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Supermarket giant takes control of two suppliers

Leeds-based Asda says buying suppliers will help it pay more for their produce.

Leeds-based Asda says buying suppliers will help it pay more for their produce.

Asda has taken control of two of its Yorkshire suppliers in a move designed to lower prices.

The Leeds-based supermarket can now actively participate in key decision making at two Cleckheaton-based companies, sliced cooked meat supplier Forza Foods and fresh meat producer Kober Limited.

Both are run by Max Smith-Hilliard, a big player in the UK pig industry.

Asda said the move would also help it to pay suppliers more for their produce.

Forza imports Polish sausages and other cooked meats for Asda where it has a multi-million pound contract.

In its latest accounts Forza said sales rose by 70 tonnes a week to around 800 tonnes a week.

New ranges and increased customer demand lifted turnover in 2011 to £225m, up from £158m the previous year.

The company has invested over £4m in additional production lines and made a pre-tax profit of £8.5m in 2011.

Kober supplies Asda with bacon rashers, steaks and joints and produces 500 tonnes of bacon a week and generated turnover of £70.8m in 2011.

Kober said a tight control over start-up costs and an efficient manufacturing cost base enabled the company to generate an operating profit of £1.2m.

The group spent £10.5m equipping its factory in Cleckheaton with the latest slicing and packaging machinery.

Under the agreement Asda can influence who gets voted on to the board and can “significantly influence” the operating and financial activities of Forza and Kober.

Asda is keen to get rid of the middle man in order to access produce straight from suppliers all over the world.

The headquarters for this business – Normanton-based International Produce Limited (IPL) – is at the heart of Asda’s plans to cut out the middle man and reduce prices on imported products.

Nick Scrase, who heads up the IPL business, said: “The two most important people in the supply chain are the customers and the growers.

“We are cutting out the middle men. We don’t have importers based in the UK, IPL fill that role for us.”

He added that the IPL system allows the group to purchase more efficiently and offer customers lower prices.

 

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