The world’s third-largest food retailer Tesco has moved a step closer to procuring all of the apples and pears it sells in the UK direct from source, after making plans to further increase the volume of topfruit it buys from growers via its fresh produce direct procurement arm Group Food Sourcing (GFS). As reported in the March issue ofEurofruit, it is understood that Tesco is negotiating an end to its current contract with Cambridgeshire-based Sydney Hart, but will retain the services of importer-distributor Empire World Trade, based in Lincolnshire, and Kent-based Richard Hochfeld to manage certain elements of its domestic and imported apple and pear programme into the UK. Worldwide Fruit, meanwhile, continues to provide the retailer with a limited volume of licensed variety Jazz.
An industry insider said: “This is a continuation of Tesco’s move to GFS. They have other suppliers outside GFS and they will always need to – you have to have a back-up plan – but they probably felt they didn’t need as many as they had.” Tesco is believed to have removed Sydney Hart from its Southern Hemisphere supplier base during the second half of last year and subsequently phased it out of its Northern Hemisphere procurement arrangements. Sources suggest the supplier will continue to provide the retailer with British apples until the end of March, at which point its contract is due to be closed.
The past three years have seen GFS build closer links with topfruit grower-exporters around the globe, introducing where possible more direct lines of procurement and cutting the number of third-party service providers it employs. For a number of those grower-exporters, including several in Europe as well as counter-seasonal suppliers in countries like Chile, New Zealand and South Africa, switching to a direct supply model has helped them to remain competitive while affording Tesco greater control over the fruit it sells.
Going direct has benefited some producers, particularly as it costs them less to represent themselves in the market than it did when paying commission fees commanded by importer-distributors. With major British retailers estimated to take a margin of around 35-45 per cent on apples, savings are also being made further back along the chain thanks to the greater control suppliers and customers now have over supply programmes, the source added.
For their part, many of the UK’s leading topfruit importers are now attempting to secure their position in the supply chain by adding value to their offer wherever possible. Some have invested in new flowpack technology to produce special four-packs of the kind marketed by Tesco under its Orchard Selection private label. although with trials on such machinery already understood to be underway in Europe and tests due to begin shortly in the Southern Hemisphere, growers themselves could soon offer the same kind of additional value.
Sources familiar with the situation at GFS claim as much as 75 per cent of all the apples sold in Tesco’s British stores are now sourced direct from growers through the division. Asked to comment on its plan to delist Sydney Hart, the retailer refused to confirm or deny such a decision had been taken. A spokesperson for Sydney Hart told Eurofruit the company was “in discussions with Tesco regarding future supply arrangements” and currently “supplying to agreed programmes”, but declined to comment further on any possible future development.
