The Horsemeat Scandal

If 2013 is to be characterised by anything then perhaps the horsemeat scandal will be its defining moment.  Customers were shocked to discover that their supermarket beef burgers contained anything up to 100% horsemeat.  Then it was discovered that Findus brand lasagne neighed rather than moos and Tesco’s own branded spaghetti was more bolog-neighs than anything else.

After nearly a month in the news, Britain's horsemeat scandal shows no signs of abating, with the Food Standards Agency now calling for a "relentless" inquiry into how non-beef products ended up in supermarket burgers and big-brand processed food.  But are consumers starting to shun processed meat products - and the supermarkets that sell them?  Certainly there is a growing chorus of politicians - from all sides - urging families to abandon supermarkets in favour of independent family butchers.  Former Labour environment minister Ben Bradshaw has said he would not buy or eat processed beef products, because the government cannot offer assurances about what is in them.

"If people want to be confident about the meat they're eating they should buy fresh British meat, preferably local and from a trusted source," he said.  And Tory MP George Eustice - a member of the Environment, Food and Rural Affairs select committee - said: "There's growing concern about the provenance of meat products.  This latest scare over horsemeat is the latest in a long line of similar problems.

"If people want to know for sure where their beef or pork comes from, their best bet is to support their local butcher, who will know where their meat is sourced."

There is some evidence - disputed by the supermarkets - that consumers are beginning to change their shopping habits.  Consultancy firm Kantar polled 6,221 people on 11 February - the day Tesco confirmed some of its spaghetti bolognaise products contained horsemeat.  Their results suggested one third of consumers were less likely to buy processed meat because of the horsemeat scandal, with 13% saying they intended to buy more locally sourced meat, and 5% intending to buy less meat altogether.

Independent butchers are also reporting a boost in demand - particularly for processed meat such as mince and burgers.  The Q Guild - which represents 110 of the "highest quality butchers in the UK" said freshly made beef burger sales have increased by up to 30%.  And Roger Kelsey - chief executive of the 13,000 member National Federation of Meat & Food Traders (NFMFT), said there was "definite evidence" consumers were looking for alternative supplies.  He estimated his members had enjoyed a 10-15% boost in their business since mid-January, with anything up to a 50% increase in the demand for sausages, mince and burgers.

The figures are challenged by the British Retail Consortium (BRC), which represents UK supermarkets.  BRC spokesman Richard Dodd said: "Our retailers say they haven't seen any big changes in buying patterns, although there has been more interest in burgers made of fresh meat, rather than frozen."  One of the main reasons advanced for why supermarkets and big brands like Findus have fallen victim to the horsemeat scandal is the length, and complexity, of their supply chains.

Rising beef prices and a public preference for cheap food were contributory factors leading to the horsemeat scandal, food industry experts say.  Beef and veal prices have risen by more than 45% across Europe over the past five years, according to the European Commission, while the global auction price for beef has topped $5,300 (£3,500) a tonne.  Horsemeat, by contrast, currently costs about $1,200 a tonne.

"It is clear that rising beef prices and the relative cheapness of horsemeat have led some people to see the potential for making big profits through fraud," says Peter Hardwick, head of trade development at Eblex, the English beef and sheep industry body.  Mr Hardwick believes the financial pressure on meat producers, who operate at profit margins of 5% and below compared with double-digit margins for retailers, may have also contributed to the problem.  "There isn't cheap beef to be found anywhere," he says. "But we still believe that ready meals can be made as cheaply as they always have been."

Despite soaring beef prices, ready meals containing beef mince have not risen in price accordingly, even though the meat is their most expensive ingredient.  For example, the average chilled ready meal costs £2.31, up just 4% over the past three years, roughly in line with food inflation, according to research from retail analyst Kantar Worldpanel.

Meanwhile, our love affair with the ready meal continues apace.  Almost nine out of 10 UK households now buy them, despite a study published in the British Medical Journal in December 2012 finding that not one of 100 meals tested fully complied with World Health Organisation nutritional guidelines.  The cheapness and convenience of chilled ready meals in particular has led to sales growing almost 10% per year over the past three years.  Frozen meals are a bit less popular, but spending on these has also risen over the same period.

To put this into context, we now spend £74bn a year on food, yet spending on food and non-alcoholic drinks as a proportion of household expenditure has fallen dramatically from 24% in 1963 to just 9% in 2012, according to the Office for National Statistics.

How can we explain this apparent paradox?

"Food is cheaper in real terms than it has ever been," says Richard Dodd, spokesman for the British Retail Consortium (BRC).  "But it has become so affordable because we've become much more efficient in agriculture, production and retailing.  "Yes, we spend much less of our disposable income on food these days, but this is related to rising incomes and the increased affordability of food."

Intense supermarket competition has educated the British shopper to expect cheap food, says Richard Stevenson, technical manager of the National Federation of Meat and Food Traders, the body representing most High Street butchers.

More than 90% of British consumers still consider price an important factor when shopping for food, according to Kantar Worldpanel, compared with 73% who take health into consideration.  Just 32% of shoppers consider whether the product has been sourced through fair trade and only 22% care whether or not it is organic.

Tesco, Asda, Co-op, Morrisons, Lidl, Iceland and Aldi have all withdrawn burgers and beef mince ready meals as a result of the scandal.  Manufacturers such as Findus and Birds Eye have taken similar steps.

Yet, the Food Standards Agency says more than 99% of 3,634 tests carried on processed minced beef products contained no horse DNA at or above the 1% level.  The 13 products that did, have already been withdrawn from sale.  The BRC says that its member retailers have completed more than 90% of their tests, and that out of 1,500 completed since 20 January, only six proved positive.  

"I'm encouraged by these updated results which confirm how few products have been involved and that any that were have already been removed," says BRC director general Helen Dickinson.

New DNA testing regimes notwithstanding, the intense financial pressure on the meat and food processing industries is expected to only increase while shoppers continue to expect cheap, convenient processed foods made from raw ingredients whose prices continue to rise in the global marketplace.