REVIEW OF DISTRIBUTION OPPORTUNITIES
for West Cork Producers
CONTENTS
Introduction
p. 03
Methodology
p. 04
Survey Monkey
p. 05
Face to face interviews / Focus Group
p. 17
Desk Research
p. 20
International Regional Distribution Trends
p. 22
Irish Models
p. 35
Possible solutions for West Cork Distribution following desk research
p. 36
Possible Next Steps
p. 38
INTRODUCTION
Distribution has long been a challenge for food producers, and as part of its
interaction with the West Cork food community, West Cork Development
Partnership (WCDP) had identified that distribution is a significant obstacle
for growing sales for many producers.
In response to this, a project was commissioned to look at the topic of distribution
in West Cork and the following objectives were set:
◆◆ Understand the current distribution issues faced by food producers
◆◆ Engage with producers and other stakeholders to understand these
challenges and determine possible solutions
◆◆ Conduct global research to establish benchmark distribution models
◆◆ Present possible solutions for consideration
WCDP identified 20 food producers that were interested in the topic of food
distribution and were willing to take part in this research project.
03
METHODOLOGY
James Burke and Associates were appointed to conduct research and the following
methodologies were used:
◆◆ Contact was established with the 20 producers with had indicated an interest
in the topic
◆◆ An initial Survey Monkey questionnaire was sent to the group
◆◆ A series of one to one meetings were conducted with producers
◆◆ A combined producer focus group was held
◆◆ Desk research was conducted on 30 domestic and international distribution
models
◆◆ A breakfast workshop was conducted on September 9th to present the
findings.
04
SURVEY MONKEY
The following is a summary of results from the survey carried out to study
distribution challenges and opportunities for West Cork producers.
The purpose of this survey was to analyse the practices currently being implemented by Cork producers in relation to distribution, and to identify challenges.
The survey focused on understanding current practices being carried out, while also
exploring any future practices or developments that may assist in Cork producer’s
ability to distribute their products on a national and international level.
The survey consisted of 17 questions covering topics such as; forms of distribution
currently being used, annual costs, issues relating to distribution, distribution radius
and supports needed to begin exporting.
In total 19 copies of the survey were distributed amongst West Cork based
producers. Of this a total of 14 were returned. As the survey base is small, the
findings can be seen as indicative rather than conclusive.
The responses to some questions on the Survey Monkey simply validated other
questions previously answered, and these have been omitted from the information
shown below.
RESULTS
Question 2: Results
What type of products do you produce? (tick as appropriate)
Answer Options Response Percent Response Count
Chilled Frozen Ambient 78.6% 0.0% 21.4% 11
0
3
As can be seen from the figures highlighted in table above the majority of producers
(77%) are producing chilled products. It thus seems logical that distribution
synergies should exist between these producers given the amount of chilled product
producers in the West Cork area.
05
Question 3: Results
What is your current chosen form of distribution? (select more than one
if necessary)
Answer Options Response Percent Response Count
1. Own transport driven by business owner
2. Own transport driven by staff member
3. A courier e.g. Fastway
4. A formal paid distributor who buys
the goods from you
5. A haulage company who only transport
the product
6. Via a retailer of foodservice operator
who has their own transport
71.4% 35.7% 57.1% 10
5
8
42.9% 6
35.7% 5
28.6% 4
What is your current chosen form of distribution? (select more than one
if necessary)
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
1. 2. 3. 4. 5. 6.
As shown from the results currently over 70% of respondents distribute products
using personal transport driven by the business owner. Although this method has its
advantages i.e. it allows business owners to meet with customers face to face on a
regular basis, in the long term, especially if the business wishes to grow, this method
has limitations. The biggest challenge is the time it consumes of the business owner.
06
Question 4: Results
What do you estimate is the annual cost of running a typical delivery vehicle
i.e. the driver and vehicle running costs?
Answer Options Response Average
Euro
13,969.17
Of the responses given the average estimated annual cost of running a typical
delivery vehicle was estimated to be €13,969. The actual figure for an annual
distribution cost for a driver and van, proven through Bord Bia research, is €60,000
per year. This suggests producers are not fully aware of the massive financial
implications of distribution.
Question 5: Results
What is the max radius of your current distribution needs? (tick one only)
Answer Options Response Percent Response Count
Within 30 km of your premises
Within Cork County including Cork city
Within Munster
As far as Dublin
Within 26 countries
Within 32 countries
0.0% 21.4% 14.3% 14.3% 35.7% 14.3% 0
3
2
2
5
2
07
What is the max radius of your current distribution needs? (tick one only)
Within 30 km of your premises
Within Cork County including Cork city
Within Munster
As far as Dublin
Within 26 countries
Within 32 countries
The feedback suggests that the majority producers are delivering food within the
26 counties or as far north as Dublin with the next biggest group servicing Cork city
and county only.
08
Question 6: Results
Which of the following city/towns do you regulary distribute to? i.e. at least
2/3 times a month (select more than one if necessary)
Answer Options Response Percent Response Count
Ballincolling
Bandon
Bantry
Blamey
Boherbue
Carrigaline
Casteltownberre
Charleville
Clonakility
Cobh
Dunmanway
Fermoy
Glanmire
Kanturk
Kinsale
Macroo
Mallow
Midleton
Milstreet
Mitchlestown
Newmarket
Skibereen
Youghal
Cork City
Dublin City
Limerick City
Galway City
21.4% 42.9% 71.4% 14.3% 0.0% 14.3% 0.0% 0.0% 57.1% 0.0% 28.6% 7.1% 14.3% 14.3% 42.9% 14.3% 14.3% 14.3% 7.1% 0.0% 0.0% 57.1% 0.0% 85.7% 64.3% 14.3% 21.4% 3
6
10
2
0
2
0
0
8
0
4
1
2
2
6
2
2
2
1
0
0
8
0
12
9
2
3
The above table lists the various cities and towns with producers regularly deliver
to, e.g. 12 out of the 14 respondents regularly deliver to Cork City. This information
indicates that there is significant crossover on towns and routes used by producers
with many towns like Bantry having the majority of producers delivering to them. It
also indicates that there are several large Cork based towns which are not serviced
by any West Cork producer thus indicating sales opportunities.
09
Question 7: Results
Please rate the following in terms of difficulties/issues related to distribution
for your bunisess. (select more than one if necessary)
Answer Options Very
Difficult
Manageable
Easy
difficult
Very
easy
Cost
07
5
1 1
Correct level of
knowledge/experience
23
7
0 1
Trying to find the time to
produce and deliver prod.
26
5
1 0
Having the correct delivery
equipment, i.e. no frozen
or chilled transport veichels
32
6
1 2
Question 8 focused on finding out what supports would be the most beneficial
regarding distribution in the future. This information allows us to focus in on the
most options to explore how they can be made into a reality. It also highlights
options that are perceived to be less helpful.
From the data it is clear that a central distribution hub and improved communication
are the most helpful ways to improve distribution practices in the future. For
example in regards to improving communication between consumers this could
involve the development of an App or webpage whereby producers could broadcast
there delivery routes for a given day or week so that fellow producers could ‘piggy
back’ on particular deliveries. This way time will be saved and costs reduced.
10
Question 8: Results
Please rate the following in terms of difficulties/issues related to distribution
for your bunisess. (select more than one if necessary)
Answer Options Pointless Not
helpful
A central distrubution hub
in West Cork where product
could be dropped and would
be collected by a third party
distributor
0
0
Moderately
helpful
Very Essential
helpful
3
91
2
6
32
Establishment of a Coop owned
and run by producers which
would provide distribution
solutions within Cork County
and a wider area if necessary
using a Coop owned vehicle
1
1
6
4
A scheme led by a large retailer/
foodservice operator, where the
operator’s vehicle would collect
product from a central
West Cork location
0
2
6
51
Improved formal communication
between producers throught the
use of online chat/check in
service, or a phone app so
distributuion could be
optimised, i.e. allowing you
to see where others are planning
to deliver to allow you to share
distribution routes
0
1
2
92
The use of shared electrically
powered delivery vehicles to
reduce fuel costs and improve
environmental impact within
West Cork
2
5
42
Training on all aspects
of distribution
1
1
2
11
The single biggest challenge facing producers identified from this question was
trying to find the time to produce and deliver products. This links to the early
information from question 3 when owner driven vehicles was identified as the
number one mode of transport. This paints a picture of owners stretched to manage
all parts of the business model.
Question 8: Results
Can you rank the following points in terms of their helpfulness in facilitating
you reaching the target of exporting your product within the next two years.
Answer Options Pointless Not
Moderately
helpful
helpful
Meet and greet with foreign
market representatives
0
01
Very Essential
helpful
4
2
Seminar on how to improve
export potential
0
01
4
2
Information on goverment or
third party financial assistance
to facilitate distribution
capabilities
0
0
1
3
3
The creation of coop brand to
share foreign distribution costs
and increase export capbilities
1
0
0
51
Question 12 was answered by those respondents who are not currently exporting to
foreign markets but are interested in exporting within the next 2 years.
The question focused on determining what aids would be most helpful in reaching
the target of exporting within the next 2 years. Similar to question 8 this data allows
us to focus on trying to ensure the development of the most helpful aids.
As was to be expected a potential meet and greet and seminar on improving
export potential scored highly. Surprisingly though the creation of coop brand
to share foreign distribution costs and increase export capabilities proved very
popular with the majority of respondents ranking this point as either very helpful or
essential. Given how this would sacrifice brand name the support for this option was
unexpected.
Support was also forth coming for information regarding government or third
party financial assistance. Aspects of this point could be included in any seminar
addressing ways to increase export potential.
12
Question 14: Results
Can you rank the following points in terms of helpfulness in developing your
foreign distribution practises. (Answer all)
Answer Options Pointless Not
helpful
Meet and greet with foreign
distribution companies
0
1
Moderately
helpful
Very Essential
helpful
2
63
Seminar on how export
distribution practises
1
0
3
71
Meet and greed with foreign
market based wholesalers
0
1
2
5
Overseas study visits to see
distribution facilities etc
0
1
6
32
4
Question 14 was answered by those currently exporting to foreign markets as well as
those with the target of beginning to export within 2 years. The question focused on
aids to help develop foreign distribution capabilities.
As with question 12 meet and greets, specifically a meet and greet with foreign
market based wholesalers, and seminars proved very popular amongst respondents.
Surprisingly an overseas visit to study distribution facilities did not prove to be as
popular as expected.
13
Question 16: Results
In five years do you see yourself operating your own independently operated
distribution system or one in conjunction with order West Cork producers?
Independently operated
In conjunction with other West Cork
producer
In five years do you see yourself operating your own independently operated
distribution system or one in conjunction with order West Cork producers?
Answer Options Response Percent Response Count
Independently operated
14.3% 2
In conjunction with other West Cork
producer
85.7% 12
Question 16 directly addresses how West Cork producers foresee there distribution
activities in 5 years’ time.
As can be seen from the data above the vast majority (86%) believe it will be in
conjunction with other West Cork producers. This demonstrates openness to sharing
distribution and a willingness of producers to explore new models.
14
SURVEY MONKEY CONCLUSION
The data obtained in this survey has highlighted a number of key areas where
distribution activities of West Cork Producers could be optimised.
The following points summaries the significant pieces of information obtained from
the survey.
◆◆ The vast majority of producers (79%) are producing a chilled product range.
◆◆ 71% of business owners currently deliver their company’s produce. While 36%
currently have staff members delivering produce. Such practices can greatly
decrease efficiency and affect the company’s ability to grow. This point highlights
the need for cooperation between West Cork producers.
◆◆ On average respondents estimate that they are spending €13,969 a year
on distribution. This figure could be greatly reduced through greater levels of
cooperation.
◆◆ Distribution costs and finding the time to deliver produce are two of the
most difficult issues which producers are faced with. The prominence of these
issues could be lessened through conducting seminars aimed at addressing these
issues.
◆◆ A central distribution hub in West Cork where products could be dropped
collected by a third party distributor and increased methods of communication
between producers proved to be the most helpful points with regards to
distribution in the future.
◆◆ Respondents with ambitions of exporting to foreign markets within two years
felt the running of a seminar addressing ways to improve export potential and
arranging a meet and greet with foreign market representatives were the best
ways to achieve this. Surprisingly the most popular point was the creation of
coop brand to share foreign distribution costs and increase export capabilities.
◆◆ In regards to developing foreign export practices in the future or currently
respondents once again felt that seminars and meet and greets, specifically with
foreign market based wholesalers would prove most successful.
◆◆ 86% of West Cork producers felt that in five years they would be operating a
distribution system or one in conjunction with order West Cork producers.
From this survey it is clear that ways in which West Cork producers can cooperate in
regards to distribution will need to be explored further and that seminars addressing
a number of key topics will need to arranged, as will meet and greets with various
third parties.
15
FACE TO FACE INTERVIEWS - FOCUS GROUP
Following individual face to face meetings with individuals and a focus group the
following information emerged.
◆◆ The use of couriers was widespread and much more significant than the
authors of this report envisaged at the beginning. They were seen as a flexible
form of transport which could react in a timely manner and most importantly
it was cost efficient with cost to get a single package to anywhere in Ireland
ranging between €5 - €6, in the majority of cases. There was acknowledgement
that there were significant “add on” costs with couriers, for chilled products
with a requirement for insulated boxes and frozen gel packs in order to maintain
temperatures.
◆◆ There was a wish among respondents to have a more formalised/structured
arrangement with a national courier who would prioritise West Cork producers.
◆◆ Cork County was mentioned by many as being the single biggest challenge
for them to distribute to. Many spoke of it being easier to get product to Dublin,
than it was to service Cork City and county
◆◆ 2 interviewees talked about their willingness to provide a distribution hub, as
an add on to their current business, if it was felt that it could provide a West Cork
solution.
◆◆ All respondents were receptive to training and further exploring new
distribution models.
◆◆ Providing online solutions where chefs/buyers and store owners could place
all their orders for West Cork products on one online system was viewed as
positive by producers. While solutions weren’t entirely evident from respondents,
it was felt that making it easier for buyers to order would enhance West Cork
producers as a collective.
◆◆ While many distribution models were discussed, the idea of a retailer being
involved and leading a distribution model i.e. product would be coordinated at
a hub on behalf of a particular retailer was warmly welcomed and seemed to
appeal to many producers.
◆◆ The option of having a green solution to distribution was also probed i.e. a
solar powered West Cork delivery vehicle. While this was received positively it
was categorised as ‘nice to have’ rather than a high priority.
In discussion with producers, several inward empty vehicle runs were identified to
West Cork. This occurs when a producer has delivered to a region outside of the
county and is returning with an empty vehicle. Many are looking for solutions to
fill these backhaul runs.
16
◆◆ In general there was consensus among all respondents that distribution was a
key challenge and even if they had already solved some of the issues, it was still
a topic that held a strong interest for all producers, and all were willing to see it
evolve to the next level.
◆◆ While the topic of marketing was not part of the interview process and
indeed the project the mention of the Fuchsia brand was raised repeatedly by
respondents who felt that it’s recent lower profile was not a good thing and that
a separate project should be formed to revive the brand. Respondents say the
marketing of this West Cork brand, and the distribution of West Cork products as
related topics.
In summary two key challenges kept emerging:
◆◆ An acceptance the current individual producer delivery system with their own
vehicles to every town in Cork County and beyond is inefficient, has significant
crossover/wasted resources and also misses sales opportunities. Producers
struggled with how to manage this process.
◆◆ The majority of producers found they were stretched beyond reasonable
limits and that distribution added to this pressure. This sometimes meant that
the distribution model was not as robust as it could be when producers were also
trying to manage other elements such as:
-------
Production
Sales process
Marketing
Product tasting
Business management
Financial aspects
17
DESK RESEARCH
Introduction to International Regional Distribution Trends
West Cork has led the development of Irish food at regional level and has gained
many USP’s through the growth of its community of food producers, but the
challenge very often can be logistics, supply chain and distribution and the key
problems faced by being located over 200 KM from the main centre of population in
Dublin. The challenges this possess for regionally based producers include:
◆◆ The time taken to get product to major markets
◆◆ The cost of distribution
◆◆ The lack of locally based distributors with national coverage
◆◆ The sometimes fragmented distribution network within the Munster
provenance
◆◆ The issue for many producers of not knowing where to find information about
producers
◆◆ The over reliance of many producers on their own distribution at heavy cost
(recognised as being over €60,000 per year for a “man in a van”)
◆◆ The “trap” of the hidden cost of distribution by distracting the owner from
other sales growth aspects of the business
◆◆ The inefficient use of vehicles often half empty, caused by being based in a
regional location trying to service diverse markets
◆◆ The differences required for distribution to retailers and the separate
demands for the foodservice sector
◆◆ While “clustered” or “pooled” distribution is often seen by producers and
stakeholders as the ultimate solution, JB&A’s experience in this area running 6
pooled clusters on behalf of Bord Bia has shown that, while producers all support
this notion and believe it to be a great idea, the actual engagement in a voluntary
pool of this type is minimal and very often the groups fail because of lack of
commitment from the producers and lack of time by producers to engage with
each other to arrange
18
INTERNATIONAL REGIONAL DISTRIBUTION TRENDS
JB&A undertook desk research at global level to look for similar producer regional
examples and where innovative solutions have been found to meet the needs of
producers struggling to get product to market cost effectively.
Following a review of 30 distribution models the focus was narrowed to the
following. This desk research explored the following as examples:
◆◆ The Scottish Regional Food & Drink Hub – Waitrose
◆◆ The Regional Hub growth in the USA market since 2009
◆◆ The ASDA regional supply project
◆◆ Heart of England Fine Foods – HEFF
The sourcing of Regional / Local products by large multiple retailers has been in
growth in recent years driven primarily by both consumer demand and commercials.
The larger supermarkets are also implementing a number of measures to reduce
their carbon footprint, and by shortening supply chain by local sourcing can
contribute to this aim. All of the UK Multiples have embraced this local / regional
sourcing as part of their overall procurement strategy. The Irish multiples especially
SuperValu and Tesco have led the way with the Food Academy and Local Supplier
Programmes. But while these programmes embrace small and medium local Irish
suppliers in terms of assistance with listings, technical advice and PR there is no
solution for the distribution challenges a new and start up supplier faces in getting
finished product to market.
19
THE SCOTTISH REGIONAL FOOD AND DRINK HUB: WAITROSE
Waitrose in the UK lead the way in supporting British local small suppliers. They
give guidance to suppliers to meet the standards of their Small Business Charter.
Their local supplier programme allows for smaller producers to deliver direct to their
stores and defines local as a 30 mile radius of their stores. In 2012 Waitrose was the
first supermarket chain in Scotland to sign up to an innovative Scottish Distribution
Hub which gives it’s smaller suppliers across Scotland a more cost effective way to
get products on its shelves. This trend of the Regional Hub has seen a huge growth
across the USA since 2009.
Waitrose, stocks over 400 lines from Scottish suppliers, encouraged its small and
medium sized suppliers from across the country to sign up to the Scotland Food and
Drink Hub. The Hub provides a central distribution point for Waitrose local Scottish
suppliers.
It was developed following a research project commissioned by Scotland Food
& Drink, which revealed some of the obstacles that smaller suppliers faced in
distributing their products. Instead of taking orders and making individual deliveries
to each of the four Scottish Waitrose branches, suppliers now deliver to one central
point in Cumbernauld, The Scottish Food & Drink Hub, reducing administration,
fuel and transportation costs. The Scottish Food & Drink Hub is a privately owned
business and also delivers on behalf of over 100 suppliers.
Tracey Marshall, Product Manager - Local & Regional for Waitrose, commented:
“Our suppliers are based as far apart as Orkney, the Borders, Falkirk and Perthshire
and many are small, family run businesses. “Before the Hub was set up, suppliers
would have to arrange all transport and delivery to each of our stores themselves
– for more remote suppliers this could be expensive and not very environmentally
friendly. “At Waitrose we are passionate about discovering new local suppliers and
we want to make it easy for them to get their products into customers’ baskets. The
Hub will help our suppliers be more profitable and reduce their carbon footprint.”
20
WHAT IS A FOOD HUB?
In the USA consumer demand for local food is undeniable and growing over the
past 10 years. But the challenge remained for small and medium manufactures and
farmers to supply the food retail and service industries with small volume product
through large-volume wholesale channels. Responding to these market challenges
is a new intermediary: The regional food hub. Retailers and food service companies,
large and small, are teaming up with food hubs to differentiate themselves with local
food programs and satisfy strong consumer demand. Food hubs are the scaling up
strategy for local food. Food manufacturers can get ahead of the curve by becoming
acquainted with the food hubs in their territories and taking strategic steps to grow
local food sales with them.
The term “food hub” emerged in the last decade to describe alternative food
aggregation, distribution, and processing enterprises that began developing across
the USA. These entities sought to fill gaps in infrastructure to move food from
farms to consumers within the same region. The USDA (United States Department
of Agriculture) has incorporated the food hub concept into their strategy to build
strong regional food systems.
Food hubs bridge the gap between smaller-scale farms/ food manufacturers and
large scale wholesale with knowledge and expertise in both worlds. They work with
producers and buyers to address challenges involved in scaling up for wholesale
channels while maintaining local food’s value for increasingly educated consumers.
More than 200 food hubs are now in operation across the USA, a product of market
forces and new consumer values. Some are well established and growing. Many are
new and developing. All are working with industry partners, and increasingly with
each other across regions, to deliver the local taste and transparency consumers’
demand.
21
U.S Food Hubs 2013 (Source: Food Hubs: Solving Local March 2014)
Nationally in the USA 33% of Food Hubs are farm-to-business operations bringing
local food differentiation into wholesale supply chains serving grocery and food
service markets. Another 28% are hybrid food hubs, supplying wholesale as well as
farm-to-consumer markets, such as direct delivery to large-scale corporate wellness
programs.
Distribution: Some Food Hubs use 3rd party
distribution transport companies to pick
up product from farmers or manufacturers
while others have reduced transportation
costs by developing aggregation points
where growers/ producers drop off product.
22
FOOD HUB FACTS IN THE USA
◆◆ Approximately 222 regional food hubs operate in the United States
◆◆ Food hubs averaged more than $3 million in 2012 revenue
◆◆ 62 percent of food hubs surveyed in 2013 started up within the last five years
◆◆ Half of food hubs are for-profit enterprises
◆◆ Food hubs are profitable: More than half operate independently of grant
funding
◆◆ Many Food Hub specialise in Fruit & Veg (sourcing from the local community
farmers) but they also distribute other manufactured branded food product
◆◆ Many Food Hubs align themselves with large Farmers Markets
Source: “Findings of the 2013 National Food Hub Survey,” Michigan State University Centre
for Regional Food Systems and Wallace Centre at Winrock International
23
TYPES OF FOOD HUBS
The different dimensions of the Food Hubs concept may be recognised in
organisations that have either been labelled as Food Hubs or display some or
many of these characteristics and may, therefore, be considered as acting as defacto Food Hubs. Food hubs are perhaps best defined by the agent that takes the
organising lead. The organising agent will determine the strategic design of the hub
model and will assemble its resources, including bringing together key participants.
Five models have been identified:
1. Retail led
This model encompasses food hubs that have been established with the principal
objective of supplying a (large) retailer. In these cases, it is the retailer itself that
has led the development of the hub through engagement with local producers or
intermediaries, with the intention of providing a local supply solution.
ASDA is the leading retailer engaged with this kind of model. Having started its
first local hub in 2002 Plumgarth, it has developed the idea so that by the end of
2007 it had 14 food hubs across the UK. Hubs involving large non-retail customers
such as public institutions and food service organisations are often based on similar
principles to the ASDA model. One example is Bradshaw Brothers in Staffordshire
who supply Staffordshire County Council day centres with meat and meat products
as well as local retailers and catering establishments, sourcing its meat from its own
farm and twelve other local farmers. Other leading supermarkets tend to favour
different local sourcing structures where individual producers may supply direct
to individual stores or via conventional regional distribution centres, and often
use the services of public agencies such as Regional Food (Waitrose) to manage
approaches to the retailer from farmers and to train them in preparing good
business cases to the retailer.
2. Public Sector led
The distinguishing features of this kind of hub are that they stem from the efforts of
the public sector. Food hubs have been frequently proposed as potential solutions
to local food supply issues, which in many cases include a wide range of policy
objectives, including environmental considerations, food access, improved school
meal and other public procurement provision in addition to developing more
equitable markets for local food producers and processors. As a result a number
of hubs has been and are being developed through public sector sponsorship and
direct financial assistance.
3. Producer-Entrepreneur led
Food hubs that have been conceptualised and developed by producerentrepreneurs exhibit more successful commercial characteristics than the
public-sector led hubs. These hubs are often formed by individuals or groups of
entrepreneurs with agricultural or other food production experience who have
identified the hub strategy as an attractive business option. Although such examples
24
frequently use public sector finance and other assistance to launch and develop,
they typically rely on personal (or other sources of private) finance, expertise and
commitment. Typically, this type of hub is initially developed to meet a producer’s
own distribution issues, although other producers are brought into the hub to make
the system more commercially feasible. Example: Bank Farm began its commercial
operations as a large scale supplier of fresh eggs, conventional and organic eggs. It
is now a rapidly growing regional food hub based in Kent and its primary aim is to
get ‘Best of Kent’ fresh local produce into markets across the South East of England.
It’s customers include supermarkets (especially ASDA, for which it acts as one of the
retailers’ regional food hubs, and Whole Food Market), food service companies and
public sector catering establishments. Having built up its special skills – as a high
quality producer, as an efficient distribution system and in the marketing of fresh
produce – Bank Farm realised that it could sell a much larger range of fresh produce
alongside its eggs.
4. Producer-Co-operative led
Co-operative-led food hubs are a distinct model due to the partnership nature of
cooperative structures. Co-operatives, by definition, are bound by decentralised
decision making and risk sharing. They are also likely to be established as
mechanisms to enable profit generation from the activities of constituent member
rather than through the food hub identity. Co-operative structures can vary
depending on the local context and typically require external expertise to set up. Cooperative food hubs are able to draw upon expertise from among its members and
promote collaboration, understanding of each others’ skills and business attributes
that may lead to greater resilience. On the other hand, co-operative structures
are vulnerable to breakdown if members’ priorities conflict. Example: Riverford
Organic Vegetables. Devon-based Riverford Organics can be considered to be one
of the UK’s leading home-delivery service of organic vegetable boxes. Although
it was once focused entirely on the South West of England, Riverford has already
expanded to large swathes of the country (see Fig. 2) and it aims to cover most of
the UK eventually through its local franchising business model. Each local franchise
is supplied by a network of producers.
5. Wholesaler and Foodservice led
The final food hub model includes those businesses that originate from traditional
wholesaler and/or distributor markets. There are a number of cases around the UK
of traditional wholesalers who carry a significant number of local / regional food
product lines and who have become de facto local food hubs. A key aspect of
these businesses is that they tend to deal with processed food products rather than
commodities. Example:
Castell Howell is the largest independent wholesale distributor in Wales with a
turnover of over £40m, having grown from a farm-based enterprise over a period
of some twenty years. It operates as a traditional wholesaler; provides a delivered
service for caterers and the restaurant trade; runs butchery, meat processing, bakery
and Cash and Carry businesses; and supplies institutional customers such as colleges
and hospitals. Castell Howell also acts as a local hub for ASDA’s regional food
sourcing strategy, providing locally sourced food for ASDA’s Welsh Supermarkets as
well as those in the Bristol area.
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FOOD HUB FUNCTIONS AND EXPERTISE
Food hubs link the commercial and community sides of local food. This combination
can make the difference for wholesale buyers trying to build efficient and effective
programs that consumers trust.
Commercial Function
For wholesale/ retail buyers, regional food hubs:
◆◆ Serve as aggregation points for local and regional food producers.
◆◆ Provide essential wholesale services ranging from food safety, storage,
packing and distribution to light processing, branding, and market development
◆◆ Offer a diverse selection of source-identified and branded local products.
◆◆ Increase the supply of local and regional products by facilitating market
linkages for producers and providing training and technical assistance with
proper grading, packing, food safety, and other protocols.
Community
Food hubs build credibility into marketing claims with commitments to Small and
mid-size producers and to communities. Activities often include:
◆◆ Marketing, Nutrition, cooking, and gardening education
◆◆ Distribution to neighbour hoods that lack fresh and healthy food options
◆◆ Partnerships with food banks and food pantries
◆◆ Job training and employment programs
◆◆ “Buy Local” campaigns and events
◆◆ Producer standards (re. organic, GMO, pastured products etc.)
ADSA Local Sourcing / Route to Market
Local Sourcing is a key strategy in the ADSA business. They have a dedicated local
sourcing and buying team whose sole aim is to identify local products and work with
small suppliers to enable their products to reach ASDA stores. The team enlists the
support of regional food groups, the Asda local hub network and our own customers
and colleagues to discover what the essential local brands are in each area. In 2002
a local farm shop named Plumgarths in Kendal, Cumbria began to supply ASDA with
its range of locally sourced products. Plumgarths pioneered the first trial Regional
Hub with ASDA for small business. Since the foundation of the Plumgarth hub, Asda
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now works with a network of 14 regional hubs around the UK sourcing locally made
produce.
◆◆ ASDA gives the opportunity to local suppliers to direct deliver to stores using
their unique hub network making deliveries cost effective for both parties
◆◆ There is flexibility regarding minimum orders and order frequency
◆◆ An easy ordering system
◆◆ They give advice on electronic ordering, marketing and technical issues
◆◆ They supply local marketing support with ASDA local branding
◆◆ And work together with regional food groups
Key Local regions supported by ASDA food hubs are as follows:
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Scotland – Taylors of Scotland local food hub
Northeast – Lanchester Dairies local food hub
NorthWest – Transfresh NorthWest local food hub
Cumbria – Plumgaths foods local food hub
Yorkshire – Yorkshire Farmhouse Market local food hub
Hull and Lincolnshire – Ideal Lines local food hub
West Midlands - Transfresh West Midlands local food hub
East Midlands – Transfresh East Midlands local food hub
M1 corridor – Luton Hoo local food hub
East Anglia – Elvedon local food hub
SouthWest – Taylors SouthWest local food hub
Wales – Taylors Wales local food hub
Southeast and London – Invicta local food hub
Number of local lines/suppliers
Since the establishment of the first ASDA regional Food Hub with Plumgarths
in 2002 has obviously been successful as they now have 14 Regional Food Hubs
supplying over 3,000 regional lines. Dealing with the large ASDA Distribution
Centers can be a huge challenge for small and medium sized suppliers so the
emergence of the Regional Hubs are a key driver of volume for these suppliers/
producers.
Heart of England Fine Foods – HEFF
Since 1998 HEFF has been working on behalf of local producers in the West
Midlands including Shropshire, Staffordshire, Herefordshire, Warwickshire,
Worcestershire and Birmingham and The Black Country establishing contacts and
building relationships with food retailers, wholesalers and food-service companies.
With these links and knowledge of the food industry HEFF assists a growing base
of food and drink producers in the West Midlands, introducing them to new markets
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and helping them develop their businesses along whichever route they choose. In
doing this HEFF is fulfilling their goals of making locally produced, quality food
available to a wider public, raising consumer awareness of regional strengths and
providing sustainable business opportunities to the local food economy.
The HEFF initiative involves 97 small to medium sized food and drink companies.
◆◆ HEART of ENGLAND fine foods (HEFF) identified the need to address
distribution for regional suppliers and identified a partner with the required skills
in logistics to implement the initiative
◆◆ Regional wholesaler and distributor, A.F.Blakemore and Son formed a
subsidiary company ‘HEART Distribution’ to work in partnership with HEFF on
the initiative
◆◆ HEFF recruited producers (97 producers use the service) and marketed the
initiative to customers (customer base is 300 customers)
◆◆ HEART Distribution provided the depot, telesales and the multi-temperature
vehicles (branded HEART of ENGLAND fine foods)
◆◆ The HEFF trade team that works regionally and nationally was responsible for
acquiring customers that include Mid-counties Cooperative, Morrisons, National
Trust, Garden and Leisure group, Countrywide Farmers, Selfridges and a large
number of independent retailers
◆◆ Four sites for satellite hubs were identified by HEFF to facilitate inward
bound deliveries and HEFF co-ordinates a schedule of shared deliveries between
producers and backhauls by A.F.Blakemore into the central depot
The partnership offers a more effective route to market for SME regional food
producers and a simple solution for independent and multiple buyers whilst
reducing administrative inconveniences for both parties.
By creating a network of satellite hubs to coordinate shared deliveries and backhauls
into a central depot before consolidated orders are delivered to the producers’
shared customers it brings savings in overall miles travelled.
Unfortunately HEFF announced it was going
into voluntary liquidation in June 2014 as it
lost public sector funding.
While the HEFF team were unavailable
for comment, articles in recent media
publications suggest that the model was
heavily funded by grants and once two of
these grants were removed, the model could
not continue to viably trade.
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IRISH MODELS
The Irish market has six possible distribution models created by JB&A in 2009 on
behalf of Bord Bia. These models are:
◆◆ The pooled distribution model where producers voluntarily share each other’s
vehicles
◆◆ A pooled distribution model with a distributor. As above with a formal
distributor providing the “wheels”
The Big Brother model (where one large producer in a region distributes on
behalf of others)
◆◆ The regional hub model similar to the hub model described above
◆◆ The regional distributor model where a producer uses several regionally
based distributors to create a national solution
◆◆ The cash & carry model. This is where the producer delivers to the cash and
carry and the retailers and chefs collect product from here
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POSSIBLE SOLUTIONS FOR WEST CORK DISTRIBUTION - following desk
research
Option A: Led by a Specialist Distributor (either already existing supplier with
Chilled and ambient capacity, and a good distribution system). A separate company
name such as West Cork Food Hub to be set up, and all invoicing via this newly
established distributor. All suppliers must agree to pool all volumes for local
deliveries initially and in phase 2 bulk orders could be investigated to Distribution
Centres.
As per Asda model – using an existing supplier as a Food Hub (pool all regional suppliers
volumes onto 1 delivery)
Option B: A stand alone new greenfield site (rented space) and assisted with some
grant funding for setup. Either privately funded or Co-Op? All suppliers would
group their deliveries from one site (pool volumes). A separate company name such
as West Cork Food Hub to be set up and all invoicing via this newly established
distributor. All suppliers must agree to pool all volumes for local deliveries initially
and in phase 2 bulk orders could be investigated to Distribution Centres. Note:
higher set up costs with this option.
As per Scottish Food Hub and the new Irish Food CoOp in the South East.
Option C: Retailer sponsored . Option A or B above, but sponsored by a retailer
i.e. all new suppliers / listings for Munster area would be made distribute via this
new Food Hub thereby increasing the volumes distributed. The retailer could also
insist that all local central billing direct store deliveries should go via this Food Hub
thereby reducing deliveries to back doors, reducing administration with invoicing
and reducing carbon Footprint. A joint initiative with a Foodservice provider would
make this more cost effective too.
Such a Food Hub has huge benefits to retailers as well as producers.
◆◆ Less deliveries at back door with local suppliers (less invoices, less
administration)
◆◆ Reduction in cost of distribution by pooling volumes
◆◆ Reduction in carbon footprint
◆◆ More effective communionication to supply base via less suppliers to back
door
◆◆ Effective PR opportunity – supporting local food production / farming
◆◆ More effective management of ordering and waste management at store level
Investigate satellite hub with one in West Cork so that stock can be collated there.
Local Cork Food Marketing groups to align themselves with the Food Hub and
coordinate sales and marketing via the Food Hub.
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POSSIBLE NEXT STEPS
While this research project was not tasked with recommending any one solution, the
following possible next steps emerged during the process:
◆◆ Conduct a full survey of all West Cork producers and identify who is
interested in a full scale distribution project
◆◆ Identify all distribution routes being used by these producers, their end
customers and time and day of week delivery
◆◆ Ascertain the aspirations of each producer within the group i.e. to distribute
nationally or regionally etc.?
◆◆ Identify a core group of 10 producers who would be willing to act as a
“management activation team” for this project
Break the team in 3 sub-groups and task each with conducting a short feasibility
study on 3 elements:
-- The Irish Food Coop Model
-- The Scotland Food and Drink Hub model
-- The willingness of West Cork producers to support a model if it were
developed
-- Enablers which would be required to support a project
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