Overview

Northern Foods Plc.


Industry Areas: Food processing and manufacturing, especially chilled foods. Besides producing products under its own labels such as Ski yoghurts and Dalepak, Northern Foods produces supermarket own-labelled products.

Overview

Northern Foods is one of the largest food manufacturers in the UK having made its name and fortune through practically inventing the supermarket ready meal. At the helm, has been Lord Christopher Haskins, one of Tony Blair’s closest advisors, steering British agriculture towards US-style integrated agribusiness, and British food consumption towards highly processed unhealthy preservative-packed food. Over the last forty years, Haskins has built this company up from a small north of England-based dairy into a giant food conglomerate.

Market share/ Importance:
Northern Foods employs 22,000 people, has annual sales of £1.4 billion and pre-tax profits of £104m[1]. It is in a very strong financial position based on its secure relationship with the major food retailers. It reported high sales during the second quarter of 2001, which were up 8% from the same period in 2000. Sales to its largest Supermarket customers (Tesco, Asda, Sainsbury’s, Safeways and Marks and Spencer), have risen 10%[2].

Despite these high sales, Northern Foods also reported lower profit margins during 2001 as a result of inflation and ‘disruption to restructuring of cake and fresh chilled dairy products operations, which are in the process of being closed down’[3]. These have been recouped over the year through 1-1.5% price rises. There has also been a 1.5million share buy back programme with shares purchased at 149.3p[4]. Northern Foods also saw its share prices fluctuate in the early part of 2001 because of foot and mouth disease[5].

Its top competitors are Unilever, Hazlewood Foods (owned by Greencore), Hillsdown Holdings, Geest and Uniq Plc[6].

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History:
Northern Foods, originally Northern Dairies, was founded by Alec Horsley on Spalding Moor, East Yorkshire, in 1937.

The history of Northern foods is intricately bound up with its retiring Chairman, Lord Chris Haskins who joined the company in 1962 when it was still Northern Dairies, after marrying the boss’s daughter, Gilda Horsley. After helping to run a small dairy in Belfast, he joined the main board in 1966, aged 29.

According to a recent interview in the Sunday Times, the big breakthrough for the business and for Haskins was when he found himself on a plane next to Marks & Spencer (M&S) executive who was setting up a new store in Belfast. Marks and Spencer is a UK-based upmarket own-label supermarket chain. This executive was cajoled into buying milk for the store from Northern foods, a contract that mushroomed into food sales to M&S now worth £500m a year. Northern foods added yoghurt deliveries to the milk and then created the first fresh trifle for M&S, which - in food manufacturing terms - was the equivalent of mapping the human genome. "We lost a fortune on that trifle over the years but we really impressed M&S with our commitment."[7]

The trifle was the forerunner of Northern's American-style pizza for Tesco, its Seafresh (!) salmon in watercress sauce for Waitrose, Gammon and parsley snack pot for M&S and the rest of the convenience foods that underpin its success. See Corporate Crimes section ‘Selling unhealthy overpriced food’. This unique business relationship with Marks and Spencer is the secret to Northern Foods success. Its strategy since has been to buy up and consolidate M&S suppliers, as well as innovating to impress. In 1986, Northern Foods built the most advanced food factory in Europe, Fenlands Food Factory, at a cost of eight million pounds, and dedicated it entirely to M&S[8].

By 1986, Haskins had risen apparently without hitch to be chairman of Northern Foods. In fact, not all has gone smoothly. Moves into the US agribusiness market, through acquiring Bluebird Inc. and Keystone Foods Corporation in the early Eighties, ended in disaster[9]. A hog processor he bought in America turned out to be a ‘near-Mafia type of business'. And the demerger in 1998 of Express Dairies, its milk operation, left Northern stronger, but Express's margins (and its share price) have been forced down by over competition in the dairy sector[10]. See www.corporatewatch.org/?lid=245Corporate Crimes Section ‘Exploiting small farmers’.

In the three years since ditching Express Dairies, Northern Foods has refocused as a supplier of convenience foods. Supplying the major retailers ensures a secure income, whilst they build up their empire of branded UK and Irish producers. In recent years, as Nestle has gone on to concentrate on developing global brands, Northern Foods have acquired their cast-offs, such as Fox’s Confectionery[11].

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References
[1] ‘Peston’s People: Lord Chris Haskins’ in the Business Section. The Sunday Times 26/8/01
[2] ‘Northern Foods sales rise against falling margins’ 26/10/01 Ft.com.
[3] ibid.
[4] ibid.
[5] ‘Square Mile stock shows symptoms of foot-and-mouth’ Financial Times 8/10/01
[6] www.hoovers.com/co/capsule/2/0,2163,90302,00.html
[7] ‘Peston’s People: Lord Chris Haskins’ in the Business Section. The Sunday Times 26/8/01
[8] ‘Northern Foods’ in the International Directory of Companies History’ (ed) Paula Kepos. St James Press. ITP (1995).
[9] Ibid.
[10] ‘Peston’s People: Lord Chris Haskins’
[11] ‘Northern Foods – change of strategy now bearing fruit’ 31/5/01 DataMonitor CommentWire.
 
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