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British Retail Consortium (BRC) Standard: a New Challenge for Firms Involved
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British Retail Consortium (BRC) Standard: a New Challenge for Firms Involved in
the Food Chain. Analysis of Economic and Managerial Aspects

Filippo Arfini (filippo.arfini@unipr.it)

Maria Cecilia Mancini (mariacecilia.mancini@unipr.it)
Institute of Agrifood Economics, Department of Economic and Quantitative Studies
Parma University
Via Kennedy 8, 43100 Parma, Italy

Abstract
The spread of retailer brands and the progressive shift towards non-price competition policies are
strictly correlated to the transformation of the distribution sector as a whole. The modern
distribution company offers – by means of the private label - products that at least match the
quality level expected by the consumer but, in order to do this, it must effectively be able to
guarantee the promised level of quality by establishing a meticulous and strict supplier control
system.
The paper evaluates the new strategies adopted by the retailers in order to improve non price
competition and studies the economic and managerial consequences met by a processing firm
that adopted the BRC food technical standard in order to meet with the retailer requirements.
The case study shows that the adoption of the BRC food technical standard has had positive
repercussions on both the management costs of company processes and the quality of customer
relations in the modern distribution market.
On a large scale, the paper identifies two main consequences in the case of a more widespread
adoption of the BRC food technical standard by the suppliers in the next future: the first relates
to the organisational relations among the operators in the supply chain and the second the
relation between the retailer and the consumer.

Keywords: BRC food technical standard, private label, non price competition

1.Introduction
The experience of the past few years has shown that the strategy adopted by the distribution
companies, oriented to the development of the retailer brand, has led to the redefinition of the
organisational approaches of the retail companies themselves. Among the other consequences,
the retailer has subjected the suppliers to a growing number of inspections to check the
compliance with contractual requirements; for this reason, towards the end of the 1990s, the
largest distribution chains in the UK market defined a standard including hygiene and safety
requirements, quality assurance and the respect for the working environment, which, if respected
by the producers, can guarantee complete conformity for the activities involved.
The development of such a standard was initially driven by the need to meet legislative
requirements but was quickly seen as having significant benefits to the suppliers of products to
the UK retailers and there has been considerable interest internationally as this standard has been
implemented. In fact, the objective of the Technical Standard and Protocol for Companies
Supplying Retailer Branded Food Products (shortly, BRC food technical standard) is to specify
food safety and quality criteria required to be in place within a manufacturers organisation to
supply product to retailers. The format and content of the standard is designed to allow an
assessment of the supplier's premises and operational systems and procedures by a competent
third party, thus standardising food safety criteria and monitoring procedures.
The rationale behind the development of the BRC food technical standard was to eliminate
multiple audit by technical retailer and third party technical representatives of food
manufacturers supplying the retailer with own brand products.
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The aim of the paper is to evaluate the new strategies adopted by the retailers in order to improve
non price competition and to study the economic and managerial consequences met by a
processing firm that adopted the BRC food technical standard in order to meet with the retailer
requirements.
The paper will be divided into two parts. The first one will consider the origin, the contents of
the standard together with the certification and accreditation system involving it. The second part
will analyse the level of implementation of the BRC food technical standard in Italy and a study
case will be considered. The analysis of the study case will include the managerial and economic
consequences following the implementation of such a standard, both inside the firm and in
relation to the modern distribution requirements.
Some final considerations will be made on the consequences of a wide spread adoption of the
BRC food technical standard in the relationship between the retailer and the consumer.

2. The evolution of the retailer brand name

In order to understand the dynamics and motivations behind the decisions taken by the largest
British distribution companies to join forces in the name of quality and the implications of such
decisions on their suppliers, we need to examine the characteristics and strategies of the present
distribution system.
Over time we have witnessed a decisive shift from competitive strategies based on elements such
as price and the reputation of the brands offered in a sales network to strategies based on non-
price competition.
Price can segment the market by attracting the consumer on the basis of greater economic
advantage with respect to the competitor chains while, on the other hand, the brand of the
products represents a symbol of quality and brand reputation is a key element in the level of
quality of the individual products. We refer, of course, to products that use only industrial
brands, where the distribution company does nothing to increase the brand reputation but rather
takes advantage of it to conquer consumer groups who want that specific industrial brand and the
quality it stands for.
A sales policy based on the dual “price-brand” concept offers many advantages for the
distribution company but also one fundamental disadvantage. The advantages certainly include
the establishment of supply relations in which the distribution company is not involved with the
quality control of the supplier’s products and does not need to commit resources to product
innovation or to bear the costs of advertising the products sold but rather sells distribution space
inside its retail outlets to the supplier companies. A clear disadvantage, on the other hand, lies in
the fact of being subjected to the industrial policies of the supplier companies in terms of the
quality of the products sold.
This is a particularly serious disadvantage for distribution companies who work to a non-price
competition sales strategy in which it supplies its customers with quality goods meaning by
quality the satisfaction of requirements that take into consideration the product characteristics,
hygiene and safety aspects, the level of services provided and its overall image.
The new strategic trends of distribution companies have led to the introduction of retailer brand
names onto the market, which is the branding of the product with the distributor’s name rather
than the producer’s, where products are processed by industrial companies on behalf of the
distribution company.
In this context, the role of the brand name takes on a different, and more important, meaning, as
it provides the consumer with a guarantee not only of the quality of the product but the quality of
the whole distribution company who becomes responsible for satisfying specific consumer
demands.

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This greater commitment to the management of the goods supplied through the sales network is
repaid by the great advantages of a distribution policy based on the use of a retailer brand name,
as can be summarised below:
♦ progressive reduction in dependency on industrial companies with greater economic
negotiating power;
♦ increased possibility to respond to consumer demands;
♦ differentiation from the competition, being able to offer “exclusive and differentiated”
products;
♦ consumer and store loyalty;
♦ presence of products that can provide greater profit with respect to industrial brands.

In return for these advantages, the distribution company has to offer products that at least match
the quality level expected by the consumer. To do this, however, the distribution company must
effectively be able to guarantee the promised level of quality by establishing a meticulous and
strict supplier control system.
The spread of retailer brands and the progressive shift towards non-price competition policies are
therefore strictly correlated to the transformation of the distribution sector as a whole, which can
be seen through the move from traditional distribution to a modern distribution system
characterised by fierce horizontal competition.
The concept of the “private label” is not a very recent invention; in fact it is even older than the
concept of industrial brands. The retailer brand was invented in the United States in the mid-
1920s, as a retail defence policy against new forms of distribution that were being introduced on
the market with aggressive price policies based mainly on industrial branded products.
The substantial consolidation of the private label did not take place until the early 1950s, with
the economic development that saw the birth of the first large distribution chains that were able
to establish independent sales policies based on the use of their own brand name.
One indication of this phenomenon can be seen from the study of the data relating to the spread,
in terms of both value and volume, of the retailer brand name in Europe (Tab. 1) and between the
British and French distribution chains (Tab. 2).

3. The origin of the Technical Standard and Protocol for Companies Supplying Retailer
Branded Food Products
The experience of the past few years has shown that the strategy adopted by the modern
distribution sector, oriented to the development of the retailer brand, has led to the redefinition of
the organisational approaches of the retail companies. Among the responsibilities of this choice,
the modern distribution sector has taken on board the translation of consumer demands into
product requisites, establishing new company management rules to reach the defined standard
and to satisfy the final customer. One of the activities involved in this process is the procurement
phase, and in particular supplier relations, which represent a critical point for the retailer who has
to act as guarantor for the demands expressed by the consumer. The pressing consumer demands
for food hygiene, health, safety and freshness have been translated into contractual requirements
included in supply specifications, which must be strictly respected by any supplier who wishes to
work with the modern distribution chains. Over time, the producers have been subjected to a
growing number of inspections to check the compliance with contractual requirements, by both
the client and by certification bodies; progressively, these inspections have become so consistent
that they are not limited to simply checking product conformity, which is by now almost taken
for granted, but have been taken over by the verification of system traceability, conformity to the
health and safety requirements and quality assurance.

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This type of evolution has created management difficulties and additional financial costs for both
the suppliers and the distribution company. On one hand, the supplier has to manage the
documentation of many parallel systems created to satisfy the auditing requirements of the
distribution companies which refer to different standards and, therefore, produce final reports
that cannot be compared and in some cases conflicting opinions. On top of this is the burden of
the costs of the third party controls, which often have to be borne by the supplier, as well as the
constant presence of outsiders – the inspectors – in the working environment.
On the other hand, the retailer has also had to use its own staff or contract others on its behalf to
carry out supplier inspections, and the establishment and management of the inspection activities
has weighed down the organisation and increased company costs.
The complexity of the new supplier relations has been particularly evident in some Northern
European countries, where the “private label” counts for a high percentage of the market share;
for this reason towards the end of the 1990s the largest distribution chains in the UK market
agreed to define a standard including hygiene and safety requirements, quality assurance and the
respect for the working environment, which, if respected by the producers, can guarantee
complete conformity for the activities involved.

4. The British Retail Consortium

The British Retail Consortium (BRC) is an association of UK distribution companies established
to represent its members. The BRC members currently represent 90% of the total turnover of the
British distribution market, and 50 % of the total turnover in the British retail brand market.
In October 1998, the BRC issued the Technical Standard and Protocol for Companies Supplying
Retailer Branded Food Products with the collaboration of the distributors Asda Group, Tesco
Stores Ltd, Boots The Chemist, Iceland Frozen Foods Plc, Cws Ltd, Somerfield Plc, Safeway
Stores Plc, Waitrose Ltd, Spar (U.K.) Ltd, J Sainsbury Plc. Two further standards followed this
one – the “BRC/IOP (Institute of Packaging) Technical Standard and Protocol for Companies
Manufacturing and Supplying Food Packaging Materials for Retailer Branded Products” and the
“BRC/FDF (Food and Drink Federation) Technical Standard for the Supply of Identity Preserved
Non-Genetically Modified Food Ingredients and Products” (BRC/FDF IP Standard) – targeting
respectively the suppliers of food packaging and food processing companies choosing to use
only Non-GMO ingredients in their production.

5. The structure of the Technical Standard and Protocol for Companies Supplying Retailer
Branded Food Products
The main elements of the Technical Standard and Protocol for Companies Supplying Retailer
Branded Food Products (the last revision is dated April 2002) are:

♦ the use of a food hygiene and safety control system based on the HACCP method;
♦ the adoption of a documented quality management system, including the definition and
establishment of a quality policy and a quality manual demonstrating the Organisation’s
commitment to quality;
♦ the control of factory environments, the products and processes through a defined and
documented organisational structure that clearly assures the functions, responsibilities and
hierarchical staff relations for those whose activities have an impact of safety, the respect of
standards and product quality;
♦ staff management.

For each part of the standard a general target is fixed (Statement of Intent) with the detailed
requirements divided into three levels:

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♦ foundation Level;
♦ higher Level;
♦ recommendations on good practice.

According to the status of system implementation, the organisation may choose to comply with
the requirements of the corresponding standard level chosen. For the first two levels the
certification body issues an inspection certificate confirming the conformity with the specified
requirements, while the third level requirements (recommendations) are not subject to
certification but act as a stimulus for continuous improvement.

6. Certification of the BRC food technical standard

The BRC food technical standard is certified by bodies whose accreditation, issued by special
accreditation bodies, guarantees the independence and technical competency of the bodies
themselves during the course of the evaluation of the company subjected to the inspection.
Technically, accreditation is defined as formal recognition that an organisation (laboratory or
certification institute) possesses the structures, material and human resources and the capacity to
carry out certain tasks in compliance with a specific standard, which in this case is the EN
45011.
The BRC food technical standard certification system therefore uses the same bodies used to
guarantee the quality management systems in compliance with the ISO 9001:00 standard and
voluntary product certification, benefiting from the reputation gained by these bodies over the
past years through the quality management systems evaluation activities.
There are currently 16 certification bodies accredited by UKAS (United Kingdom Accreditation
Service), and although no statistics have yet been published to this regard, there are about 750
BRC food technical standard certified companies in the United Kingdom.
In Italy, the BRC food technical standard was introduced on the initiative of food processing
companies that supply products to the UK distribution chains or operate in the UK. Today, there
are only two bodies accredited (C.S.Q.A. and Certiquality) for BRC certification by SINCERT,
the Italian National Accreditation body but other bodies – whether British or from other
countries – also operate in Italy using the accreditations from British or Norwegian bodies. No
official data is currently available to confirm the exact number of BRC food technical standard
certified companies in Italy, although a survey carried out with the certification bodies puts the
estimate at around 150-200 companies, mainly operating in the meat processing, frozen and
canned food markets, with some also from the conserves, fruit and vegetable, wine and oil
markets.

7. The case study: the Fiorucci Group

To better understand the implications of the adoption of the BRC food technical standard at
company level, a case study was carried out using the data provided by the Fiorucci Group,
through direct discussions and the use of a written questionnaire.

7.1 Company history

The industrial activities of the Fiorucci Group began in 1950 following a long tradition dating
back to the 1700s in Umbria, when this area belonged to the Papal State, in which the members
of the Fiorucci family were professional "norcini", specialist pork meat processors. In time the
activities of the Fiorucci family grew and grew, thanks to the particular commitment at the turn
of the last century, until the creation of a chain of directly-managed and third-party owned shops
between the two World Wars. The sales activities and know how handed down through the
generations led to the establishment of the modern industrial concern at the end of the Second

5
World War. Today the company owns six factories across the provinces of Rome, Parma, Udine
and Sondrio which produce a range of raw prosciuttos and other processed pork products, one
factory in the province of Modena producing Balsamic Vinegar and one factory in Richmond,
Virginia (USA). The distribution network – comprising branches, directly owned offices and
distributors – crosses 22 countries and the company’s annual turnover is approximately 320
million Euros, about 83% of which comes from the national market.
The continuous commitment of the Fiorucci Group to product and process quality has been
certified against the ISO 9002 standard by the certification body DNV, the test laboratory has
been accredited by SINAL (the Italian Laboratory Accreditation body), and four products have
been voluntarily certified, by SGS, as well as a number of products that carry the European PDO
and PGI marks.

7.2 The BRC certification

Today seven of the Group’s product classes are certified against the BRC food technical standard
(Prosciutto di Parma, Balsamic Vinegar of Modena, Salame, Roast Meats, Sliced Raw and
Cooked meats, Seasoned Specialities, Mortadella), involving three factories.
The steps taken to adopt the standard were very limited, given the fact that the Group has been
ISO 9002 certified for several years, as well as complying with the mandatory laws in force in
Italy regarding food hygiene (Italian law 155/97, which enforces the EC Directives 93/43 and
96/3 relating to food hygiene) and safety in the work place (Italian law 626/94).
The modifications made were mainly concerned with the review of the existing documentation.
More specifically, the “Doctor Screening” procedure was introduced to satisfy the standard
requirement for the formalisation of this activity, and the quality management system was
widened to include a procedure for the management of glass and plastics.
The review of company processes also involved product recall and crisis management,
establishing an annual programme involving three recall simulations, as well as the introduction
of some new activities required for the implementation of this programme.
The changes introduced to comply with the BRC food technical standard required neither the
assistance of a consulting company nor the employment of new staff, while the existing in-house
training programme covered all new matters using internal staff. The only significant cost of the
operation was therefore the inspections carried out by the certification body, at a cost of
approximately 8,000 Euros per year.
The company therefore identified the advantages of adopting and being certified against the BRC
food technical standard. The greatest advantage is the reduction in costs, made possible by using
only one reference – the BRC food technical standard – to satisfy the mandatory legal
requirements relative to both product safety, safety in the workplace and the ISO 9002 voluntary
standard. The BRC food technical standard also plays a valuable role as it is the only reference
guide for distribution groups that do not operate on the UK market and is also understood to be
able to be integrated with the foreseen requirements of the PDO and PGI standards and other
voluntary product certifications already owned by the company. The application of the BRC
food technical standard has in this case provided an opportunity to rationalise the documentation
created to satisfy the previously adopted standards and the management costs deriving from each
one of these. Another of the main advantages the company has mentioned is the reduction in the
number of yearly inspections, highlighting the importance of this issue not only in financial but
also logistic and organisational terms.

7.3 The impact of the BRC food technical standard

As shown in the above case study, the adoption of the BRC food technical standard by the
Fiorucci Group has had positive repercussions on both the management costs of company
processes and the quality of customer relations in the large scale distribution market.
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Generally speaking, although the experience of this standard only refers to a period of not more
than five years, it allows us nonetheless to reflect on some issues that go beyond the relations
between the processing and distribution companies, to examine new strategies used by the latter
in relation to the consumer.
As stated above, the choice of widening the “private label” sector has as a main consequence
caused the redefinition of supplier relations, with procurement regulations defined in
unprecedented and strict supply specifications. We can imagine that a choice of this type and the
consequent adoption of the BRC food technical standard by the processing companies may lead
to even greater consequences. In fact, the application of the BRC food technical standard leads to
a very high level of standardisation in the services offered by the suppliers, which in turn is
reflected in the standardisation of some of the characteristics of the products supplied by the
retailer. The pressing demands of the consumer for greater hygiene and food safety, freshness
and correct preservation practices, for example, can all be satisfied by the BRC food technical
standard, and the same can also be said for the demands for raw material and product
traceability.
The adoption of the BRC food technical standard, which leads to the supply of products with a
uniform quality – at least as far as the aspects covered by the standard itself are concerned –
weakens the differences that exist between the current strategies of the distribution chains; in
fact, these currently focus on the guarantee of specific characteristics that are already assured
under the adoption of a BRC food technical standard-compliant company system. Envisaging,
therefore, the further spreading of the BRC food technical standard, it will naturally follow that
the supply of fresh, healthy food products will no longer be presented as marketing pitch, but as
a quality basis upon which the distribution companies will have to develop new differentiation
strategies.
The attention of the distribution companies will have to shift towards innovation and the
improvement in the intrinsic characteristics of a product, as well as the improvement of services
offered to face new competitive challenges; certainly, independently of the option or
combination of options chosen, there are bound to be yet more modifications to the current
supplier relations, as part of a dynamic process that, in terms of overall quality, aims at the
continuous improvement in customer satisfaction, and therefore ultimately increases consumer
well-being.

8. A few final considerations

Overall, we may identify two main consequences of the more widespread adoption of the BRC
food technical standard: the first relates to the organisational relations among the operators in the
supply chain, and the second the relation between the retailer and the consumer.
As stated earlier, the new strategies of the distribution companies will have repercussions for the
producers, who will be required to offer more innovative products, with requirements that are
constantly aiming to satisfy the specific needs of the consumer. In a production reality like that
found in Italy, where a large number of exports to the markets of Northern Europe are made by
producers of typical, local speciality products, the financial costs of BRC certification could be
excessive. In fact, while it is true that the standard reduces production and management
inefficiencies, it cannot be denied that the fixed costs for annual inspections may be too much to
bear, above all for those companies that have not already adopted a quality management system,
and where therefore there has not yet been any need to rationalise the existing documentation.
For these companies in particular, and more generally for all parts of the production chain
supplying to the modern distribution chain, a reorganisation of working methods will have to be
imposed, aiming to rationalise costs and processing times, using forms of management that
include, for example, the use of “partnership” relations among operators in the supply chain.

7
As far as the relations between the retailer and the consumer are concerned, the widespread
adoption of the BRC food technical standard will lead to the growth of retailer branded products
and the consolidation of the relationship between the retailer and the consumer.
The retail brand name will play an even greater role than in the past in interpreting consumer
demand, acting as a guarantor for the products supplied. This evolution, which certainly
represents a great opportunity for the modern retail industry, cannot however help but lead us to
the reflection that the retailer, taking on such a great commitment, cannot limit its involvement to
the reorganisation of the production chain but will have to become involved also in other
functions that are more typical of the producers – such as for example advertising costs – and
other more traditionally institutional functions such as consumer education and information.

9. References
Arfini, F. (2000). The value of typical products: the case of Prosciutto di Parma and Parmigiano
Reggiano cheese.The Socio-economics od Origin Labeled Products in Agri food Supply Chains
and Co-ordination Aspects. Acts et Comunications, 17, INRA.
British Retailer Consortium, (2002). Technical Standard and Protocol for Companies Supplying
Retailer Branded Food Products
Canali (1997). The evolution of food distribution system and its implication on the marketing of
typical products in the 52th EAAE Seminar Proceedings “Typical and traditional products: rural
effect and agro-industrial problems”, Istituo di Economia Agraria e Forestale, 19-21 June,
Parma, Italy
Lugli G. (2002). Marketing distributivo, UTET, Milano
Marescotti A. (1999). Marketing channels, quality hallmarks and the theory of conventions in the
67th EAAE Seminar Proceedings “The socio-economics of origin labelled products in Agri-food
supply chains: spatial, institutional and co-ordination aspects”, 28-30 October, Le Mans
(France), INRA

Table 1- Spread of the retailer brand name in Europe (Year 2000)

SHARE IN VALUE SHARE IN VOLUME
COUNTRY
(%) (%)
United Kingdom 43.5 45.4
Belgium 26.0 37.4
Germany 27.4 33.3
France 19.1 22.1
The Netherlands 18.4 20.6
Spain 12.8 20.5
Italy 11.0 12.3
Source: competition commission\ AC Nielsen (European Regional Review)

Table 2 – Sales share % of retailer brand name products in some chains (Year 2000)
UNITED KINGDOM FRANCE
Safeway 47 Carrefour 20
Tesco 51 Auchan 16
Sainsbury 54 Intermarche 29
ASDA 54 Leclerc 18
Somerfield 36 Casino 23
National average 45 National average 22
Source: competition commission\ AC Nielsen (European Regional Review)
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