This was the general consensus of development chefs, new product development (NPD) managers and interim/freelance NPD specialists contacted by FoodManufacture.co.uk following Clarke’s admission that Asda had not been as focused on “food values and food quality” as it might have been.

While some observers believe Clarke’s admission was a PR gaffe, one consultant that has worked with all of the major multiples on premium own-label ranges said his honesty was “refreshing”.

He added: “At long last we’ve got a chief executive that’s said publicly what most of the industry thinks privately. They call the range Extra Special, but it’s not. Not only does it lag the competition but there is not really much of a differential between the spec for their standard products and some Extra Special lines.

“I personally think that the quality has gone backwards in some areas – they are behind where they were five years ago. The aspiration is there but you can’t ask for M&S quality at Asda prices, which is what they are asking for. Something has to give.”

He added: “Asda has done some interesting things, it’s launched ready-to-cook microwaveable bagged meals, which is conceptually a very good idea, for example. But in general, I think it has let itself down over the past two or three years and in many areas it is well behind the competition.”

Waitrose now retailer to beat in quality pecking order?

In quality terms, Waitrose was now the retailer to beat, although manufacturers still typically benchmarked products against Marks & Spencer in chilled food, claimed another industry source.

“Waitrose has recognised that what consumers are looking for at the premium end of the market are freshness cues, interaction, great recipe composition and great packaging. But Tesco has also raised its game recently, especially in Finest.”

One development chef that has worked with own-label suppliers to all of the leading supermarkets said: “The quality of Asda’s own-label range is under par in some areas, but its aim is to be the cheapest, and if you want to be the cheapest, you have to make compromises.”

He added: “When I last went to the head office, I was given a badge saying something like ‘I’m here to make goods and services more affordable’, that’s the mentality of the company.”

Another development chef said: “The quality of Asda’s range is quite variable – it really depends on the product category – on Indian sauces, for example, they have tried to go down the authenticity route on Extra Special but I am not sure they have got it right for the UK palate. Some of the products are actually quite inedible in my view.

“But on chilled ready meals, they are not bad at all.”

One consultant that has worked with several leading branded and own-label manufacturers, added: “I think they have taken their eyes off the ball; they are just a bit off the pace compared with the competition.

“As for the pecking order, I’d say in convenience meals, it’s M&S, Waitrose, then Sainsbury, then Tesco. Then you’ve got Asda.”

Asda: “exciting” new products in the pipeline

Asda, which has seen its market share dip slightly (0.3%) in the 12 weeks to July 11 according to Kantar Worldpanel, said its range would soon be refreshed with some “exciting” new products.

A spokesman added: “We love our food and are proud of the products we sell, but you don’t get anywhere standing still.

“That’s why we’re very excited by the work we’ve been doing behind the scenes this year, much of which is going to be available to see in our stores very soon. So it’s a case of watch this space.”

Mike Wilson, president of the British Automation & Robot Association (BARA) told FoodManufacture.co.uk that despite a 172% growth in robot sales to the UK food and drink industry since 2006, the UK still lagged significantly behind its EU neighbours.

Wilson said that leading robot suppliers were beginning to understand that user-friendly, affordable systems could boost the popularity of their wares, rather than complicated systems that tried to accomplish too many tasks.

He said:“Certainly leading robot suppliers are driving towards developing robots that are easier to programme and maintain, systems that non-engineers can use.”

He added that SMEs in the food and drink industry found it particularly difficult to afford engineers specialising in advanced manufacturing technologies, whether as permanent staff or consultants.

Short-term payback

Another rationale for cheaper, less complicated systems was short-term payback, Wilson said, with UK manufacturers eager for quick returns from pricey, complicated machines because of worries about whether they would keep key retail contracts:

“One problem for businesses here is that the supermarkets have so much power,” Wilson said. “I feel they could be a little more proactive and encourage suppliers to innovate in exchange for contractual security.

“It would benefit the whole supply chain and prevent a vicious circle: if smaller manufacturers don’t spend on automation they risk losing contracts, but if they innovate, they worry about capital expenditure and potentially long payback times.”

Wilson said that German manufacturers only expected payback after five years, on average, and uptake of robotic technology was consequently higher than in the UK, as the latest International Federation of Robotics figures for 2008 show.

Within the food and drink industry, 823 robots were sold in Germany compared with 74 in the UK during 2008. Germany had a total of 4,817 robots in the industry, while the UK only had 637.

Simulation techniques

Nonetheless, Wilson said that baking and confectionery were two areas of food manufacturing where automation was making inroads, with current food and beverage industry growth driven primarily by “large manufacturers”. He mentioned primary and secondary packaging as two tasks for which robots were proving popular.

One scheme to encourage automation through affordability was launched by the Centre for Food Robotics and Automation (CenFRA) in July.

It employs 3D computer simulations to help food manufacturers ‘virtually’ evaluate the merits of automating aspects of production processes, and helps them avoid the expense of installing potentially unsuitable trial systems.

A CenFRA spokeswoman told FoodManufacture.co.uk said that new simulation techniques could be used by the food and beverage industry as a whole, and that uptake had been good thus far.

She cited a recent trial at Yorkshire-based pork pie maker Vale of Mowbray:“The firm wanted to expand a production line using robotics. They simulated a proposed idea using CenFRA simulation and found it didn’t work for them.

“It actually made production less efficient, and the design was subsequently fine-tuned. Obviously this saved them money on dummy trials.”

According to BARA, the food and drink sector accounted for 17% of UK robotics sales in the second quarter of 2010, second only to the pharmaceuticals industry (at 19%).

Overall sales of robotic equipment in the first half have also grown for the first time since 2006, and are 55% up on 2009, said BARA.

Speaking to FoodManufacture.co.uk after posting an 81% leap in full-year operating profits*, chief executive Jim McCarthy said big brands had historically been wary about dealing with the discounters for fear of scuppering relationships with the major multiples.

However, most now recognised the benefits of working with the discount sector, while customising products and pack sizes to avoid direct price comparisons with products on sale through the major supermarkets had also helped allay concerns, he claimed.

“The percentage we buy direct has increased as manufacturers recognise the professionalism of Poundland but also our strong volume growth – we opened 56 stores last year and hope to open a similar number or more this year.

“All manufacturers are cognisant of the major food retailers’ views on their dealing with the discount sector. But the major multiples in turn need to be careful that they don’t do anything anti-competitive. Over the last few years, the transparency of price lists has also helped major manufacturers deal with us.”

Different channels to market

He added: “My view is that there will be further consolidation in food retail, which will mean more power in fewer hands, and it will become increasingly important for manufacturers to look at different channels to market, from the discount sector to selling direct to customers. It’s important that you don’t put all of your eggs in one basket.”

The multiples had also put some brand owners’ noses out of joint over the last 18 months by highlighting the discrepancy between the price of own-label items versus brands, he observed.

“If I were a big brand owner, I’d also be a little peeved if I’d spent all that time and money building my brands only to see my customers use their online shopping sites to highlight how much cheaper their own-label products are. At Poundland, we are very centred on brands.

“We also don’t think as a business that we are doing manufacturers a favour by doing business with them. It’s a genuine partnership.”

Low cost to serve

As for buying terms, Poundland was not getting better terms than the major multiples, he said.

“People often ask me, are we buying at better terms than Asda or Tesco, and the answer is no. But we’ll accept lower margins than their model allows because we have an incredibly low cost base.”

Poundland was also attractive to manufacturers because of its low cost to serve, he claimed: “We make quick decisions and we pay our suppliers in full on time. You can ring us on Monday with an offer, and it’s highly likely that we will make a decision there and then. You can deliver on Wednesday and by Friday or Saturday, it can be in our stores.

“You don’t have expensive trips to the head office and you don’t have to wait for category reviews and endless committee meetings to get anything done. Dealing with us is very very simple.”

£200m food and drink range

Poundland was working increasingly closely with manufacturers to develop bespoke pack sizes and products to meet the inflation-busting £1 price point, he added.

“Several products are specific to us or our sector, such as Kraft’s Maxwell House classic roast coffee at 100g or 1.5kg bags of sugar and Tetley teabags. But there is also an element of re-engineering in order to meet the price point and give our customers value – so one year we might have 40 units in a pack, another year 45, for example.”

The chilled offer – milk, sandwiches, bacon, ham and butter – would remain limited to high-volume items, he said.

“It’s easy to be seduced by higher-margin slower-moving products, but that’s not our business model. We’re looking at bread but we’re waiting to see if things settle down a bit with wheat prices before making a decision.”

* Poundland posted an 81% rise in operating profit to £21.5m on sales up 28.7% to £509.8m in the year to March 28, 2010.

The company cites several benefits of its Swelite fiber ingredient, including increased stability and reduced volume loss, value-added protein replacement at 50 to100 percent, better standardization to allow for variation in poultry, and juicier poultry products.

Managing director of A&B Ingredients Gil Bakal said: “What makes Swelite so special is that it forms a matrix within the poultry paste. It acts as a shape retention agent controlling cooking losses and keeping the product in its original form. In addition, Swelite acts as a meat extender, thus increasing product economy with the same texture and yield.”

Bakal added that manufacturers would not need to change their manufacturing process to incorporate the ingredient and that it can be used for fat- and water-binding at one part to five in cold emulsions, or one to six in hot emulsions.

“Simply add Swelite to the poultry meats, shape and coat as usual. Swelite does not impact the processing of the nuggets,” he said.

A&B Ingredients said its pea fiber is a “label-friendly ingredient” derived from yellow peas.

There are several other companies offering fiber ingredients for extending meat products to reduce cost while retaining a juicy texture, based on a variety of cereals. Z-Trim, for example, supplies a corn fiber ingredient that it says can also cut fat and sodium content; Solae offers a soy fiber ingredient intended to increase the yield and fluid retention of processed meat products such as ground and kebab meat; and NutraCea has a rice bran ingredient intended to boost the nutritional and functional properties of meat products.

In addition, meat extenders are typically used in place of meat fat, which is extracted.

Developed by California State University professor Gour Choudhury, the new processing system uses air to blast peel off fruit and vegetables. A specialist in food processing systems, Choudhury estimates that the technology could cut fruit and vegetable companies’ water use by up to 80 per cent, saving tens of thousands of euros each year.

Choudhury told FoodProductionDaily.com: “We did a commercial prototype run last year, and it worked very well. We are doing a full-scale commercial run this year.”

Waste water discharge

According to the patent application filed by Choudhury with the US Patent and Trademark Office: “Using air to remove the loosened peel instead of the conventional use of water significantly reduces the freshwater requirements and substantially reduces the quantity of wastewater discharge with very low concentration of contaminants.”

The technology focuses on the initial use of caustic fluid and/or steam to weaken the connection between the peel and the flesh of the produce. “Once the peel has been sufficiently loosened from the flesh, forced air may be applied to the surface of the produce to remove the loosened peel and any residual caustic fluid,” according to the application.

Following processing, the fruit and vegetable peels, caustic fluid, and water are collected and separated. The peels are then neutralized and fed to livestock, used as fertiliser, or used for pectin production. The caustic fluid and residual water can be recycled.

Conventional processing involves slicing fruit in half, removing pits and washing the produce in a lye solution that loosens the skin. The skin is then removed by water blasting as the fruit is carried along a conveyor belt.

Accountant-friendly

Under development for three years, the new technology promises to offer an environmentally and accountant-friendly peeling solution for processors of peaches, tomatoes and other soft fruit.

Cost of the equipment is estimated at $300,000 to $500,000.

California State University has dedicated a team to commercialise the technology which is now looking for industry partners.

Ed Yates, president of the Sacramento-based California League of Food Processors told local news provider Freshno Bee: “Anything that uses less water, energy and chemicals will help keep us compete against the rest of the world.”

Oxfordshire-based Spice Application Systems (SAS) has seen limited UK orders in 2010 despite successful recent trials, and is also dismayed that companies have failed to pay resulting invoices, in stark contrast to European firms.

SAS’s equipment applies a static charge to powdered seasonings, oils or ‘slurries’ (oils mixed with spices), before spraying them onto foods such as crisps, sweets and cheese. The firm claims that this technique provides more uniform food coverage, and typically uses 10 per cent less product than traditional ‘tumbling drum’ methods.

Extremely disappointing

SAS reported in April that it had won UK business with Intersnack, Burt Chips and Seabrook Crisps, but chief executive Peter King told FoodProductionDaily.com that uptake amongst other companies since had been low:

“It has been extremely disappointing – we’ve conducted six recent trials for UK manufacturers and not one firm has taken up the technology, which is amazing considering how much money it could save them.

“We’re also having problems with these new UK manufacturers [not those named above] failing to pay invoices – seeing as trials only cost them £700 a time this is extremely shabby. The big difference is that European firms pay their accounts.”

King said that one major UK food firm had conducted a successful “full-blown trial” using SAS kit to add powdered starch on a grated cheese production line, but still failed to invest:

“Our product eliminated an everyday ‘balling effect’ for this firm, whereby every 20 minutes they have to stop the line, with associated staff time spent cleaning blockages. This takes around five minutes, so over an eight hour shift the costs rack up.

“We installed our machinery and the line ran for a complete day with no stoppages. The next week a company representative rang me and said the technology was ‘absolutely fantastic’. Nonetheless, there was still no uptake, it’s unbelievable.”

Principal barrier

King denied that affordability in a post-recessionary environment was the principal barrier to greater UK uptake of electrostatic flavour application technology:

“I can’t see that there’s a cost barrier to this technology – to be honest I have no idea why there isn’t more interest here, especially when manufacturers can typically expect a return on investment within four months.”

Nonetheless, SAS continues to prosper in Europe, and the bulk of its total 12,000 unit sales since foundation in 1999 come from this region. King said that trials were ongoing with firms producing products as varied as crisps, frozen foods, confectionery and pet food:

“We have one ongoing trial with McCain, and we’re off to Belgium next week to conduct more [trials].”

Several firms contacted by FoodManufacture.co.uk this week said that Amazon had launched the UK grocery site six weeks too early, had failed to market it properly and failed to devote sufficient resources to handling administrative aspects of the set-up process for suppliers.

One small company that has products listed on Amazon but fulfils orders directly through its own online store, said the whole experience to date had been “very frustrating”.

A source there added: “The people we had to speak to initially were not the same people we subsequently had to deal with, which has made the whole process quite challenging. We also thought there would be more work done on the marketing side, but that doesn’t seem to have happened yet.”

One much larger firm said: “The results so far have been somewhat disappointing but we are working with Amazon to address some of the issues.”

Some others said they “haven’t sold much yet” but hoped things would pick up.

Grounds for optimism?

However, most suppliers we contacted still remained upbeat about its long-term prospects and said it was unfair to compare it with shopping at Tesco.com or Ocado because it was not trying to do the same thing.

One ethnic foods specialist said that sales had picked up after a lacklustre start and that more customers were now using the site to buy its products in bulk.

The IT manager at the firm added: “We’ve had a few orders to start with that were obviously from competitors that were just checking us out, but generally we’ve been fairly pleased with how things have picked up since. Funnily enough, we’ve had a lot more male customers via Amazon than we usually get!”

The fact that Amazon had not spent a fortune on launch marketing was probably deliberate he speculated, with the firm keen to iron out technical problems, get a feel for how customers were using the site and identify where the growth opportunities were before spending a fortune on marketing.

Early days

Amazon has declined to answer specific questions from FoodManufacture.co.uk about sales targets or teething problems raised by suppliers, but stressed that it was “early days”.

A spokeswoman added: “Our aim is to be the place where customers can find and discover any product they want to buy online and we have created a store that not only includes a great choice of household favourites but also a large selection of international, niche and ethnic foods, many of which may have proved hard to find for shoppers in the past.

“As well as offering low prices on individual items, customers can also take advantage of the great value and convenience offered by bulk-buying everyday products such as nappies, washing powders and petfood.”

Fulfilment model

The fulfilment model for the new grocery store (with bulk ambient groceries delivered from Amazon’s own depots but niche and temperature-controlled products delivered directly from suppliers) has proved controversial, as customers ordering several items could potentially receive – and pay delivery charges for – scores of separate deliveries.

However, more products were becoming available centrally, claimed the Amazon spokeswoman: “There are thousands of items available directly from Amazon.co.uk for free delivery and we will continue to work tirelessly to increase that selection.”

PepsiCo’s Frito-Lay North America division said it took four years to develop the 100 percent compostable package, which was launched in the United States in April. The snacks bags are made with the plant-based renewable material, polylactic acid (PLA), and biodegrade in as little as 14 weeks under ideal conditions.

At the time of publishing, the Facebook group SORRY BUT I CAN’T HEAR YOU OVER THIS SUNCHIPS BAG had attracted 32,464 fans, with many posting comments complaining that the new bags frighten their pets or that conversation cannot be heard over the sound of the packet.

One recent posting on the group’s wall said: “How am I supposed to sneak chips from the bag now without anyone knowing?”

In response to the consumer noise over the issue, the company has provided on-shelf signs that say: “Yes, the bag is loud. That’s what change sounds like.”

The package was chosen by product innovation experts from the market research organization Mintel at last month’s IFT food expo in Chicago as one of the most innovative new products of the past year. According to Mintel’s research, 43 percent of consumers say they are likely to buy the SunChips product because of its strong eco-friendly positioning.

No one from FritoLay was available to respond to a request for further information prior to publication.

However, some fans of the Facebook page have defended the SunChips packaging. Another posting reads: “A 100% compostable bag, great for the environment, and what bothers you is that it’s loud? Are you trying to hide the fact that you’re eating them? Pour them into a bowl and quit complaining.”

Facebook is the most popular social networking site, used by 78 percent of online households, according to TNS. The research organization has said that social media has the potential to “transform marketing as we know it.”

The price increase for 2010 had been the subject of drawn out negotiations between producers and processors. According to the French daily Le Monde, Bel and Lactalis had previously accepted the proposal but others including Bongrain and Sodiaal had rejected it.

Reacting to the latest news, the FNPL, which represents French dairy farmers, said: “It was indispensible for farmers following the 2009 crisis and the strong level of charges that they face today.”

In addition to the pricing agreement, producers and processors agreed to introduce a mechanism for monitoring the difference in the cost of a litre of milk between France and Germany. The aim is to ensure that French prices remain competitive.

Competitive position

Pricing differences between the two countries will be integrated into future negotiations, so as to help prevent damage to competitiveness. Currently Germany is more price competitive although the difference between the countries has narrowed significantly since the sharp global fall in dairy prices last year.

Olivier Picot, president of the processing association ATLA, was quoted in Le Monde saying that the French industry must accept that it has to change its methods of production. He warned that the latest agreement will only last if deep and structural problems are tackled.

Picot said: “The average size of French farms is a lot smaller than in Germany, a fact that creates gaps in productivity and profitability.”