Producer reduces reliance on M&S

Jan 14 2009 by Iain Laing, The Journal

NORTHERN Foods yesterday said it had reduced its reliance on Marks & Spencer after the consumer downturn led to an increased focus on the value sector.

The Leeds-based group, which has 900 staff at its ready meals plant in Carlisle, said discounters such as Aldi, Lidl and Netto now accounted for 20% of its sales, compared with very little business two years ago.

In contrast, M&S used to generate a third of sales but now makes up 25% of business.

A spokesman said M&S was still an important customer, but that the company was “doing more and more with discounters”. The sector has grown in recent months as the downturn in consumer spending causes shoppers to trade down.

The latest TNS Worldpanel figures show Aldi reached a record 3.2% share of the market in the 12 weeks ending December 28.

Northern Foods, which introduced products such as sandwiches and San Marco pizzas for under £1 to appeal to cost-conscious shoppers, also sells to Tesco, Sainsbury’s, Asda and Morrisons.

The firm said its third quarter trading had been robust, despite a slowdown in its frozen foods and bakery divisions.

Underlying sales for the 13 weeks to December 27 were up 3% on the previous year, down from 3.5% in the three quarters as a whole, with average prices up 3.8%.

Analyst Andrew Saunders said the group appeared well positioned to take advantage of the trend among consumers to trade down to cheaper products.

“The ongoing challenge will be to produce affordable, appealing and yet innovative products that consumers will be happy to buy,” he said.