The Horse-Meat Scandal: How has the independent sector faired?

All wholesale businesses are subject to rigorous checks on the health of all animals from the moment they walk into the abattoir to the point where they enter the manufacturing sector (the point where horse-meat was introduced to the food chain). So how did it happen?

The maths behind a cheap supermarket burger is revealing. A pack of eight Tesco beef burgers weighs 397g and sells for £1. That’s £2.52/kg, manufactured and delivered. At the time, the market price of the cheapest beef mince was £5.23/Kg. It clearly doesn’t make sense. Horsemeat therefore provided the opportunity to lessen the impact of supermarket pressure.

All abattoirs in England have either resident or visiting vets to monitor animal health, carcass condition, temperature and overall traceability back to the source, making it difficult to pass off horsemeat. However, it was used and the impact affected everyone for a period of time.

So how has the independent sector faired over the last few months? Generally very well. Seward comments that there is a consensus that the high-end independent retail butcher has survived well, and possibly indeed prospered at the expense of the retail multiples. Other retailers at the price conscious end of the spectrum have not benefitted much, if at all.

A foodservice supplier added that there was no adverse effect on sales: "It had very little effect on us…. we also saw a slight uplift in sales but at the time we could not put that down to horse-meat in particular as the weather cheered up a bit as well."

He added, "The retail butchers in turn perceived a bit more footfall but it has gone away as an issue with them now. In conclusion the whole thing passed us by with a minimum of impact."

Another commentator added that, "[the supermarkets] have now to be seen to be buying beef which has raised prices substantially over recent weeks. This has made it difficult to maintain margins."

In conclusion, the independent sector may have benefitted from the scandal initially, but the long term impact is a firming of prices as the supermarkets have to continue to purchase large quantities of beef to maintain their public image. The consumer in turn appears to have gone back to its old ways of buying on price.

Posted on 26th September 2013 by George Seward  |  Permalink

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Our principal, George Seward, has enviable expertise and experience in the field of food business sales and mergers.

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