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1. OK, so let’s talk Pork Pies. (Thread)
2. There is definitely barriers to selling pork which can be negotiated away as part of a trade deal of some kind.
This is true.
This is true.
3. But pre-cooked ready to eat food like Pork pies, not so much. Especially when the average Pork Pie aficionado will tell you that a pork pie shouldn’t even be refrigerated.
4. Even refrigerated, the average pork pie has a shelf life of 5-8 days.
5. On the basis, using sea freight to transport refrigerated pork pies to the US isn’t that viable.
6. Which is probably why when the Samworth Brothers tried to export them they chose the frozen model.
7. Freezing pork tends to affect the taste because....:Science.
8. It is not just the pork, the fat content of the pastry effects how well a pie freezes
9. And in the case of Melton Mowbray pies, the gelatine in the jelly also doesn’t necessarily freeze well.
10. So a Pork Pie maker might find themselves having to change how their pie is made, something they have had to do to achieve a competitive shelf-life just in the UK.
11. Historically, freezing hasn’t been something that pork pie makers have been happy to do.
12. But there have been improvements in freezing technology, and the Samworth Brothers claimed their process didn’t affect the quality of their pies. We can give them the benefit of the doubt while assuming that there is a market entry cost for the freezing technology.
13. Now a company has invested in the technology, it has to transport them frozen. Unsurprisingly this is more expensive than non-frozen goods, both in terms of sea freight and then transporting them intra-state when they arrive in the US.
14. All of this adds up to a greater lead time, and a greater lead time means there is a need for a larger storage facility. As an example of how lead time affects storage, EU citrus fruit needs 1.5 days storage, while citrus fruit from the rest of world requires 10 days storage.
15. Then there is the issue of variability.
Ocean freight is not that reliable.
Ocean freight is not that reliable.
16. This in turn increases the storage capacity required.
17. And on the basis of what causes this variability, it’s important to note that leaving the EU *may* negatively affect our trade with the rest of the world where sea freight is employed.
18. OK, so the logistics don’t just require a larger area of storage but a larger area of cold storage, It was more expensive to transport, and it's also more expensive to store.
Usually about 3 times more expensive in this case.
Usually about 3 times more expensive in this case.
19. Then it has to be thawed somewhere over 24 hours, or be sold as a frozen ready to eat pie which, if not thawed correctly, will be a soggy ready to eat pie.
20. The retailer is unlikely to want to do this while it can get fresh pies delivered daily, so this would have to be a separate process. It may even involve the actual baking.
(Which would set the clock on delivering within the shelf life again)
(Which would set the clock on delivering within the shelf life again)
21. Leaving the remaining question that every investor asks, why would a retailer give shelf space?
Specifically, why would they give shelf space to a non-fresh limited shelf life pie, or indeed, a frozen ready to eat pie?
Specifically, why would they give shelf space to a non-fresh limited shelf life pie, or indeed, a frozen ready to eat pie?
22. OK, so maybe can reduce the lead time, and therefore the storage costs, by air? Well, we do have 25 airports servicing 18 states.
23. And the good news is that the US has a great supply chain infrastructure.
24. The bad news is that the UK doesn't,,,
Or at least, air freight capacity in the UK is largely belly-hold.
Or at least, air freight capacity in the UK is largely belly-hold.
25. It is perfectly possible to transport cold storage with belly-hold.
26. But is it scalable enough to serve every town?
I can't begin to imagine how it could be.
I can't begin to imagine how it could be.
27. Having said that, countries in the EU employ UK capacity to access the US market, and with the additional border friction introduced with Brexit, that may result in more capacity available for UK companies.
28. The bad news being that, due to the UK’s lack of air freight, importers and exporters use the same free circulation within the Single Market to access the Asian market.
29. So, in the case of air freight, there is no ‘probability’ about it. Leaving the EU will have a negative impact on the existing infrastructure that UK exporters, and importers, currently use to trade with the rest of the world.
30. OK, so assuming we’ve reduced the storage costs and we have managed to negotiate trial shelf space in a one or two stores, what then?
Well, the limited shelf life means that they had better sell or there will be no repeat order. (They don't like discarding unsold products)
Well, the limited shelf life means that they had better sell or there will be no repeat order. (They don't like discarding unsold products)
31. With that in mind it's important to remember that not everything that works in the UK works in the US.
32. It is a common misconception that what works in the UK will work in the US because we’re "culturally similar", and the fact they don’t recognise savoury pies might be seen as “a bit of” a red flag.
33. Which means additional market entry costs in terms of advertising, which if successful will also mean that any UK pie maker will be facing local, and fresh, competition in the future. (H/T @CoppetainPU)
34. Let's be honest, exporting pork pies to the US is a horrible model that involves high cost entry and a non-guaranteed return with questionable scalability. The export model alone has already been tested and has already failed.
35. If the plan was to target the UK immigrant communities, then the bigger market is estimated to be in the European Union. (It's not that close!)
36. While we fly to 25 airports to serve 18 states in the US, we fly to 271 airports servicing 27 memberstates in the European Union.
37. While maintaining a regular ferry service and a train freight network.
38. With the Ferry service and the train service being used to provide backup should one suffer disruption.
39. Added to the fact that with less travel the model is less affected by expected and unexpected increases in freight costs.
40. The reality is that in terms of perishables, distance, time, and infrastructure all affect the viability and profitability of a product.
41. There are unquestionably modest opportunities in a US deal in terms of cooked baked products, but in the face of losing the EU market, it’s like celebrating finding a fiver at the same time that you’ve lost a grand.
42. And if politicians want to talk about the “opportunities”, they should probably talk more about the opportunities of doing the job they haven’t been doing, rather than telling business owners how to do theirs.
43. Because, and I can’t stress this enough:
Our inefficient air freight infrastructure is about to become more inefficient.
We need honesty from our politicians.
We need solutions from our politicians.
The last thing we need is more pork pies from our politicians.
/End
Our inefficient air freight infrastructure is about to become more inefficient.
We need honesty from our politicians.
We need solutions from our politicians.
The last thing we need is more pork pies from our politicians.
/End
