Tesco has pledged to continue with its “exclusive” Willow Farms poultry brand despite a hygiene scandal at the factory supplying the product and identical chicken being sold more cheaply by rival Lidl.



The supermarket chain’s chief executive, Dave Lewis, said he had been as “shocked as anybody” after a joint undercover investigation by the Guardian and ITV News found evidence of food safety records being altered at the West Bromwich processing plant of 2 Sisters Food Group, which supplies Willow Farms chicken.

The investigation also highlighted footage of chicken drumsticks, already packed for discount rival Lidl, being reopened and repacked for Willow Farms, which is badged as “exclusively for Tesco”.

2 Sisters admits 'other areas of concern' at West Bromwich chicken plant Read more

Lewis said: “We don’t see [the Willow Farms exclusive tag] at all as dishonest. The Willow Farms brand is only available inside Tesco”.

He added that he believed the hygiene problems identified in the investigation were contained to the West Bromwich processing plant, which 2 Sisters temporarily shut down at the weekend in order to retrain staff. “We don’t think our inspectors had the wool pulled over their eyes, but we will learn from the investigation,” Lewis said.

On Thursday last week the Guardian and ITV released undercover footage showing an instance of 2 Sisters workers altering the source and slaughter date of poultry being processed in the Site D plant in West Bromwich.

Experts said altering “kill dates” could artificially stretch the commercial life of the meat and dupe consumers into buying chicken past its use-by date. It is illegal to place incorrect use-by dates on food, which are set for safety reasons and differ from “best before” dates. The company told investors on Tuesday there was “no evidence of any such breach in that regard”.

Other sections of the footage, which was filmed in August, showed chicken being picked off the floor and thrown back on to the production line, and older poultry being mixed with fresher birds.

Lewis said: “What we found out through Thursday is a source of serious concern for us … What did we do? We announced an immediate investigation, as did the Food Standards Agency. Neither the Food Standards Agency nor our own [investigation] found a problem in that factory. That being said, the investigation carries on.”

Tesco share price shows turnaround packaging nice but contents same Read more

His comments came as Tesco said it would pay a dividend for the first time since in three years, bringing to an end to the hiatus triggered by the 2014 accounting scandal. The retailer said the decision to pay an interim dividend of 1p reflected “improved performance and board confidence”.

Pretax profits at the retailer rebounded to £562m on sales of £25.2bn for the six months to the end of August. On an underlying basis, profits rose 23.7% to £759m, which was ahead of analyst forecasts of about £700m.

But despite the return of dividends and improving levels of profitability, investors remained uneasy – the shares finished the day down 3.2% at 184p. Analysts said the jury was still out on Tesco’s £3.7bn deal to buy the cash and carry group Booker, which is the subject of a competition investigation, and the rate of progress being made turning around the UK chain.

Since taking charge in 2014, Lewis has focused on cutting prices and improving customer service in Tesco supermarkets. He has also embarked on an aggressive cost-cutting programme to save £1.5bn, most recently pushing through a fresh round of redundancies at head office and announcing the closure of its Cardiff call centre.

The UK chain has now clocked up seven of quarters of growth, with like-for-like sales up 2.1% in the second quarter. Lewis said the retailer was attempting to shield shoppers from grocery price rises triggered by the Brexit hit to sterling.

The retailer also announced a modest £15m increase in its contributions to the company pension scheme, to £285m. Last year the retailer warned that its pension deficit had ballooned owing to the collapse in bond yields after Britain voted to leave the European Union. But that deficit has now shrunk from £5.5bn in February to just £2.4bn at the end of the half-year after it changed the discount rate it was based on.

