Although the market for finished poultry products is moving away from the budget sector in the aftermath of the recession, EU food firms remain firmly focused on discounted prices when sourcing ingredients, says the CEO of Rectory Foods.
Charles Woolley said in February 2010 that UK-based Rectory Food Group - which principally supplies poultry products and turned over £26m in 2009 - noticed before the recession really took hold that the retail market was turning towards discounters, and sourced cheaper products as a result.
And although Woolley said demand for cheaper poultry products had eased somewhat, he told FoodNavigator.com that Rectory's clients remain focused on getting the best deal for food ingredients.
“The discount trend is certainly less pronounced and probably came and went towards the back end of last year," he said. "On the food side I think consumers got over the shock of the recession and began to treat themselves again."
Recession hangover or standard practice?
“So there’s less demand for discounted poultry products, but on the ingredients side the desire is still there there. However, it’s difficult to tell whether this is due to the financial crisis [from 2007 onwards] or manufacturers’ normal practice in driving raw material costs down.”
Woolley added that price pressures had led Rectory to source some of its food ingredients from third countries that are “further afield”.
Rectory Foods’ core territory is as a blue-chip poultry supplier, and Woolley said he agreed with Rabobank predictions that the world poultry market is due to grow by 40% within the next 20 years, with 70% of demand driven by Asia.
But although he is aware of the opportunities within the world market for finished poultry products, Woolley said Rectory Food’s move into the food ingredients sector was prompted in part by the need to achieve higher margins for products, given price volatility affecting the world poultry market and input costs.
Buying into ingredients market
Rectory branched-out into frozen and dried ingredients two years ago to enable ready meal customers to buy ingredients from the company as well as meat: the firm supplies fruit and vegetables, seeds and pulses, garlic and ginger products as well as dehydrated ingredients.
“Our margins suffered slightly, because we were a new entrant into the food ingredients market, and you need either a unique offering and be mindful of margins,” said Woolley. “To a certain extent you have to buy yourself in as a new player.”
Woolley said that Rectory Foods expects to improve on its turnover of £26m for 2009 by around 30% when it reports its full-year results at the end of January.