The founder of veg box company Riverford has slammed the often “abhorrent” relationships major supermarkets have with their suppliers and warned of further food shortages unless they reform their practices.
Speaking to The Grocer in the wake of an announcement Riverford was moving to 100% employee ownership, Guy Singh-Watson described the low returns passed on to many suppliers as “morally reprehensible and I don’t think it is good business because in the long run they won’t have a supply chain”.
He pointed to the fruit & veg shortages seen across the mults earlier this year as a key example, while citing how the DTC business had had no trouble accessing tomatoes as “our suppliers in Spain know that we treat them properly”.
“I think there is a hell of a lot in the retailing of food and in particular the relationship between buyers and suppliers which should insult anyone’s soul and we should challenge it,” he added.
Relationships
Singh-Watson said Riverford had built relationships with suppliers over a number of years and had invested in its long-term supply chain in order to avoid the supply chain shocks seen by the supermarkets.
“There is no doubt that we could buy vegetables marginally cheaper, obviously in November last year we could have bought them massively cheaper but I don’t think that would be good business in the long run,” he explained.
Supporting growers and honouring all programmes to those suppliers has cost the business in the past, around £1m at Singh-Watson’s estimate, and while it was “pretty painful” at the time, “those growers are still there supplying us and they will still continue”.
Riverford’s shift towards full employee ownership has seen Singh-Watson sell his final 23% stake in the business, meaning 100% of the company’s shares will now be held by the Riverford Trust for the benefit of its employees.
The transition began in 2018 when Singh-Watson sold 74% of the business to company staff via the Employee Ownership Trust model.
Singh-Watson will remain a co-owner of the business, sitting on its Trust Board and acting as a non-executive director.
He emphasised he was “not running away” but he was now 63 years old and “the success of the business has less and less to do with my personal input”.
He added he also wanted the money for use on projects which promote inclusion and cohesion including Ripple Effect, a charity which helps farmers overseas, and local community projects in Devon.
Resilience
Singh-Watson added that employee ownership had been “really good for Riverford” for a number of reasons, including improving resilience, boosting staff engagement and encouraging opportunities to be more creative.
The model would benefit society as a whole compared to the “fickle short-term nature of capitalism” which he blamed for the reduced amount of manufacturing industry in the UK and is “why we will really really struggle to deal with climate change”.
“We need to invest patiently in the future and I think employee ownership is a great model for delivering that because you really can take the long-term view,” he said.
Riverford saw sales rise by 50% during the pandemic, but they have since fallen by 15%, something which was “very difficult to manage”. However, Singh-Watson credited his team’s performance during the slowdown and stressed he felt “pretty buoyant” for the future, as although sales “really did slide last year” they had since stabilised.
“People are shopping less frequently but they are being pretty loyal and we are keeping customers,” he added. “I think our brand and our values are more relevant than ever.”
In the announcement of the shift to 100% employee ownership, MD Rob Haward added: “Over the past five years, engagement with all our fellow co-owners has proven to make us a better, more successful, more resilient business that can think both for the short term and the long term.
“We are proud to model this better way of doing business, and as we move to becoming 100% employee owned, we look forward to seeing Riverford continue to flourish.”
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