There is a renaissance for British brand names in the luxury sector: foreign buyers, particularly those in Asia, are in a frenzy to buy all things British. The ‘Made in Britain’ logo is a sign of quality and UK provenance is a status symbol.
Rolls Royce is the jewel in the crown of the British manufacturing industry, and its name is now the adjective used to define pedigree and excellence. British craftsmanship provides the world with its most luxurious motor cars. Whisky is also a luxury item for China’s elite, and Diageo — home to some of the world’s premier branded beverages — says 42% of its business is in the faster growing markets of Latin America, Africa and Turkey as rising middle classes seek the more luxurious British brands.
Recently, the UK has seen a seismic shift in UK consumer choice. 82% of consumers polled said they would prefer to buy British goods. The reasons remain unclear but could be a convergence of factors such as the Bangladesh factory disaster, which renewed ethical issues for foreign garment manufacturers; the horse-meat scandal that shone the light on complex and spurious food supply chains; and the Olympic Games, which changed the way British citizens look at their country, inspiring pride and legitimising patriotism.
If consumers increasingly select goods because of their origin, does it also follow that investors shop for shares by scrutinising and evaluating the extent that a company is championing the British economy?
Recognising the sea change in customer sentiment, the major retailers are in a race with each other to sign up British suppliers.
As the largest food retailer in the UK, Tesco (LSE: TSCO) is the biggest customer for British farmers. Sales of local and regional food at Tesco soared to over over £1 billion for 2011/12, and well over half of their customers are now buying more local food than they were five years ago. Tesco has over 4,000 product lines and 500 local suppliers, and has adopted the marketing tag line “Bringing food closer to home”. As well as supplying only British and Irish beef, it has promised to source all chicken from UK farms in 2014.
Morrisons‘ (LSE: MRW) commitment to British produce is more comprehensive, and is a result of its vertically integrated supply chain. In addition to being a retailer, it is one of Britain’s biggest food manufacturers, with over 20 food production and distribution sites around the UK. It owns its own farm, three abattoirs and, more impressively, it makes one quarter of all the food it sells.
As one of Britain’s biggest retailers of dairy products, Morrisons claims that all of its dairy produce is 100% British, recognising that British dairy farms have high welfare standards and are some of the most efficient in the EU.
Sainsbury’s (LSE: SBRY) has some catching up to do and promise that by 2020 it will double the amount of British food sold. It sources 100% British pork, chicken and lamb, and British or Irish fresh beef. Sainsbury’s also supports Britain’s arable and crop farmers by using British flour in their store-baked bread, and it is in its fifth year as the largest retailer of British apples and pears.
