each
region had its speciality and should stick to that. And the Austrians were fiercely patriotic and
had bought regionally for centuries.

It’s now a trend that UK supermarket groups are exploring – each has a local sourcing and
buying team, and some are finding this a successful way to appeal to consumers minds, and
a useful way of enhancing their corporate image. The actual volumes sold are currently small
in comparison to the mainstream, though growing.

An apple a day

And underlying all the current trends is a move towards a healthier option. This is not new.
For as long as foods have been promoted and consumed, their health attributes have been
part of their appeal. Some of the biggest global food products, including Kellogs Cornflakes
and Coca Cola started life as alternative health products. The huge upsurge in interest from
the media and consumers about healthy eating, obesity, and school meals was one of the
reasons for the establishment of the Fruitface business and the application for this
scholarship.

So there is a general shift towards quality, and a rise in the demand for local food. The
success of many farm shop businesses and food halls, and recent launch of the US chain
‘Whole Foods Market’ in Kensington exemplifies the premium and healthy approach that the
UK’s affluent consumers are moving towards. The Whole Foods Market, and other stores
including the John Lewis Food Hall are currently relatively tiny outlets, but ones which the
major UK retailers are watching closely.

General trends in healthy eating

There has never been so much concern over the food that we eat. Whether they’re
20somethings living in studio apartments or 70 year old divorcees from the suburbs,
consumers tend to pick up ideas on how to eat not from knowledge handed down through
generations, but from a huge variety of media channels including fairtrade websites, celebrity
gossip magazines and TV chefs. These fragmented and diverse influences lead consumers
to local foods, exotic imports, energy supplying foods, foods providing good bacteria, low fat,
good fat, anti cellulite, muscle gain… the list is long and sometimes bewildering.

It is not surprising then, that consumer demand can change almost daily. But the average
farmer – who is male, aged 58, and lives in a quiet rural area – generally has a very
traditional diet and lifestyle compared to the rest of the population. How primary producers
cope with varying population and food trends is a key issue for UK farming.

At any time, there will be several trends affecting consumer buying behaviour - including a
move away from traditional foods such as white bread, cakes, and red meat in favour of
convenience, health, and low cost produce. This is not an ideal trend if your business model
relies on selling tonnes of potatoes, sugar beet, and wheat at a high price.

Fortunately, there has been a large rise in interest in ethical consumerism – the willingness of
consumers to buy products with provenance and perceived ethical benefits. This leads to
consumer demand for higher value goods that farm based businesses can supply. These
include local food, and food products with health benefits.

The healthy eating trend is part consumer led and part caused by Government and
international awareness of the problem and added cost of an unhealthy population.

But what is a healthy diet? There are hundreds of diets, some good (GI index), some bad (fat
rich Atkins), and some bizarre (the Jesus diet). Sadly for producers, leading health experts
across Europe and the USA can agree on one thing - in the Western world, eating healthily
usually means eating less.

For UK producers brought up to maximise yield this trend towards lower volume and higher
value requires a massive shift in attitude.

Other trends in the food sector include a drive away from processed foods towards more
natural, unadulterated products. Foods that are recommended include whole grains (such as
brown bread, rice and beans), fish, white meat, fruit and vegetables. These are
acknowledged to be the healthiest food groups and the staple ingredients of a good diet.

Globalisation

Globalisation has had a huge influence on dietary trends, both in production, productivity, and
on dietary habits. Products are now shipped globally, and foodstuffs quickly appear that
would have been unheard of 30 years ago. Hummus, tahini, olive oil, soy milk, beansprouts
are now staple parts of the UK diet. Dripping, suet, spam, and turkey twizzlers are all
products that have been superseded.

The speed that Supermarkets in the UK can introduce products was shown to me when my
business Fruitface introduced our range into Asdas stores through their local sourcing
groups. After our initial meeting in June 2007 we were stocked by them within two months. In
the same time frame, they had sourced an own label range with a strangely similar pack
design at a much reduced cost. Flattering, but very concerning!
Dietary trends

There are at any point hundreds of diets available to anyone seeking to lose weight, tone up,
reduce blood pressure, or otherwise improve their health. Although over the long term most
are very hard to follow, and don’t work, the power that some briefly take on when they
capture the public imagination is huge. Atkins, Zone, South Beach, GI, are all diets that have
become successful through shrewd media placement and celebrity endorsement.
Unfortunately, these shooting star diets tend to explode onto the public consciousness, catch
the mood of the time, cause food companies to launch new products based on the principles
of the diet and promoted alongside the diet, and then decline as quickly as they appeared.
This poses problems for all food companies, even those that have a more flexible business
model than the average farmer. For arable farmers, who have a ‘product cycle’ of one crop
per year, the flexibility needed to produce crops that fit in with fast moving dietary trends is
impossible to create.

To benefit from trends in diets, producers have to look at long term shifts in consumption, and
align the crops they produce and products they create with these trends. Long term,
wholemeal products are more popular, demand for oats is rising, and demand for oilseed
products made from non saturated fats is helped by media promotion.

In some cases, it may be possible to create genuine cultural preferences for local farm
products through long term marketing – in part the process outlined earlier in this report.
Austrian pumpkin seed growers, California raisins, and Spanish jamon producers are all
outstanding examples of regional producers that are now internationally known.

Superfoods

By attaching the label superfoods to products, manufacturers and the media have combined
to create huge growth areas for products such as broccoli, spinach, salmon, and blueberries.
Each has benefited from press coverage, in particular the blueberry and the pomegranate,
both relatively unknown and underused fruits until they captured the imagination over the last
three years.

Producers and manufacturers have used the media to harness these trends. The power and
change in media and how they can be used are critical to food producers. The Californian
company PomWonderful is a great example of how a marketing campaign can revolutionise
an agricultural commodity.

Trends affected by media coverage

Dietary trends are particularly affected by media coverage, and the changes that have
occurred in the structure of the media partly explain how people's eating habits have become
so diverse.

The media world has become more fragmented, more diverse and has been transformed by
technology. The main BBC and ITN news reports used to have audiences of 8 and 10 million,
yet today they average half that. At the same time, there are rolling 24 hour news
programmes with small audiences that cover events as they unfold. In the early 1980s, there
were 3 TV stations broadcasting in the UK, and now there are several hundred.

Newspapers also fight for a share of a shrinking market. Many are now read on-line rather
than the next day, and the value and volume of internet advertising has overtaken newspaper
adverts. There are roughly 70 million blogs available online now, with thousands being
created every week. Many are not influential and never read, while some are read and
repeated by journalists and broadcasters. In particular, young people less and less get their
news and opinion from traditional outlets. The websites Google, Facebook, Myspace, and
other sites are the destination of choice for news, views and general information.

Individual producer's contributions through videos, blogs, and other online activity have a
huge role to play, and should be encouraged. Multinational corporations with huge marketing
budgets target these channels, but there are no financial barriers to putting information on
such sites. Here the power of a great story comes through, and so the possibilities for
promoting small business are huge. Some great examples of small companies that use direct
online communication include Howies (www.howies.co.uk ), Innocent Drinks
(www.innocentdrinks.co.uk ), and Wiggly Wigglers (www.wiggglywigglers.co.uk ).

So consumers are bombarded with different stimuli, each with diverse and sometimes
conflicting messages; and traditional methods of eating are changing. There is a huge
diversity in the profile of the average UK consumer. When you combine this with the more
traditional demographic of the average UK farmer: male, aged 58, stable family unit,
farmhouse diet of meat, vegetables, then pudding; it is easy to see the lack of connection
with the rest of the population, and say that targeting opportunities in the food market will not
be suitable for all.

New media threats and opportunities

Traditional media techniques no longer can be used on their own. This is an opportunity and
a threat. An opportunity in that small, flexible, and creative producers can get their story told
and promoted to a mass market without the traditional marketing budgets needed by
consumer goods businesses. And a threat from several angles.

Farming is an industry that in part relies on heritage and tradition for its product's appeal, and
the organizations that farmers generally use for promotion – the NFU, the levy boards, and
producer groups - are structured on traditional lines and use traditional means of
communication. This is unlikely to change given the average age and societal background of
the UK farmer.

Despite individual examples of great communication including grass roots campaigns such as
Open Farm Sunday and the rise in local food and farmers markets, there is a dearth of more
sophisticated communication from the farming sector. When you compare the proportion of
revenue that consumer goods businesses put towards promotion – and recognize that these
are the companies that farm businesses have to compete with – there is a clear gap here.

However, farms should not assume that the best way to compete in the food market is to fund
similar communication strategies as their competitors. The strongest attribute that UK
agriculture has from the marketing side is its unique story.
In order to compete effectively with established food businesses, and successfully negotiate
with supermarket buyers, farm food businesses need to have a point of difference, and to
brand themselves effectively.

If businesses are interested in adding value to their commodity and creating a bond of loyalty
with their customers, they need to brand their product. Unfortunately for farmers who see
themselves as men of science and pragmatic, practical people, branding is an inexact
science, where emotions matter at least as much as hard facts. Great brands are not just
made up of images on labels, they also connect with customers through the power of
storytelling. As a real and authentic industry with a living and growing storyboard, farmers
and farm based businesses are well positioned to create great stories and thus great brands.

The story of a product created from a commodity then packaged and with minimal processing
ending up in the consumers’ plate is one often used by food companies. Del Monte,
Starbucks, even McDonald's all use this kind of imagery to sell their brand, and in time their
products. This has a real value, though not one realised by UK farming.

This appropriation of the hidden value in farming’s image by others has gone on for too many
years. UK agriculture is severely under resourced in marketing, primarily because of a lack of
knowledge, sophistication, and awareness rather than a financial shortage. But to plan a
promotional campaign there must be a clear identity to promote. As the media world has
become more fragmented, there are many segments within UK agriculture that set farmers
against each other. Organic vs conventional, corn vs horn, white meat vs red meat, are all
potentially divisive areas that could cause confusion in a consumer's mind.

The result is that while use of the media is absolutely necessary to business, it is essentially
not possible to guide the media unless there is clarity and coherence. Media coverage is
driven on by desire to find the ‘new new’ thing. This may well be in favour of a UK product or
service, but there are hundreds of other ideas and products clamouring for attention, and
these can all have an impact on the minds of consumers.

And in what way can the traditional farm lobby groups have a voice in this? There needs to
be a level of professionalism and awareness of New media that hasn't been seen previously.

Categories

UK grocery aisles are separated into differing parts. While there are niche opportunities in the
free from and wholefoods aisles, the majority of revenue comes from the mainstream aisles,
where competition is intense from well established and resourceful businesses.

Traditional products derived from arable crops include: porridge oats, granola, bread, cereal
bars/flapjack, crisps, and oils.

These are all established products that contain a large proportion of ingredients that are or
could be grown on UK arable farms. Of these, crisps in particular have been rebranded
initially by Kettle Chips, but more relevantly for farmers, by Tyrells, Pipers, and Yorkshire
Crisps as a prestige farmer produced product. Crisps (and snacks in general) are a more
appealing market for producers to enter than standard grocery products due to the range of
outlets that can be supplied away from supermarket retailers.
The same principles can be applied to the other products listed. Premium, wholesome, and
home produced are all great selling points, and there will still be opportunities for genuinely
new products. But in every market there is only room for a certain number of products. If you
look at the breakfast cereal category, there are Kellogg’s products, Weetabix, and
supermarket own brands in any number of varieties. Alongside these appear Jordan’s
cereals, and other companies including the Dorset Cereal Company, which stress their
natural and farming roots. At a local and niche level, small farmer producers supply fine food
outlets and other alternative channels.

It’s great to see some market leading businesses in the food sector leading by emphasizing
their rural roots and farm origins. However there is only room for a certain number of brands
– both on shelf, and more importantly in consumer’s minds, and any success story has to be
backed up by a well executed business operation to prevent copycat businesses entering the
market.

Conclusions

There is a limit to the number of food businesses that can profitably co exist, but the fast
moving nature of the UK food market – when compared to more conservative and traditional
markets such as those in France, Spain and Italy – means that opportunities will continue to
appear.

Industry wide recommendations

The gap between industry bodies and consumers has been widened by the fragmentation of
the media. It is not only the duty of the levy boards and industry organisations to promote
themselves. It's also up to individual producers and businesses to market themselves – as
some are doing successfully. The best models to follow appear to be that of those few
agricultural producers who successfully add value right through the chain to the consumer -
wine producers, Spanish ham producers, olive oil growers, pomegranate growers, and
Styrian pumpkin seed farmers. These seemingly random producers all use similar techniques
to make sure that their produce is demanded and consumed.

Academic research

As a means to attract publicity and verify claimed health benefits, having academic studies
that state the benefits of a product can be of huge value in increasing demand. Probably the
best example of industry-sponsored research comes from the success of the PomWonderful
pomegranate juice brand. Based in Los Angeles, the drinks brand had over $20 million US
spent on research projects that support its health claims. This though, works best as part of
an overall strategy. Given that the real strength of farm based food businesses is in their
uniqueness and in the story that lies behind the product, an over reliance on science can be a
misallocation of resources. Look at the below pictures. Both people advocate certain types of
diet. Which has more impact and a healthier image?
A scientist Elle MacPherson

Celebrity endorsement

As important as scientific claims are, in today’s world there’s nothing like a celebrity
endorsement to attract demand. And here again, in the UK the absence of a strong food
culture results in a consumer base eager to believe what they’re told is a good thing by
someone they look up to.

There is huge possibility within the UK food market for celebrity endorsement. The limits are
only imagination and financial resources. And while celebrity chefs provide a valuable service
in promoting local foods and recipes, there is much more that can be done. Globally, the
biggest British icons are its actors, musicians, models, footballers, and writers. These are
rarely seen promoting food types, and seem to have little connection to farming. They could
have, and should be used more effectively. Does the NFU have any link to the Football
Association, or the British Academy of Film and Television? These are the types of external
partnerships that UK farmers who target consumers need.

General Issues raised by the studies


On farm processing issues

With the current increase in demand for all natural resources, commodity production looks
promising, but if historical trends are a guide, then farm size will increase, as will equipment,
and staff levels will fall. This in the long-term means a very different agriculture; with low
employment levels, bigger machinery, and fewer and fewer customers. So more industrial,
and less in touch with consumers. For farming to enjoy the current level of public goodwill
and political influence commodity production shouldn’t be the only way forward.

The business model of the average arable farm in the UK is one that has historically needed
a low level of investment in sales and marketing. Despite the recent rise in commodity prices,
arable farming will continue to follow the historical agricultural trend towards lower staffing
levels, increased mechanisation, and the consolidation of holdings to spread fixed costs and
enhance returns.

Unfortunately, this trend towards scale raises a number of issues, especially when the value
of crops is low. The decline in employment in farming means a reduced proportion of the
population are involved in farming and are less connected to the production of food. As there
are fewer farmers, they have less political influence – and without government and political
intervention, UK farming would be very different.

The market for commodity production looks promising for the future. There are two main
reasons for this. One, it’s clear that globalisation has caused a rise in the worlds prosperity
across all continents and an unprecedented level of demand for all commodities from rubber
to rapeseed. Secondly, and reinforcing the rise in demand, concern about global warming
has become a scientifically accepted reality. From this international policy has turned toward
biofuels as a sustainable energy resource, and demand for soft commodities to produce
biofuels has grown exponentially. This level of demand has not existed before, and is acting
as positive support across the globe.

Future options
So what are the options for farmers? These vary in the same way that each farm in the UK
varies.

If you have a great location, then there are numerous successful farm shops and leisure
attractions to provide inspiration. England has the highest population density of any major
country in the Western world.

If you have great scale, then use it to produce more and more.

And if you have an interest in food and marketing, then use that, either on your own, or in
partnership with other interested producers, and take a consumer product to market. This
may work, and give outstanding profits and public appreciation, and it may fail, and leave you
with a depleted bank balance and public failure.

Without some strategic advantage as a small producer, it will be increasingly difficult to


survive. If this strategic advantage is permanent in the form of land, then it will be easier to
prosper. But if this is not the case, then personal attributes have to be encouraged and
developed. Training, education, and skill development have to be taken seriously if farmers
are to add value and not be dependent on the fluctuations of the world cereals market and
the whims of OPEC.

It’s customary to look at arable farms as a group, applying standard yields and returns to
each farm, and estimating benchmarks from that. If farmers are to enter the food market, then
the standards are different – each business is different, with a real range of resources. So it is
harder to quantify returns and opportunities.

But it is possible to look at examples, and use these. If you examine the crops grown, then
there are opportunities in the health food market. Wheat, barley, oats, and oilseed crops are
all used by food manufacturing businesses as part of their healthy product range. Can
farmers do the same?

From my own experience, once you get beyond the local outlets and independent trade (farm
shops, delicatessens, sandwich bars) to sell into the likes of Asda, Tesco, and Morrison's, is
not an easy task. Market conditions change, as do buyers. How well the local food market
stands up to the drive for lower cost foods is crucial for the future of food producing arable
farmers.

Processing

The value of processing on farm comes through the marketing benefits that can be gained
from having an idyllic location. In some cases it makes sense for farmers to process
themselves. In many cases it doesn’t. It is expensive, time consuming, and an investment in
plant and machinery that can depreciate rapidly. Cooperation and partnerships have to be
thought through as part of any business plan.

Not every farm processor can be as successful as Tyrrells crisps, but inspiration can be taken
from them. Much value is created by food manufacturers and retailers who use the image of
farms and farmers in their marketing message.

This is another untapped resource available to UK agriculture – its intellectual property.


Brands can be created from existing assets, but in each case the producer must look for their
point of difference. Champagne, Jamon, and Styrian pumpkinseed oil do not use their name
without the value reverting to the grower. Growers must work to develop their partnerships
with other businesses, and figure out what their business does that adds value.

The major barriers to arable producers becoming more involved with the food chain and
adding value are:

- Farm production needs a high level of processing to turn into a food product.
- It's expensive to process, both in terms of investment in plant, and also to create a brand
and get the finished product to market.
- Primary producers generally don't have the skills and knowledge to add value in this way.

Functional foods

Functional foods have often been talked about as the future for food production, with
patented ingredients seen as a high return solution to a low margin commodity structure. The
rise in probiotic yoghurts, cholesterol reducing margarines, and isotonic drinks all show how
much investment has been made here. But food is not a market where the appliance of
science is readily adopted and the recent GM debate has confirmed that there is a general
mistrust of science, particularly when applied to food.

It is crucial to plan carefully before promoting one specific property of any food type. The
number of failed launches of functional foods shows how fast moving and challenging a
market like this can be, particularly for primary producers. For every successful manufacturer
of Bio yoghurt, there are manufacturers of oat milk and oil blends that haven’t had the same
success – due mainly to a lack of consumer understanding, convenience, and taste. Time
and again consumers show that they prefer buying food over science.

As much of the success of farmer owned businesses can be attributed to the emotional
connection that they are able to make with the consumer, following a purely science based
approach risks losing that positive emotion and competing on science terms alone directly
with the massive research and development budgets of large food corporations. This market
is one to be approached with care.

This is not to say that UK agriculture should ignore science, just that it should utilise
partnerships with scientific research wisely, and tailor its marketing message to consumer
needs. The lessons of GM should be born in mind here, and the main selling point for farm
businesses – their unique ‘natural’ story – should be protected.

Organic or not?

Although organic producers and their lobby groups have been very vocal in promoting the
claimed health benefits of organic food, there is no real evidence to support the claims. The
Food Standards Agency regularly confirms the lack of evidence, and it seems that any
benefits that are claimed come from a different type of husbandry rather than the lack of
chemical inputs. Despite this, there is a loose connection in consumer’s minds between
organic and healthy, and conventional agriculture can learn from this. There are leading
companies (Innocent Drinks, Birds Eye, Pret a Manger) that have a reputation for healthy,
excellent quality food without being organic. Their examples show that it is not always
necessary to be organic to attract wealthy health conscious consumers.

There are though, many lessons that can be taken from the success of the organic sector.
The food marketing knowledge, skills, and techniques so often lacking among conventional
producers are often seen within the organic community. There are combinations of reasons
for this: a lack of scale, an open mindset, and the necessity for consumer involvement have
all caused farmers to seek new skills and add value.

Distribution channels

It’s unlikely that pure commodity producers will benefit in the long term from any changes in
eating habits in the UK. Any value added is created too far away from the farm gate to make
any real difference to commodity prices. Yet primary producers looking to move away from
commodity production and add value must realise that the standard food/grocery market in
the UK is as competitive as any in the world. This means that the products they supply can
either compete with experienced food manufacturers – who themselves struggle against
retailers buying strength – or reflect the more fragmented outlets that they can reach such as
food service, snacking, sandwich outlets, and direct sales. The concentrated nature of
grocery food retailing in the UK means that any plans to sell into that market have to be
looked at through the eyes of the biggest distribution channel – supermarkets. When
companies such as Weetabix and Gillette feel that they have to sell out because they don’t
have the power to negotiate with big retailers, why should farm scale operations be in any
position to compete?

They often won’t be. The farm businesses that do prosper will not be the ones that compete
on scale alone. To add value, investment - not always financial - must be made in creativity,
innovation, and in branding, story telling, and giving organisations and products a point of
difference. Food products are generally easy to replicate, and must be differentiated in order
to add value.

This requires much more than working with a supermarket chain. Just because products are
on shelf in a white warehouse does not mean that passion, brand loyalty, and added value
have been created. Primary producers have to understand that the market for their products
may not currently exist, so they have to create a market themselves. This process can be
extremely expensive.

Fortunately UK farmers have ready-made resources that are unavailable to most food
manufacturers. For example, consumer goodwill, an attractive physical location, and close
proximity to a wealthy consumer base. These can all be used as part of an individual or group
of businesses’ marketing strategy.

Connect with consumers

So how do farmers get closer to consumers? There are industry initiatives available, including
the Food Chain Centre, which provides access to research and knowledge based on TNS
data, derived from Tesco customers shopping habits. Other ways of gathering knowledge
range from being involved with local food groups to attending food events and selling direct –
such as at a local farmers market, or from the farm gate.

If farmers are serious about adding value to their products, they must be as involved as
possible with the consumer. This leads to the consumer having greater emotional connection
to agriculture and a respect for food, which can create a virtuous circle where consumers
demand a higher standard, and are aware of and willing to pay for the extra value. Globally,
public knowledge and awareness of food leads to healthier populations and increases the
value of the food that is returned to the grower. The UK should not be left behind here.

In addition, for an agricultural industry that needs positive publicity, it has to be a good thing
to be seen to be providing healthy and thus socially responsible products.

There are opportunities for farmer owned and farm based businesses to prosper from
changes in eating habits, but they are not available to everyone. The changes to business
structures and changes in mindset required will be beyond the scope of many. Those that do
succeed will have a combination of assets in their favour that include personal skills and
geographic location. There will be opportunities for larger businesses and cooperative
organisations, but there are also opportunities for smaller, more flexible businesses, which
have clever people but less financial and physical scale, and are thus less constrained by
their current systems.

Recommendations and conclusions

Development of food culture

− My travels and studies showed me that the countries that have the most ‘diets’ including
the USA and the UK are those that have the most dietary problems. Conversely the
Mediterranean countries and China, where food has a real place in society, have a
relatively healthy population and traditionally less time for fad diets such as Atkins, Zone
diets, and diet gurus selling supplements.

− A lack of emphasis on the process of food preparation and too much focus on ‘healthy
snacking’ and ‘meal solutions’ rather than the origin and provenance of food seems to
have lead to an extremely unhealthy situation for consumers and farmers.

− Developing the food culture of the UK has to be the foundation of any British farming and
food initiative. It is a sound approach for the nation, socially responsible, and enhances
the reputation of British farming. This enhanced reputation helps not just speciality food
producers. It adds value across agriculture, through facilitating a better negotiating
position with policy makers, greater consumer appeal, and easier media access.

− It also means that other interested groups can’t move into the marketplace for UK food
and take market share from conventional agriculture by undermining it’s reputation and
practices. Too often conventional arable farmers see their roles as purely commodity
producers. This is a common view, and ignores the benefits that farming receives from
society and the benefits that commodity producers receive from their association with
producers of food and environmental goods. These are widespread and include public
goodwill, and an enhanced lobbying position nationally and across the EU.

- The benefits of initiatives like open farm Sunday and improved access to UK farms help
to reconnect agriculture to the rest of society. Ground level marketing and promotion like
this adds value to UK production by cementing in the mind of the consumer the positive
nature of UK produce.

− The story that farmers can tell about their products should not be wasted. UK farming has
in its diversity and stories about individual producers the basis of a great brand. The
stories that food retailers tell about their producers are tremendous sales tools.

− When entering the food manufacturing business, perhaps the biggest attribute that
farmers have is their story. Consumers love it, it is something that other businesses would
love to have, and it has a real value that is being given away by farmers to the processors
and retailers. And although farmers may not currently have the knowledge and skills to
appropriate the brand value of UK agriculture there are ways to access them. Agriculture
has been guilty for too long of resting on its laurels, and being too slow to change. If
there’s a good thing to have come out of the recent low commodity prices, its been that
people have had to be creative and been forced to look at new ways of doing things, have
had to reconnect with the rest of the economy, and at new ways of getting the best out of
their existing assets.

Here in the UK we have a modern and sophisticated economy, some exceptionally talented
and creative people, perhaps the worlds best designers – the Olympic logo excepted. But in
terms of fashion, media, technology, sport, and architecture, Britain has companies and
individuals that lead the way. Partnerships should be forged not just within agriculture, but
also with groups and industries that agriculture can learn from.

Just for a moment think how hard it is for an Australian or New Zealander to have such talent
and demand within a few hours drive.

So product ideas are available to us through inspiration from consumers and the media, we
have the means to test new products cheaply through farmers markets and the growing farm
shop network, we have the media to help promote the products, and the capability to promote
them lies in farmers hands.

We’re so close to such an affluent market, and this should provide an opportunity for UK
farmers to sell food direct and to thrive. There is a real demand, a real market, and the
resources local to the UK to make farm based businesses that put the market first thrive and
survive.

Edward Sweeting

edward@fruitface.co.uk

Personal reflections
When researching my study, I've been struck by the interest shown in my own business, and
how the report I've produced and the conclusions drawn have affected it.

Well, the lessons learnt have been that it may not be wise to expand the business too far with
our current product range and staff. We're based in a very rural area, with limits on our
financial capacity and availability of staff. In order to effectively sell products through the food
chain the marketing proposition for the consumer and retailer has to fit with their aims and
plans. Our current product range was designed to fit on the delicatessens shelves as
something different, innovative, and suitable to be bought as a gift. This does not translate
well when put alongside cans of beans, multi packets of crisps and other staples. The slow
dance with major retailers is too much like a slow smother for my liking.

So we needed to have a rethink. It would be great if we had customers outside the door. But
it's rural here. Unfortunately, it's four miles to the nearest shop, and if there are 10 cars drive
by in a day the road is busy! A 'direct to the consumer' sales model, using online technology
and catalogues is the next stage. We'd like to sell healthy food products all over Europe, but
on our own terms. Commodity production is one thing, to really add value to a small part of
the crop we'd like to sell it direct. The Nuffield experience has equipped me with many great
experiences, friends, and hopefully with the perspective and the clarity to see that many
customers can be better than just four.
With thanks for their time and contribution:

Many thanks to all those who helped with this report, some of whom I have named below as
a guide to the range of contributors. All your help and guidance was much appreciated.

Spain

Habib Essid –Executive Director, International Olive Oil Council

Antonio Caravaca. Jamon Production

China

Chen Zhiangliang. Grower. Nanjing

Ma Yanjung, Farmer, Shaanxi Province

Venetia Paillard, International Food Buyer, City Shop, Shanghai

Director, Song Minsheng, and all staff at the Department of Commerce, Shaanxi Province
General Manager, Xi Ziwang.

UK

Amanda Ursell, Dietician, Journalist. Sunday Times, GMTV

Jim Dowling, Creative Director, Ogilvy Public Relations EMEA.

Fiona Richmond, Slow Food UK

Dean Cook, Central Science Laboratory

Austria

Eva Holzschuster STEIRERKRAFT

Tom Muller. European Marketing Director, Carpe Diem / Red Bull GmbH

USA

Randii Macnear Davis Farmers Market


Karla Stockli, VP of Marketing, California Raisin Marketing Board

Angel Mexa, Marketing. American Apparel, Los Angeles

Mike Benzinger, Benzinger Winery, Sonoma County


Marsha Guerra, Chez Panisse, Berkeley, California.
Dr. Marian Nestle, Professor and Chair, Department of Nutrition and Food Studies, UC
Berkeley
Fiona Posell, VP Corporate Communications Pomwonderful
Gabriele Ludwig, Almond Board of California.