Please note: this blog was published in February 2022 and its content is based on what was correct at the time of writing. As a result, some of the facts and opinions may no longer be current or relevant.
Did you know that every June 5th there is an annual celebration of National Sausage Roll Day in the UK? While it’s unlikely that we’ll get an additional bank holiday allocated for this occasion, it undoubtedly signifies this country’s love for these pastry snacks. Sausage rolls are just a small segment of a much wider industry, referred to as ‘Food-to-Go’, which is retailers that offer takeaway products. This is a highly competitive market in the UK, particularly on high streets, where global chains and independent stores compete for custom of shoppers, office workers and, more recently, those ordering from home.
Food-to-Go represents over a quarter of the total eating out market in the UK (1), and the industry’s value is expected to expand to £22.6bn by 2025 (2) despite contracting in 2020. Given the increasing significance of the industry, it is vital to assess its sustainability characteristics. While the health implications of its products are prominent concerns, there is also the wider scope of social issues to consider, including its impact on staff, animals, and communities.
Our Ethical Investment Plans include Greggs, which is held in the Royal London Sustainable Leaders Trust.
The finance stuff 📈
Company value: 2,732.5million
Share price: £26.91
2020 Profits: £511.7million
What does Greggs do?
Within the UK’s Food-to-Go industry, one name is beginning to dominate: Greggs. The bakery chain has even surpassed McDonald’s in recent years and holds the largest share of the UK market (3). The retailer capitalises on Britain’s love of sausage rolls, selling over 2.5million per week (4). However, its extensive range of products demonstrates that Greggs is far more versatile than these simple pork pastries. Offerings such as breakfast rolls, pastries, and pizza enable its shops to cater for demand at all times of the day, and there are even three locations with 24-hour stores.
Greggs was established in 1939, when its founder, John Gregg cycled around Newcastle selling eggs and yeast to its residents. Twelve years later he opened the first Greggs store in the same city. The
company has subsequently soared in popularity, as well as in value, due to its innovative low-cost goods and several successful acquisitions. This popularity is emphasised by the fact that London is the only city in the UK where fewer people visit a Greggs store compared to the multinational retailer, Pret-A-Manger (5). Its ascendance can be summarised through the growth in its share price, which has returned over 700% in the last 20 years. Greggs is also included in the FTSE350, meaning it is one of the largest 350 publicly traded companies in the UK. Management continues to show an appetite for further growth, with plans to open an additional 150 shops each year, as well a potential international expansion (6).
Despite its size, the recent success of its vegan-friendly range demonstrates its ability to be nimble and reactive to changing tastes and habits. Greggs attributed a surge in its 2019 profits to the launch of its vegan sausage roll, which has established itself as one of the company’s most popular products. Furthermore, due to the impressive sales of these meat-free sausage rolls, each staff member received a £300 bonus (4).
What positive impact is Greggs having?
Greggs’ positive impact on local communities started in the 1960s, when the company introduced its ‘pie n peas’ programme, providing free meals for the older residents of Gateshead. In 1987, the Greggs Foundation was launched, with the purpose of improving the quality of lives in the areas it operates in. One example of the Foundation’s initiatives is the Hardship Fund, which has donated over £2.5million in grants to families in need of financial support in the North-East (7). The company has also established partnerships with several charities, including BBC Children in Need and North of England Children’s Cancer Research, raising tens of millions in the process.
In February 2021, the ‘Greggs Pledge’ was unveiled, outlining three key themes that Greggs will contribute to help with improving our planet by 2025. The first of which is ‘Stronger, Healthier Communities,’ where the company is aiming to provide 70,000 meals per day to school breakfast clubs - almost double the amount currently provided (8). Greggs is also committing to increasing the proportion of healthier foods on its shelves to 30% (8). The second theme is ‘Better Business’ which illustrates the company’s intention to improve internally through embracing diversity in its workforce, as well as implementing a Responsible Sourcing Strategy. Greggs has also documented its objective of achieving the Tier 1 BBFAW Animal Welfare standard, the highest ranking for food companies with regards to their conduct towards animals. The third theme, ‘Safer Planet’, discloses Greggs’ environmental goals, including decreasing its packaging by 25% compared to 2019 (8). In the long-term Greggs plans to be Net Zero by 2040 - 10 years ahead of the UK government’s target. The company has already made impressive progress, with 96% of its current electricity usage coming from renewable sources (8).
What Greggs have to say 📣
“We will give back to the communities that support us and take less from the environment that we all rely on. I want Greggs to play a meaningful role not just in getting Britain back on its feet but in getting us to a better place.”
Roger Whiteside, CEO
2021 Impact Report
What Royal London think… 🤓
Whilst a sausage roll purveyor might not seem like an obvious choice, it actually performs very strongly against each of the E, S and G factors. The company is well governed, as well as strongly prioritising customer health, responsible sourcing, community, the environment and its workforce.
To wrap up 🎁
Greggs’ proven business model combining competitive prices and convenience has allowed the company to flourish into arguably the nation's favourite Food-to-Go retailer. Whilst there are valid concerns regarding the implications of overconsumption of its products on customers’ health, Greggs’ extensive history of supporting communities and its future commitments demonstrate that the company is conscious of its impact. Furthermore, the Greggs Pledge highlights the company’s intent to positively influence each aspect of E, S and G, as well as its ambition to become an industry leader in sustainability, in addition to size.
References
(1)https://www.lumina-intelligence.com/market/food-to-go/
(3) https://store.lumina-intelligence.com/product/uk-food-to-go-market-report-2021/
(5) https://www.mylondon.news/whats-on/food-drink-news/greggs-pret-food-london-popular-22445203
(7)https://www.greggsfoundation.org.uk/about/history
(8) https://corporate.greggs.co.uk/the-greggs-pledge/The_Greggs_Pledge_2021.pdf
