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Growth stars in the region

The Sunday Times released their ‘Fast Track 100’ private companies yesterday and the most surprising aspect was that the list included so few digital businesses. Most of the companies with the biggest sales increases over the last 12 months came from more traditional sectors such as consumer goods, food and drink, leisure and business services.

The North East and Yorkshire fared well among the regions with 13 companies in the list, beating the North West (10) and the Midlands (10) and with a huge sales increase of 126%, Cawingredients, based in Leeming Bar, were the Region’s Growth Star in 13th position.

Andrew Cawthray set up Cawingredients in 2010 after having sold his previous soft drinks business, Macaw Soft drinks for £75m in 2005, which just goes to show how successful his business model is and on top of the current £44m turnover they are in the middle of huge expansion with bigger warehouse facilities, more bottling lines and another 100 jobs.

They supply Aldi UK and count several of the UK’s leading brands as their customers and Richard Harrison, their Chief Operating Officer has done a brilliant job of growing the client base along completely different lines to those of last business. Aldi in particular has seen a big increase in market share over the last two years.

Earthmill, Pure Gym and Xercise4less were at 17th, 18th and 21st in the list. Although based outside the Region, The Alchemist, part of The New World Trading Company was at number 20 and their latest outlet, The Botanist is due to open in Monument Mall next week after a £2m development and fitting out. Having had a sneak preview I can confirm it is the most exciting brand and bar/restaurant I have ever seen.

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Supporting the farming economy

I can remember times when no one knew a ‘poor’ farmer but those days have long gone and with the vagaries of EU farming policy and aggressive food sourcing of the major supermarkets there are many who struggle to make a decent living off the land.

As the Prince of Wales claimed in a recent foreword for Country Life too many of the population undervalue the farming role, especially aspects of the job taken for granted. Those in the cities and urban areas see the countryside as somewhere to enjoy a Sunday afternoon drive or a walk with the kids. The consensus is that they treasure the rural idyll but have little appreciation of the work that goes into maintaining the way the landscape looks.

In most areas farmers are the mainstay of the rural community and the thread that links the ecosystem. They maintain hedgerows and dry stone walls. They plough and furrow countless acres. They are the guardians of beautiful landscapes that form the backdrop for insects, birds, butterflies and bees. They provide jobs in areas where few exist.

Not only do we need to champion their role, we need to protect their very existence in the way we source our food. It helps but it is not enough to simply buy meat, eggs and produce locally. When faced with imported food on the supermarket shelf we need to back British even if it means spending a little more. That way we can keep more value in the rural food chain and make grocery buyers reflect that in the range of food that supermarkets stock.

Supporting the farming economy works both ways as the ecosystem becomes more sustainable and the beauty of the landscape is enhanced for locals and visitors alike. What price do we place on that? As more of the population polarises around urban areas then the more we will value escaping into the countryside for a holiday, weekend or Sunday drive. It’s worth keeping that in mind as you head to your favourite shop this weekend.

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Cav faster than Tesco

There are exceptions, like Usain Bolt and Mark Cavendish, but usually size prohibits speed and so it isn’t such a big surprise that the juggernaut that is Tesco, increasingly looks slow and unable to turn round.

I can recall, in a similar forecast 3 years ago before their market share dipped and they found a huge black hole in their profits, saying that Terry Leahy was passing a poisoned chalice to the new CE and so it has proved.

Now today, in a well reasoned argument, the boss of Waitrose states that the ‘Big Four’ supermarkets are living in the past and will continue to lose market share. Everyone else has of course been saying that for months but Mark Price is the first person who has accurately summed up the reasons why.

Aldi and Lidl are a small part of the issue but you only have to look at changes in consumer behaviour, some of it brought on by the recession, and the portfolio of shops the big four own to see there are other more fundamental reasons. Just look at the size and contents of the average shopping trolley. It is different and we eat in a different way to 10 years ago.

Big often means arrogant and for some reason big guys stop listening and watching. It happened at M&S, it is happening to the ‘Big Four’ and it will happen again unless there is a fundamental change in the way a big business like Tesco is run. Top teams become driven by sales and profit, stop listening to customers and cease to respond to what is happening on their doorstep.

The biggest problem for Tesco, apart from their inability to count, is their property portfolio and the sheer size of out of town stores will be a drag on sales per square foot for years to come unless they divide it up differently. I called into my local Tesco today and the first 15 metres of the number one aisle in the shop was merchandised from top to bottom in Halloween. If that doesn’t scare the markets into selling Tesco shares, nothing will.

The growth of Aldi and Lidl will slow down in 2015/16 but Waitrose will continue to forge ahead and expect to see real growth in community supermarkets again, even convenience stores. I could be wrong but customer insight is everything and because we are used to listening if I do get it wrong I’ll know before the outcome is terminal. There lies the problem with size, others just keep getting faster, better and passing you.