Can Silvercrest survive losing Tesco?
Analysis: The news that Tesco has withdrawn its frozen burgers contract from Silvercrest Foods is the second major commercial setback to the ABP-owned company in a week, writes ALISON HEALY, Food and Farming Correspondent
Last Wednesday, Burger King said it was replacing all Silvercrest products in the UK and Ireland with products from another approved Burger King supplier because of the discovery of horse meat in burgers.
That contract was reported to be worth €30 million a year. The company is fighting to win back this contract and is putting a raft of new protocols in place to reassure customers. It is replacing its management team, introducing a DNA-testing regime and auditing all third party suppliers.
Burger King officials are planning to come to Ireland in the next week or so to discuss the issue with Silvercrest Foods and Department of Agriculture officials.
The Tesco contract for frozen burgers is worth about €15 million a year to Silvercrest Foods. However, Tesco said it would continue to buy fresh Irish beef worth more than €100 million a year from other ABP companies.
The company will be hoping that this ongoing relationship means it could some day win back the lost contract. But for the moment that looks highly unlikely. Tesco group technical director Tim Smith said Silvercrest had used meat in Tesco products that did not come from the list of approved suppliers. “Consequently we have decided not to take products from Silvercrest in future. We took that decision with regret but the breach of trust is simply too great.”
The supermarket chain buys €177 million worth of Irish beef every year and said it would continue to do this, a decision which has been welcomed by the Irish Farmers’ Association.
The setback for ABP is now an opportunity for other beef processors. Tesco is planning to open discussions with other Irish beef processors for the sourcing of frozen burgers.
Meanwhile, ABP has not said when it expects Silvercrest to reopen. Its 112 employees are being paid during this suspension of production but they must be getting increasingly worried about the future of the Ballybay plant. Silvercrest Foods reportedly accounts for five per cent of ABP’s total €2.2 billion turnover.
There is no doubt that ABP will survive this crisis, but can Silvercrest bounce back from this latest setback?