A local meat company has experienced a reduction in sales and profits since Tesco took over Shoprite stores.
As a result, Andreas Meats will stop supplying Tesco with its products from February 28.
The meat company also blamed high operational costs to meet Tesco’s requirements, along with limited selling opportunities.
Tesco only stocked a very limited range of Andreas Meat’s products, which it believes didn’t do it’s product range justice or provide the customer with sufficient choice.
Due to the hight costs and limited range, Andreas Meats was not able to generate sufficient profitability from the relationship.
End of Relationship
Andreas Meats says that revenue from Tesco IOM stores is significantly below both the level it previously experienced with Shoprite, and the amount it had expected.
It said: “We cannot see this changing significantly in the future and there is no realistic prospect of AM products being rolled out to Tesco UK stores.”
Andreas Meats says it recognises that its “growth plans are not well aligned with Tesco’s requirements”.
The local company will now intend to focus on its other routes to market on the island and plan its future product range development accordingly.
Costs of Tesco
In a statement to Manx.News, Andreas Meats said: “There has been a huge amount of change in the island’s business environment over the last 12 to 18 months, which has affected almost everybody.
“For Andreas Meats the most significant impact was Tesco’s acquisition of Shoprite, which at the time represented around half of the company’s total revenues.
“Given the significance of our long-established trading relationship with Shoprite, we changed our business and invested to ensure we met Tesco’s requirements and could continue to trade with them.
“With assistance from DEFA, this included becoming SALSA accredited and an IOM Approved Food Producer, ensuring we successfully met Tesco’s requirements for full product traceability and very high and consistent food hygiene standards.
“We also maintained our long-standing commitment to make our products here on the island using Manx pork, beef and lamb – despite the higher costs of doing so.
“However, both our revenues and profit margins from sales to Tesco are well below expected levels. Looking ahead we do not envisage this improving sufficiently to generate the commercial outcomes that we need to successfully sustain this relationship.
“Accordingly, we have now reached the decision to cease supplying Tesco IOM with our products, which we believe is in the best long-term interests of Andreas Meats.”
Available Locally
Andreas Meats products will continue to be available through it’s long-established network of local customers.
It is currently working on enhancing its product range by increasing production of some traditional favourite product lines and developing some innovative new products.
You can find the full list of shops that stock Andreas Meats here.
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