Tesco is aiming to cut costs by increasing its international sourcing and looking at new supply markets such as Turkey.
Richard Brasher, Tesco's commercial and trading director, has told analysts and investors that it was aiming to become more flexible about where it sourced both its food and non food lines. It is also looking to better match its source countries with its products and increase its sourcing from Europe.
One analyst told The Grocer that with food this would mean looking at different markets from which to source its fresh produce and moving some of the supply of its citrus produce from countries such as Spain to Turkey. He said: "Naturally it makes sense for Tesco to use these markets as they will be cheaper than where they are currently sourcing from."
One produce expert said it was inevitable that Tesco would look to utilise these areas and that the move could bring down the cost of citrus from Spain as suppliers had to compete with these new markets.
He said: "All retailers will be looking to trade in markets outside the EU where there are fewer financial restrictions. Food is the last area for retailers to move into in terms of international sourcing because of a perceived lack of quality. As Tesco starts to operate stores in these markets, it builds relations with local suppliers and levels of trust go up."
Another analyst told The Grocer that Tesco was also looking to centralise its European supply chain in a bid to minimise corruption on the part of European buyers giving out supply contracts.
Ronan Hegarty