Tesco Kerry Foods

Tesco is changing its provider for all its Indian and Oriental ready meals

Tesco is to scrap its Indian and Oriental ready meals contract with Kerry Foods, in a move which union leaders claim has put hundreds of jobs at risk.

The supermarket today (24 October) announced it had made the decision, due to come into effect in June next year, after a competitive tender within its ready meals supply chain.

The Grocer has learned that the contract has bene won by Bakkavör.

Tesco said the move would see a change of provider for all its Indian and Oriental ready meals, from Finest to Exclusively at Tesco (basic) products.

The move comes amid an increasing bid by Tesco to take on Aldi and Lidl by reducing the price of its own-label discount products and also a strategy to reduce its number of suppliers under Project Reset.

Kerry Foods expressed its regret at Tesco’s decision to end a relationship going back nearly 20 years.

“Regrettably, a major customer has confirmed it will be moving our chilled meals business currently produced at our Burton site to another supplier,” said a Kerry spokesman. “We have been working together for nearly two decades and as one of the biggest employers to the local area, our first priority is to our people. We will continue to work with them and relevant suppliers into the near future as we explore other opportunities for our business.”

Sources at Tesco stressed the decision had been based on extensive work looking at the value of commercial bids, site capability, quality, innovation and service.

A Tesco spokeswoman said: “Following an extensive six-month review we have taken the decision to make changes to the supply chain for our Indian and Oriental ready meals. We remain absolutely committed to working in partnership with all our suppliers and will do all we can to support Kerry Foods during the transition process.”

The Grocer understands Tesco has a dedicated team working on the process aimed at securing a smooth transition.

However, the union Unite attacked what it called the “brutal” termination of the contract, which it said had led to hundreds of jobs at the company’s Burton-on-Trent site coming under threat.

It said the Tesco ready meals contract accounted for 75% of the production at the Mosley Street plant.

“Tesco has abruptly terminated the contract for Kerry Foods to supply ready meals for its supermarkets,” said Unite regional officer Rick Coyle.

“The contract has run for 19 years with no complaint about the service, quality or delivery, which makes the Tesco decision all the more brutal.

“Kerry Foods’ management is currently looking for new contracts to replace the business that will be lost.

“Over the last three years, more than £20m has been invested in the Burton-on-Trent plant, making it one of the most modern food production sites in the UK. This should give confidence to the workforce that new orders will be obtained.

“I would like to pay tribute to the employees who have continued to work to a high and dedicated standard, despite the very real worries they and their families must be experiencing during this period of great uncertainty.

“Unite will do all it can to work with management in the quest for new work at this premier site.”

Tesco’s move comes four months after The Grocer revealed it had to slash the number of suppliers it works with, in a new phase of its Project Reset strategy.

The move, billed as a ‘sourcing reset’, will see Tesco conduct a sweeping review of its entire supplier base over the next two years.

The retailer has said it will conduct a “transparent and structured” process, although one leading supplier warned manufacturers were facing a “tsunami” of change.

Last month Tesco announced Saucy Fish co-owner Seachill had taken over a £50m contract from Worcestershire-based Blue Earth Foods to supply all its own-label chilled prawn products.

One supplier source said: “Tesco is having huge conversations with its suppliers at the moment. There could be many more examples of this to come.”