Mark Ritson on branding: Chickens came first in Tesco descent

Terry Leahy is an intelligent man. He must have realised that, just as Sainsbury's lost the leadership of the supermarket category in the 90s, Tesco's unprecedented market share would one day come to an end. It is unlikely, however, that he would have predicted that a TV chef with a double-barrelled name and a passion for poultry would be the harbinger of its downfall.

However, reports from last week's AGM and the publicity that followed suggest that Hugh Fearnley-Whittingstall has been just that. After all the efforts of politicians and the news media to bring Tesco to heel, ultimately it was chickens that marked the beginning of the end of its golden period

First, the facts. Both Fearnley-Whittingstall and Tesco are correct. Yes, 75% of Tesco chickens are bred in appalling conditions that should shame British consumers. Yet by the miracle of market segmentation, Tesco can rightly claim to let the consumer decide what is more important: animal welfare or an extra two quid in their pocket. One market segment is prepared to pay more for a better-treated chicken. Another, much bigger, segment wants value. Of all the companies in the UK, Tesco, with its famed consumer focus, is among the least likely to make this decision for the shopper.

The supermarket's imminent troubles actually have little to do with poultry. They stem instead from its failure to engage in a dialogue with its stakeholders. Fearnley-Whittingstall admitted targeting Tesco because of its size, but he also grew appalled by its inaction. 'Six weeks, and still no date with Tesco. Sainsbury's, Waitrose and the Co-op all spoke to us, but Tesco won't say yes, and they won't say no. They just lead us on this strange dance,' he wrote in his recently published diary.

The TV chef isn't the only one feeling ignored. The charity War on Want attended the AGM to allege that Tesco is supplied by an Indian factory where textile workers are employed for less than £1.50 a day. 'They ignored us, but they knew we were there. Terry Leahy spoke to us for a couple of minutes at the end. He said he was looking at the issue, but didn't make much commitment,' said Simon McRae, senior campaign officer.

This response seems to have become standard. Tesco's reaction to allegations of tax avoidance from Thai journalists was to refuse to address their arguments, instead issuing libel actions. It ignored union requests to offer its US workers the same rights as UK staff, and met accusations of exporting much-needed food from Zimbabwe with claims that local people would not want the type of vegetables being exported, rather than a policy review.

Years of dominance have bred complacency and a feeling of victimisation at Tesco, and the growing gallery of critics touting constant (and often unfounded) allegations of malpractice has helped to create the company's current malaise.

Tesco's rise approximately paralleled that of New Labour, and so may its descent. Like New Labour, it appears to be an exhausted operation, ground down by a decade of power. At the AGM, chairman David Reid lost patience. 'If it's chickens, can you leave it?' he snapped.

The questions will continue, while Tesco's apparent unwillingness to respond will only increase criticism and expediate a loss of leadership that now seems unavoidable.

- Mark Ritson is an associate professor of marketing and consultant to some of the world's leading brands

30 SECONDS ON ... HUGH'S CHICKEN OUT! CAMPAIGN

- Hugh's Chicken Run aired on Channel 4 in January. It followed Hugh Fearnley-Whittingstall as he reared chickens on three Axminster farms; one intensive, one commercial free range, and one a community farm project.

- The show raised national awareness of the suffering of battery birds and the chef's Chicken Out! campaign.

- The drive challenged the poultry industry to lower stock densities and adopt RSPCA Freedom Foods requirements as standard.

- Consumers were urged to buy free-range, pressurising supermarkets to end 'price wars', pay fair prices to farmers, and label clearly.

- Tesco demanded £86,000 to hear the chef's case, which it claimed had been submitted late, at its AGM.

- After raising the money through donations and auctions, the chef tabled his proposal, but failed to gain the 75% shareholder backing needed to implement the changes, achieving just 10% of the vote.

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