Has the Meat and Wholesale industry bitten off more than it can chew?
The Meat and Wholesale industry has certainly seen its fair share of movement over the past five years, which, when you consider its sensitivity to inflation, currency rates and world economics, isn’t such a surprise.
Between 2012-13, prices grew in this market due to rising inflation, but these gains were swiftly wiped away in 2014-16 as the Russian trade embargo hit pork wholesale prices. With low wholesale costs filtering down to consumers, meat became a power player in supermarket price wars with a never-ending stream of ‘buy X for £X’ deals dominating the shelves.
Now, however, with higher import costs due to a weakened pound and rising inflation, the market is beginning to see an upturn in fortunes. In fact, looking at estimated projections to 2022 for the market – the only way seems to be up.
But with increased inflation comes a hit to household incomes. This may prompt a reinforcement of certain consumer behaviours, which players in this industry should take note of. One example is the trend towards ‘scratch cooking’ – something the meat market is particularly sensitive to, as just 32% of consumers feel that processed meat is a good ingredient when cooking from scratch (Source – Mintel report, Processed Poultry and Red Meat - UK - December 2017).
Meanwhile, concerns over saturated fat content and the health impacts of processed and red meat continue. Transparency within the sector will do wonders to manage these negatives. For example, ‘on-pack’ portion guidance could help to reinforce the legitimacy of meat as an integral part of a healthy balanced lifestyle.
Transparency is also important given recent high-profile cases of Food Fraud. A recent example included Gressingham Duck, which was portrayed as a traditional, British brand – but revealed to be sourced from countries as far afield as Thailand. Meanwhile, the effects of the horse meat scandal of 2013 are still being felt within the marketplace.
From an economic standpoint, as with a lot of markets, the decision to leave the EU is likely to have consequences, both for importers and exporters. Imports could be hit the most if there are restrictions to EU produce, and this will likely push prices up. There is also opportunity here. While quality remains a key driver for consumers, only 29% of consumers actually check the origin of meat, providing scope to look further afield than Europe for meat imports if needed.
So, it appears we have a market with strong potential, but not without challenges. We expect the industry to meet these challenges head on, creating a robust platform for future growth in the process.
Sadly, however, as much as the meat and wholesale market is growing, so too is the corporate fraud industry. Due to increased revenue within the meat sector, fraudsters will be watching closely to see how they can gain from this. With scams becoming ever more sophisticated and commonplace, it’s not so much a case of whether an attempt will happen, but rather how it can be identified and swiftly shut down.
The best way of reducing your risk is by creating a culture of due-diligence. By this we mean check, checking and checking again – not just new customers, but everyone on your books and their suppliers. Within a risk-sensitive culture, employees will feel empowered to take the time to really interrogate customer data, they will raise their hand when they think something’s not right, and you’ll be in a much stronger position to mitigate fraud risk.
Ultimately, you don’t want to miss the opportunities this growing market brings with it, but you should make sure that you’re doing everything possible to minimise risk while doing so.
Corporate fraud is not the only threat sniffing around the meat industry. Due to complex supply chains and high profit margins, it’s also vulnerable to food fraud. From misrepresentation of meat species, origins, and animal welfare, to expiry date tampering and addition of 'fillers', there’s a range of ways that suppliers may look to cheat the system.
In fact, the need for a worldwide focus to identify and put a stop to these illegal activities is so pertinent to the sector that we’ve written a whole piece on it, which will be next up in this series.
Our final thoughts? In the UK, meat is still very much on the menu. The sector provides some fantastic opportunities as long as it continues to innovate and identify and minimise its risks. Keeping up to date with the players in this industry will be key, which is exactly what we’re here to help you with.