By JOHN ROBERTSON
TESCO says a slump in sales of Shetland milk at the supermarket is a sign of the recession starting to bite as shoppers switch to cheaper products to tighten their belts.
Lerwick store manager Paul Clelland was responding to an accusation that the drop of nearly 20 per cent in sales of local milk over the last 6-8 weeks was due to Tesco losing its commitment to supplying Shetland milk, favouring cut-price milk from south instead.
The six dairy farmers who own Shetland Farm Dairies are now having to dump large quantities each day after milking their cows. Until three weeks ago all the local milk produced was being sold. Dairy manager Davie Henry said about 400 litres a day was no longer required, which was “quite a marked downturn”. “It seems a shame to pour it down the drain. I think folk don’t realise that we can supply all the milk they want in Shetland all year round.”
The problem escalated on Monday after NorthLink had cancelled ferries over the weekend, causing panic-buying of fresh foods on Friday then a big drop in demand, which led Tesco to cancel Tuesday’s entire order from the dairy in Lerwick, claiming it had too much of all milk brands in its store. Cancelled orders are not unknown and used to happen more frequently when Somerfield ran the store, according to Mr Clelland.
Another aggravating factor earlier this month for the local dairy was a three-day national promotion by Robert Wiseman Dairies and Tesco offering Fresh ‘n’ Lo milk for a mere 50p for two litres in a move which caused uproar among UK dairy farmers.
On Tuesday two-litre cartons of Shetland milk were selling at £1.52 against Fresh ‘n’ Lo at £1.06. Other milk prices at Tesco were two-litre Cravendale at £1.66, Tesco brand at £1.49 and organic milk (2.2 litre) at £1.73.
Mr Clelland was clearly angered by the attack on Tesco, which he only learnt of from reporters asking why the supermarket was abandoning local suppliers. He blamed SIC councillor Allison Duncan for trying to create a problem which did not exist. Four of the six dairies are at the Ness in his constituency, the others being at Asta and Weisdale.
Mr Duncan had told the press he was worried the problems with falling milk sales at Tesco could be “the thin end of the wedge” with implications for other Shetland suppliers, including vegetable producers. But Mr Clelland said: “I was disappointed that he chose to contact the media before actually having a conversation with me. I find that quite sad, to be honest.”
Just three days before Mr Clelland had held a meeting with Mr Henry regarding falling sales, which both sides agreed had been a constructive session.
Mr Clelland said they had discussed what Tesco could do to encourage shoppers to buy local rather than the cheaper produce from south. “They appreciate what we’ve done to help them so far,” he said. “I would much rather use a local supplier because the supply is guaranteed seven days a week.”
At least on that point he and Mr Duncan were in agreement. Mr Duncan said the customer had a choice but he sincerely hoped the Shetland housewife would seriously consider buying local milk to support struggling dairy farmers.
Mr Henry said there was now one million litres of milk coming into Britain each day from the EU so milk reaching Shetland could have come from anywhere. Meanwhile, the local industry has seen soaring fuel and feed costs plus an eight per cent rise in the cost of packaging materials. “The more folk see south milk the more they think that we are actually not able to supply and once it goes down the slippery slope, how do you get it back?”
According to Mr Clelland, Tesco shifts more local milk than Somerfield ever did. He claimed 90 per cent of his sales space for milk was given over to the Shetland products which featured Shetland flags and special signage produced by the company.
“The company has gone out of its way to try and make the store Shetland-specific rather than imposing some Scottish identity on the shop which we wouldn’t want here.”
He was not cynical enough to believe this week’s fuss might have been part of a last-ditch attempt to poison opinions about Tesco’s planning application for its store extension (see separate story).
Mr Clelland said he understood where the farmers’ concerns were coming from but he believed the problem lay with the country’s economic troubles, despite Shetland’s affluence. “Customers are using price as the main driver for shopping as we move into the downturn. We have seen a shift in customer spending patterns because money’s becoming tighter. I think we’re sheltered from the recession in Shetland to a degree but ultimately it will touch us at some point and customers are looking to save money.”
At such times he said people cared less about where a product came from – its provenance – a trend borne out nationally by a recent decline in sales of organic products, which are generally more expensive. Incidentally Mr Clelland said he had been astonished by the quantity of organic fruit and vegetables sold in Shetland but he had noticed “a bit of a tail-off”.
Mr Henry said the problem for the local dairy industry was incoming milk in general, not just what came through Tesco. “What really gets my goat is that for every litre they bring in we dump a litre so it’s good, wholesome milk going into a slurry tank.”
Tesco had to dump “several hundred pounds worth” of south milk on Tuesday too, Mr Clelland said.
Although sales levels are not down much at the Co-op, it does not stock the ultra-cheap Fresh ‘n’ Lo brand and takes in less milk from south. Naturally, Mr Clelland also believes shoppers looking for the cheapest deals would go to Tesco instead. The recent national promotion on Fresh ‘n’ Lo milk was advertised in all the papers and Mr Clelland said he would have faced complaints from his customers if he had prevented them having the chance to buy the milk at mainland prices which was on offer in other Tesco stores. “The reality is that customers were coming into the store looking for that promotion.” He said he had decided not to display a large advertising banner in the car park next to the roundabout because he did not want to “actively promote” the campaign.