Volumes might be small, but local sourcing drives are giving new impetus to supermarket sourcing of specialist fare says Rod Addy
Interest in speciality food and drink products is booming - and set to grow even faster in the next four years if Datamonitor's report has got it right.
And if the recommendations of the Curry report are in the long run delivered, the climate for all sizes of regional producer could improve.
Smaller producers still tend to mainly supply independents because they don't have the resources to handle the scale of distribution the multiples demand. But despite problems with volume, the major retailers are still seeking out the smaller specialists, particularly in the context of local sourcing initiatives.
Charlotte Lawson, Food from Britain director of business and UK services, explains: "Their keenness to supply speciality and regional food and drink reflects consumers' growing demand for products of quality connected to the place where they live."
All the major multiples are now running local sourcing initiatives. Tesco has set up local sourcing teams in Wales, Scotland and Northern Ireland, and says it stocks 7,000 locally sourced products.
Sainsbury claims to source 3,000 local products from over 400 suppliers. It has a regional sourcing team and has completed three supplier development programmes in Scotland, Wales and the south west, helping smaller suppliers deal with large retailers.
A second Scottish programme is due to finish this summer.
According to the multiple, the 10 suppliers who took part in the first Scottish scheme saw £6.5m of increased sales, a 77% rise, in year one.
Safeway runs several local sourcing initiatives, including its Highland and Northumberland lamb and its Welsh and West Country beef lines.
Asda's local sourcing team is headed by Karen Todd. She says: "We give local producers a minimum commitment of three months.
"If sales flag, we go to the suppliers and look at ways of improving them."
She cites Rodders Clotted Cream as a typical success story: "It's a big product in the West Country. Since we started stocking it there, it has outsold Asda's own brand by 50-1."
Somerfield, which claims 2,000 locally sourced lines, has forged similar partnerships with suppliers.
A spokesman says: "Our Cotswold lamb range has now been on sale for three years and we recently launched the exclusive Celtic Pride lamb range in our Welsh stores."
The multiple is currently focusing activity on its south west heartland.
Booths claims to have always been committed to local sourcing from its northern roots. According to the Council for the Protection of Rural England, 25% of Booths' total food stock is locally sourced.
Despite these initiatives, some still remain sceptical about the multiples' motives. Paul Sander-Jackson, project manager for local food scheme Somerset Food Links, says: "Many speciality producers are suspicious of their buying methods and contractual relationships."
Bob Farrand, national director of The Guild of Fine Food Retailers, says: "Retailers are treating it as a passing fad. They cannot handle regional stocking effectively because they still insist on the economies of scale of central distribution."
Guy Tullberg, sales and marketing director at condiment maker Tracklements, believes speciality foods' route to market is not the multiples but smaller shops: "They provide the specialist retailer with his edge against the mass market. It's not just that they allow new products into the marketplace, they also create a better standard of food production and a choice in terms of the quality products available."
The company recognises that multiples do fantastic business catering for the mass market, but believes real innovation comes from specialist manufacturers.
Regional food groups representing FFB work to connect connect speciality food manufacturers with both types of retailer.
Waitrose has fostered a close relationship with them. Earlier this year it clinched a deal with 40 local suppliers to provide lines for select stores. Several regional food groups were involved in negotiations, including the South East Food Partnership, Taste of the West and Taste of Anglia.
Waitrose also launched its Small Producer Awards to raise the profile of regional manufacturers.
Safeway has worked closely with Heart of England Fine Foods to set up events such as the Festive Food Experience at the end of last year. The multiple provided staff for HEFF's self-service shop, equipment such as shopping baskets and help with stock taking.