Tesco chief’s health spur
In his first interview, Tesco’s UK boss Matt Davies sets out to calm critics of unhealthy supermarket food – and vows to avoid ‘shrinkflation’ in his products
RESPONSIBILITY for the nation’s health is not something we might willingly hand over to private corporations. But, for Tesco’s UK boss, it’s personal. Matt Davies, in his first interview since arriving to run the £43billion British chain two years ago, said his own health scare spurred a drive to make Tesco a healthier place to shop.
‘When I joined Tesco I had a health check and my sugar levels were way too high – high enough for a doctor to turn around to me and say: “Listen, Matt. You need to think about this.” After that I became more aware of type 2 diabetes and the impact it can have on how you live your life. I was fortunate,’ says the 46-year-old Davies.
To some, the new-found health conscious Tesco will sound like too little too late. Just a year ago consumer group Which? surveyed supermarkets including Tesco and found that unhealthy food was more likely to be offered at price discounts than healthy options such as fruit and vegetables.
Just last month a Commons Select Committee on childhood obesity repeated concerns about price promotions on junk food. All supermarkets – Tesco included – continue to make a large proportion of their sales in unhealthy foods. Davies, however, insists that whatever Tesco may be able to do, it cannot control consumer choices.
‘Customers tell us very, very clearly: we do not want you to dictate to us what we can and what we cannot eat; we don’t want choice editing,’ he says.
Davies insists it’s a fine balance between presenting customers with unambiguous options and making choices for them ‘without compromising on taste’.
But supermarkets are undoubtedly at risk of greater interference from politicians facing ever growing calls from the health lobby. All of this suggests there may be more to Tesco’s health drive than Davies’s blood sugar levels.
With even a Conservative Government wading in with a sugar levy on fizzy drinks which takes effect next year, many in the food industry fear we are at the beginning of a new wave of regulation driven by health concerns. Chancellor Philip Hammond surprised many campaigners and frustrated manufacturers when he threw his weight behind the levy in March.
So while Davies may be concerned about his own health, he is also keen to keep on the right side of public and political opinion.
‘The food industry has a responsibility to continue to challenge itself to make sure that food is healthier for customers. People who are passionate about this are going to be ahead of regulation,’ he says.
Tesco’s reputation and performance have recovered well since the accounting scandal that rocked the firm in 2014. Last month, full year results showed sales and profits rising. Last week, key rival Sainsbury reported falls in both sales and profits at its supermarkets in 2016.
But crucially, first quarter figures from Tesco due next month will give an insight into how it is performing so far this year, as the weaker pound has eroded shoppers’ buying power. Tesco has faced tough negotiations with suppliers trying to raise their prices – notoriously in the so-called Marmitegate row. But Davies claims Tesco has largely succeeded in keeping a lid on inflation for its customers.
‘We’re continually working with our suppliers to mitigate any cost increases and keep prices as low as possible for our customers. Despite cost pressures, a typical basket of foods at Tesco is 6 per cent cheaper than it was two years ago.’
But what about the notorious ‘shrinkflation’ where instead of raising prices products get smaller, famously so with Toblerone and other chocolate products?
WHAT other suppliers do is beyond Tesco’s control but Davies says there will be no such tactics used for Tesco’s own products. ‘We do change pack sizes from time to time to meet the changing needs of customers, but we have no plans to change the pack sizes of our own-label products for the reason of cost price inflation,’ he declares.
Ahead of those crucial first quarter figures next month, Davies cannot give any clues to the group’s current financial health. Not so his own physical health. Davies said his personal check-up led to ‘lots and lots of sensible, subtle changes’ – eating different foods and doing more exercise. He says: ‘I gained a deeper understanding of where hidden sugars lie. I’ve been able to make a big difference to my own blood sugar levels which is why I’m so focused on sugars that lurk where customers don’t appreciate.
‘I didn’t appreciate that, historically, there were sugars in cooking and pasta sauces. We know 80 per cent of diabetes flows from obesity. Nine per cent of kids are obese. Two thirds of adults are overweight and there is a growing diabetes crisis. Customers are clear this is something they want help with.’
Tesco has launched its ‘Little Helps to Healthier Living’ healthy eating campaign to encourage shoppers to switch.
Customers will be offered free diabetes checks at stores with pharmacies and fresh fruit placed besides checkouts as well as price cuts on hundreds of fresh, low-fat food from fish to corn on the cob. Crucially, price cuts are aimed at persuading shoppers to switch to healthier alternatives which will be, for next few weeks at least, cheapper. A pack of three 200g tins of Heinz baked beans with no added sugar will cost 84p compared with the standard equivalent at £1. Meanwhile, a 1.25-litre bottle of Diet Coke will cost 90 pence compared with £1 for a standard bottle.
Tesco refuses to say how much it is spending on the healthy food campaign. But if, as Davies clearly hopes, the initiative draws in health-conscious shoppers the group will be aiming to recoup whatever it has spent through higher sales.
When it comes to the biggest political and economic issue of the day – Brexit and the General Election – Davies is less forthcoming, however.
‘We’ll work with whatever Government is elected and try to make sure that as part of any Brexit negotiations we can continue to serve shoppers better. We would welcome anything that enables us to do that,’ he says.
With evasive skills like that, it is perhaps not surprising that Davies has flown well below the radar since taking the job at Tesco.
He rents a home near Tesco’s head office in Welwyn Garden City and spends most of the week ‘down there’. He has a home office in Manchester, just a few miles from his birthplace in Wythenshawe. ‘I’m not very adventurous,’ he laughs. ‘I ventured as far as Hull for university but I’m back here and my mates are still the same people as when I was 12 years old – terribly sad really,’ he confesses.
But his milestones in business are another matter. In 2004, he was appointed chief executive at Pets At Home. He tripled the chain in size before it was sold for almost £1billion – netting Davies a fortune estimated to be £20 million for his shares. But that didn’t dent his work ethic. In 2012, he became the boss of Halfords and in 2015 was drafted in by Tesco chief executive Dave Lewis to run the group’s UK division, arriving a year after the notorious accounting scandal.
The group still has a way to go to recover its former glory. For Davies and Tesco the bottom line will have to be that promoting healthy eating also promotes some healthier profits.
There is a growing diabetes crisis and customers are clear this is something they want help with
My mates are still the same people as when I was 12 years old – it’s terribly sad really