Sainsbury’s & Tomlinson’s Special Edition

Tomlinson’s Liquid Dairy of Wrexham goes into Administration

On Saturday evening around 33 direct suppliers plus approximately 39 (15%) of Sainsbury’s Dairy Development Group (SDDG) suppliers were told Sunday’s milk would not be going to Tomlinson’s for processing and its doors were closed.

On Monday (yesterday) Pricewaterhouse Coopers were appointed as administrators.

The Tomlinson’s family business employed 331 staff and started 36 years ago and until 2016 was a well respected solid family business.  Then came the award of a Sainsbury’s liquid contract in May 2016 and the need to double capacity to around 200 million litres within a 16 month period.

PWC in their announcement confirm “Tomlinson’s had suffered an accumulation of significant operating losses over recent years”.

The business was profitable and nose dived in the year ending March 2018 where it lost around £5 million and a further £2 Million to March 2019. For the 331 staff its devastating news, for the 72 or so farmers it will be painful and the potential, yet to be confirmed, loss of 6 weeks milk money will certainly push some over the edge.  All of these farmers need support, advice and help to cope and see a way forward and a future.

Credit to Lloyd Fraser (haulier), Muller and Sainsbury’s for ensuring Sunday’s milk and thereafter was all lifted, processed, delivered to Sainsbury’s stores and will presumably be paid for, to ensure seamless continuity of customer supply.

The Background to Tomlinson’s & Sainsbury’s

All of the 39 or so SDDG farmers were originally with Muller where they committed to deliver what Sainsbury’s required including investing in Sainsbury’s higher standards and welfare.

The farmers have accommodated everything Sainsbury’s have asked of them and have done nothing to deserve this consequently Sainsbury’s must surely accept responsibility for the dire situation they have put these loyal farmers in.

Let’s face facts the farmers involved are only linked to Tomlinson’s because they were told to move from Muller if they wanted to retain their Sainsbury’s supplier status.  It was a postcode lottery over which the farmers have no control or say.

When Sainsbury’s  encouraged them to move from Muller to Tomlinson’s those farmers trusted Sainsbury’s and believed the retailer had carried out due diligence on the Tomlinson’s family business.

It’s now time for Sainsbury’s to step forward accept responsibility and comment on what’s next in particular their position on the money its SDDG farmers are due on milk supplied from 1st of September to the 12th of October.

Barney Kay in particular needs to be visible especially given he hails from Tomlinson’s area coming from Stoke-on-Trent and living within 7 miles of the Potter office (Barney the kettles on if you do the school run).   Barney has a good agricultural background, was a NFU regional director, general manager of the National Pig Association, general manager at Moy Park, Head of Agriculture at Tesco (2015-2019) and a few months ago moved to Head of Agriculture at Sainsbury’s.  He knows about farming.

Let’s see Sainsbury’s through Barney and his side kick Gavin Hodgson, Sainsbury’s Head of Livestock, demonstrate how strong Sainsbury’s value the relationship with the Tomlinson’s SDDG farmers.

Will Sainsbury’s be honourable and do the right thing or will they dig their heels in and go on the defensive?

If Sainsbury’s don’t do the right thing it will likely destroy some farmers and will certainly severely dent farmer’s faith in retailers and their aligned contracts. Already there is local talk of several on the edge if no money comes.

One solution must be for Sainsbury’s to be invoiced for the 6 weeks milk by each farmer and for Sainsbury’s to pay them direct subject to a signed debt transfer enabling Sainsbury’s to receive any proceeds from the administrator thereby avoiding double funding.

In a nut shell it’s a case of Sainsbury’s deciding between Value v Values!

What next for the Tomlinson’s SDDG (Sainsbury’s Dairy Debt Group)?

Affected farmers are asking about payment for milk they supplied to Sainsbury’s in good faith. Depending on how Sainsbury’s choose to play this out will determine whether the 39 or so SDDG Tomlinson’s farmers are judged to have had a fair deal.  Affected farmers have renamed their group as the Sainsbury’s Dairy Debt Group.

I believe if Sainsbury’s effectively stick two fingers up to paying the farmers for the milk delivered to Tomlinson’s the lawyers will be quick to sharpen their teeth. Christine Tacon as the current Groceries Code Adjudicator GCA can expect to be wheeled into the frame as matters escalate especially given she also lives in the heart of the area.

At that point the National Press are likely to take a keen interest alerting Sainsbury’s customers to the situation. Any legal or GCA process will take time but as Sainsbury’s know from past experience its customers will ultimately decide whether they believe these SDDG farmers have been treated fairly or hung out to dry.

Only last night there was a TV documentary covering 150 years of Sainsbury’s a period where the retail giant held pole position as the countries No 1 retailer until recent years when it slipped to 3rd position..

The programme highlighted a number of recent gaffs & own goals by Sainsbury’s including their bizarre decision to sell a Sainsbury’s brand of ‘Fairly Traded Red Label tea’. Having successfully pioneered fair trade and trading terms with farmers in developing countries ensuring they were paid a fair price in 2017 came Fairly Traded tea from Sainsbury’s which was instantly viewed as undermining those farmers and confused consumers.

Then came the Greenpeace report stating that Sainsbury’s were worst in class for their use of single use plastic and non-recyclable packaging. Greenpeace subsequently promoted an orange strap line stating Sainsbury’s ‘couldn’t care less’.

As I have stated previously Sainsbury’s have to pick between value and values on this issue.

Medina

Liquid middle ground processor Medina has just published its financials for the 78 week period to 27th October 2018 and has posted an eye watering £1.4 million loss compared to a £2.57 million profit in the year (52 week period) ending 29th April 2017 pre its involvement with the Sainsbury’s business.  Like Tomlinson’s Medina borrowed to expand and accommodate the additional business from Sainsbury’s in 2016.

There is an extremely serious PR series of events Sainsbury’s Dairy appear to be at the heart off.  No wonder some are linking where Sainsbury’s go with their dairy business tends to follows ‘a trail of orange destruction’.  Some liquid processors might be better off not having major retailer’s liquid business.