Yorkshire food and drink suppliers boost Morrisons

Strong demand for local produce such as Masons Dry Yorkshire Gin and Lottie Shaw's Yorkshire Parkin has boosted Morrisons as it announced its third consecutive year of improved sales and profits.

George Ross, a farmer at Morthen Milk, one of Morrisons' new Yorkshire suppliers

The Bradford-based firm has brought in over 200 new local suppliers and it has introduced 750 new local products to its stores.

In Yorkshire, its best sellers include award winning Masons Dry Yorkshire Gin based in Bedale, Lottie Shaw’s Yorkshire Parkin made to a 100 year old family recipe and Voakes Free-From Pies, which are made by the wife of a famous Yorkshire pie maker who couldn’t eat the family produce because she is intolerant to gluten.

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O​ther Yorkshire best sellers include ​Grandma Wild’s Biscuits from Steeton near Keighley, Parrs Foods from Scarborough and Rotherham-based ​Morthen milk​. Sheffield dairy farm ​“​Our Cow Molly​“​ ​is also being sold in three local Morrisons stores. The local businesses ​are being stocked alongside Yorkshire products already in Morrisons, such as Wakefield Rhubarb and Yorkshire ham.

Local sales have risen 50 per cent over the past two years as shoppers up and down the country opt for local producers.

Morrisons’ chief executive David Potts said: “We see our Britishness to be in tune with customers.

“We can definitely do more. It’s allowing local farmers and growers to know that we are very open minded.”

He said that 68 per cent of customers have expressed an interest in buying local.

“Two thirds of what we sell is British,” he said.

“A good example is milk. A new arrangement with Arla means all our milk is British. All of our Yorkshire stores have got Yorkshire milk.”

Mr Potts said the local food initiative is going to get bigger. Morrisons classes local as being within a 35 mile radius of the store.

Following a successful partnership with the Women’s Institute last year, the group will be looking for more local food makers over the next few months. Mr Potts said he’d like to get British food supply above the current 66 per cent.

He was speaking as the group announced a 17 per cent leap in bottom line profits to £380m for the year to February 4. On an underlying and comparative 52-week basis, pre-tax profits rose 9.5 per cent to £374m.

The grocer said like-for-like sales jumped 2.8 per cent despite the challenges of higher import costs following the pound’s slump since the EU referendum.​

​It marks the ninth quarter in a row of rising sales and Morrisons said it would pay a special dividend of 4p per share, reflecting its confidence in future growth. Th​is means the total full year divi​dend will​ nearly double to 10.09p a share.

​But the special dividend payout was not enough to cheer investors, with shares falling nearly 5 per cent after the results.

Ken Odeluga, market analyst at City Index, said concerns remain over margins at the big four players as they fight to compete with the discounters.

“The problem is they are not growing as fast as upstarts Aldi and Lidl whose combined market share continues to advance,” he said.

Th​e share price fall​ ​also reflects a 5 per​ ​cent rise over the last three months and some disappointment at a fall in free cash flow to ​£​350​m from ​£670​m.

​Bernstein analyst Bruno Monteyne said: ​“This will temper somewhat the excitement of the special dividend​,”

Mr Potts warned that the market remains very competitive and said the group will continue to prioritise offering customers value for money.

​He said ​that ​inflation, which soared in 2017 due to the Brexit-hit pound, ha​s​ tapered off and w​ill continue to ease back in 2018. The group ha​s​ held off hiking prices ​in order ​to remain competitive.

​Morrisons said there is still a “substantial cost-saving opportunity”, which it pledged to put back into improving service for shoppers.