In this months issue 2 THE LAST OF THE ‘MOHICANS’ 4 CROSSING OVER IS NO MORE Exchange rates and tax hikes make buying in the North less attractive for shoppers from the Republic.
38 ALMOND TO ARREST DECLINE OF BAILEYS With a 7% drop in sales to the end of last December, Phil Almond, global marketing director for Baileys sets about arresting the decline in Baileys sales. 40 HOW GREEN IS GREEN?
6 NEWS 8 ARE PLASTIC BOTTLES FUTURE FOR WINE? A new innovation by an Irish-owned company might make it easier for wine lovers to carry wine through airports. 10 UNEMPLOYMENT A THING OF THE PAST? Unemployment could effectively disappear by the middle of the decade, according to a new report by the Economic and Social Research Institute (ESRI).
41 STIFF COMPETITION FOR NEWSPAPER ADVERTISING 42 NEWS 44 FOCUS- SOFT DRINKS 48 FOCUS
- SNACKS M.D/Editor: Deputy Editor: Bsn. Dev. Managers:
15 NEWS Contributors:
20 AN ERA OF THE ‘AND’....... “The expectations keep ratcheting up. You have to do the basics and then you have to that and that and that,” said Tim Mobsby, president of Kellogg Europe 22 NEWS 24 TOP 100 COMPANIES TGm features the top 10 major companies operating in Ireland.
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The last of the ‘Mohicans’
2002, Tony n O’Brien (73) stood down as chairman of C&C plc after 21 years as the group’s chief executive. The group has grown from a soft drinks business that sold into the Irish market only, to an alcoholic and non-alcoholic drinks business that sells in the UK and Ireland and is looking to expand further. Cider is at the core of what it does. “Success for Magners in the UK this summer is fairly vital for us”, he said. The weather is good, the World Cup has been on and he is feeling optimistic, but any worries he has, he passes on now. “I’m the last of the Mohicans,” he says, reflecting back on a lengthy career where he was accompanied in the business world by other long-timers such as Richard Burrows of Irish Distillers. He is the last of his generation to be “hanging up my briefcase”. As well as C&C, he has also served as chairman of Anglo Irish Bank as a nonexecutive director of CRH and as president of Ibec. He is currently chairman of the Review Group on Higher Remuneration in the Public Sector. C&C, formerly Cantrell & Cochrane, is a truly old Irish business. It was formed in 1852, became a partnership in the 1870s and was bought by Guinness and Allied Domecq in 1968. An accountant by training, O’Brien worked in a number of other companies including Erin Foods before
moving to Cantrell & Cochrane and becoming its chief executive. He could have had a good life, running a Stg£2 million business, earning a good income. So why the drive to grow and develop? “What I find is that if your aspirations are not beyond these shores, then really what you are looking for is to be taken over by some multinational that wants a spot in Ireland. A lot of Irish SME’s have that aspiration in mind. They develop a nice niche business here and hope someone will buy them. It is a limited horizon.” He spent 14 years on the board of CRH, and has huge admiration for the way it has spread its tentacles around the world. The Kerry Group is another Irish success story he hugely admires. “It is a great shame there are not enough Irish multinationals. I always wanted to be the next Kerry Group. And we might be in time.” He speaks with admiration of young Irish companies in places such as China. Ireland, in his view, needs to begin educating its young people in such languages as Chinese, Hindi and Japanese, “otherwise the children will be let down the way my generation was in terms on language”. O’Brien was involved in one of Ireland’s first management buyouts. “It was great fun.” The first step in the move was to get his owners, Guinness and Allied Domecq, off the pitch. Guinness went first, then a year later he made a pitch to the board of Allied. He was a director at the time and the pitch ran the risk of getting
him fired for disloyalty. However, he made a “shareholder friendly” pitch and the board went for it. The effort to then float the business took three runs and almost didn’t make it. The first run was hit by the collapse of the rouble, the second by currency troubles in South America, “factors outside our control”. The third time they made it, but it was close. “That was six years ago”. But the most audacious move in his career, he says, was his bid for Irish Distillers. He was mad “for
expansion” at the time. Irish Distillers was going nowhere, with Irish whiskey being “murdered internationally by Scotch”. He thought the product needed a route to market internationally and believed his then parents, Guinness and Allied Domecq, could provide that. Because he had been told the Government would not be happy with Guinness being involved in a takeover, he came up with the idea of making a joint bid with Gilbeys, with a view to splitting the brands between them afterwards.
Ireland in the late 1980s though was a lot different to the Ireland of today. Gilbeys was owned by Grand Met and the unsolicited takeover bid was “construed by Irish Distillers as the Brits taking over Irish whiskey”. There were “Keep the Spirit Irish” banners outside every church gate in Ireland. “This was green flag stuff, like never before. At the time there was a kind of nationalism still in the country, in business as much as anywhere else. All that old rubbish. How the world has changed.” For months on end, he had to devote time to addressing political gather ings and to being subjected
to abuse. In the end, Irish Distillers was bought by Pernod Ricard, and Irish Whiskey went on to become a huge success internationally. O’Brien feels that success vindicates his effort. “The political sector was blinded by patriotism or something but it took a toll out of my life I can tell you.” His satisfaction with the remaking of the public’s attitude towards cider is evident. The drink had long been “unfairly” portrayed as the source of social problems, a drink for park benches. A long public relations campaign that capitalised on it being a natural drink, with an
attractive taste and thirstquenching qualities, and being a drink that could be poured over ice, led to an eventual growth in market share of the beer or long alcoholic drink sector. “It took 10 years in total, but we got up to 12 per cent of the beer market, comparable to Carlsberg or Heineken.” The group also began to buy up other brands, including international ones. It bought Tullamore Dew from Irish Distillers, with O’Brien having to convince Burrows of the logic of the move. Then they set their sights on the UK market, the largest cider market in the world. Again it was a longwell-founded campaign. They bought other brands so as to earn clout in the market. There was a large cider market in the UK, but it was cheap cider with low margins. C&C sought to create a premium market for it Magners brand, building up towards a summer 2006 national launch. “There was huge fanfare, a huge spend. We had the World Cup, blistering heat, the thing took off like you cannot imagine.” Such was its success that the cider ran out. “So we decided in our lack of wisdom as it transpired, to double capacity immediately. We spent a couple of hundred million.” But the following summer was atrocious, with floods swelling England, and its competitors had by then woken up to the threat. There was no World Cup, no novelty factor. “Magners nose-dived and we had egg all over our face.” One of the mistakes the company made was that it ploughed money into an
this year’s performance is “fairly vital for us”.
advertising campaign that boosted the image of cider generally, without necessarily making people want to drink Magners. “The fight-back has been going on for the past few years and this year’s performance is “fairly vital for us.” Meanwhile, expensive explorations continue in such places as Spain and Germany to see if a new cider market can be created. “The international development of cider will be important for us going forward.” Given its small size, O’Brien believes the only strategy for the Irish economy is to be competitive and await growth in larger economies such as th US. He believes the Irish workforce is educated and responsive and that, after a few tough years, the country will rise again.
July/August 2010 3
Crossing over is no more
C R OSSING
Crossing the Border once meant big savings on the weekly shop, but not any more as exchange rates and tax hikes make buying in the North less attractive for shoppers from the Republic. So, it turns, out that all our politicians had to do to stem the flow of people crossing the Border to do their shopping was nothing. Over the past few years, when price discrepancies between Northern Ireland, and the Republic of Ireland were highlighted, the Government wrung its hands, commissioned costly reports but seemed to do very little of substance to address any of the issues. Now it seems the problem has just gone away. Over the past three years, hundreds of thousands of shoppers from the Republic poured across the Border. The favourable exchange rate, lower VAT and excise rates combined with lower profit margins for the North’s retailers brought about the sort of vast price differentials between the jurisdictions that many cashstrapped consumers found impossible to ignore. Not any more. Recently, a shopping expedition was made across the Border to find out if there were still significant bargains to be had. It was all quiet. “We have noticed a dramatic fall-off in the number of people coming in from the South in the last few months,” said one shop assistant. “Most of it is down to the exchange rates. A year or so ago we were offering 90p for a euro, today it’s just 79p.” Exchange rates are one element. tax rates will be another. When the British Chancellor of the Exchequer George Osborne published his emergency budget recently there were howls of protest from retailers in the North as he announced the UK’s VAT rate is to increase from 17.5 per cent to 20 per cent from January. The move, the North’s retailers said, could cost the economy there millions of pounds in lost revenue from crossBorder shopping. Francis Martin, president of the
Northern Ireland Chamber organisation said the increase in VAT could in general have a negative effect on small enterprise because it will increase the cost of doing business. The independent retail trade association said it was a “regressive move” which would hit everyone in Northern Ireland, from low-income families to pensioners. There was no such glumness coming from the southern side of the Border. Politicians issued a statement welcoming the moves while retailers rubbed their hands in relieved glee. Speaking at a corporate function Tesco Ireland’s chief executive Tony Keohane described how Tesco had played its part in successfully reversing the flow of cross-Border shopping. He said Tesco was “in the happy position of managing queues in-store again” and thanked his supplier base for their support during a time of great change. “Ireland has changed radically, Ireland has changed fundamentally and Ireland has changed probably forever,” he said. He claimed that moves by the big grocery retailers in the Republic - and there is none bigger than Tesco - has led to a 40-50 per cent drop in cross-Border shopping, this year rising to 70 per cent in certain key categories such as health and beauty products. As a result, he said, Tesco’s Irish arm had seen nine consecutive periods of growth for Tesco. A year ago, when there were real bargains to be had in the north, the Republic’s shoppers could load up their trolleys in Sainsbury’s with pretty much anything, secure in the knowledge that it would work out
substantially cheaper. Today it’s not like that. A six-pack of Pampers baby wipes which can be bought in Tesco in the Republic for €7.78 costs €8.93 in Sainsbury’s. Pampers nappies - one of the products that drove many people with young children across the Border over the past three years - are now almost identically priced in both jurisdictions. A 50g jar of Nescafé which was selling for €1.97 in the North has a price tag of €1.66 in Tesco in Dublin.There are still some bargains to be had, although sometimes the price differences are not as extreme as they may once have been. Cheaper generic medicines aside, it is alcohol where the biggest savings can still be made, although one would have to do some homework as some price discrepancies are not as great as you might imagine and sometimes alcohol actually cost more in the North.
..lower VAT and
excise rates combined with lower profit margins for the North’s retailers
brought about the sort of vast price differentials
that many cash strapped consumers found
impossible to ignore.
Kellogg Cut Sugar Levels
initiative to other products. Childrenâ€™s cereals have been under fire from health groups for their high sugar, salt and fat levels, which campaigners claim are contributing to rising levels of obesity among young people. As a result, sales of Coco Pops had begun to fall. Kellogg said its move was driven by consumer demand rather than any scientific evidence that high sugar levels were contributing to obesity. Jim McNeill
Health and consumer groups have given a guarded welcome to the decision by Kellogg to cut the sugar content of one of its bestselling childrenâ€™s cereals. The company said it would cut sugar levels in Coco Pops from 35 per cent to under 30 per cent from next year. Minister of State at the Department of Food CiarĂĄn Cuffe welcomed the announcement and called on Kellogg to extend the
Irish cereal consumption is the highest in the world, at 8.2kg per person per year.
Jim McNeill, Kellogg Company of Ireland managing director, said the sugar is to be replaced with starch from grains and glucose syrup with no use of artificial sweeteners. Vitamin D is also to be added. He said Kellogg planned to make further reductions in sugar levels in Coco Pops in the future, and in other products in its range. Salt levels have been cut by 44 per cent over the past 12 years according to the company. Irish cereal consumption is the highest in the world, at 8.2kg per person per year.
F UTUR E
Are plastic bottles future for wine?
First came plastic corks, and now plastic bottles are threatening to nudge glass ones off the shelves. A new innovation by an Irish-owned company might make it easier for wine lovers to carry wine through airports. The use of glass bottles for wine is a fairly recent innovation. Up until the 18th century, it was transported and matured in large oak barrels, clay jars or animal skins. Glass and cork protected wine from oxidation in a way that was not possible before, allowing wine to be aged more safely. However, glass is heavy and bulky, and expensive to ship. It also has a tendency to break. In recent years, we have seen alternatives in the form of Tetrapaks, bagsin-boxes and even cans. All of these have been used only for less expensive wines. This could all change with the introduction of Polythene Teraphthalate (PET) or plastic bottles. Proponents argue that they offer significant advantages over glass. They weigh less and take up less space, and are therefore significantly cheaper to ship, and easier to carry. They are also unbreakable, and are 100 per cent recyclable. PET bottles have been used before, usually for cheap 1.5 litre bottles of inexpensive wine, and sometimes for quarter bottles. However, PET allows more oxygen into the wine than glass, and until recently this reduced the wine’s shelf life significantly. Paul Sapin a French
bottling company majorityowned by Irish wine importer Febvre & Co, has launched a new generation of PET bottles it claims will revolutionise the way we buy wine. Instead of the normal single layer of Polythene Teraphthalate its version, the MLP, has two layers, with a nylon layer inbetween. The nylon acts a barrier to both carbon dioxide and oxygen, and gives an extra six months’ shelf life to the wine. So will plastic bottles catch on? There has been consumer resistance in the past. They look smaller, for a start. Heavy bottles look
The use of glass bottles for wine is a fairly recent innovation.
good, and are sometimes used to make cheap wine look more expensive. But earlier this year Marks & Spencer changed all of its 25cl bottles to MLP, and reported a 20 per cent increase in sales. It intends adding full bottles to the range. Australian producer Wolf Blass has also run trials with a few wines. Febvre has launched
two South African wines in MLP at Dublin Airport, Hout Bay Shiraz and Sauvignon Blanc. Consumers can now carry three instead of two bottles at the same weight. Environmentalists, who already object to water being sold in plastic bottles, are sure to voice their concern at this development.
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Unemployment a thing of the past?
Unemployment could effectively disappear by the middle of the decade, according to a new report by the Economic and Social Research Institute (ESRI). This is the outcome it expects under its “highgrowth” scenario for the Irish economy over the decade to 2020. However, should the economy expand along the alternative “low-growth” trajectory the institute sets out, joblessness would average 7.1 per cent of the workforce in the period 2014 to 2020.
employment is the more likely medium-term outcome owing to the flexibility of the Irish labour market. This flexibility, it says, has been strongly evident over the past 15 years. During that period (up to 2008), the rate of job creation far outstripped the average in the developed world and joblessness all but disappeared. The institute does, however, hint that flexibility alone may not be enough, citing the example of Finland in the 1990s. In the
for a more activist Government approach to labour market policy. While the ESRI’s lowgrowth scenario is more optimistic than the forecasts of either the international Monetary Fund or the European Commission, it represents a downward revision on the same long-term forecasting exercise carried out by the institute in May 2009. The revisions are entirely related to the costs of the banking crisis, which the ESRI admits it underestimated.
tightening was and is imperative. It believes the economy would be in a worse condition now if adjustments had not been made; that international markets would have “punished” the country if no tightening had taken place, that the government has no choice but to adhere to the fiscal tightening package it has set out for itself; and that that package with additional measures by 2014 even under the ESRI’s high-growth scenario for the economy.
In part reflecting the heightened difficulties of economic forecasting at a time of such change and uncertainty, the think tank has constructed alternative scenarios for future trends across a range of indicators, including employment, output and public debt. The ESRI believes its optimistic scenario for
early years of that decade, the Nordic country suffered one of the worst recessions ever to take place in an OECD economy. Unemployment soared to 20 per cent and remained in double digits five years after growth had resumed. To minimise the risk of such an outcome in Ireland, the ESRI repeated its call
Most of the policyrelevant content of the report focuses on the often complicated and unpredictable relationship between economic growth and fiscal policy. In the Irish context, however, the ESRI harbours no doubts about what is required, and is emphatic in its view that budgetary
Indeed, the report suggests that a larger adjustment in 2011 should be considered. Such a frontloading of the consolidation process would drive down the risk premium Ireland pays to borrow in international markets. This could reduce debt-servicing costs and boost investment across the economy.
Government must tackle cut-price alcohol sales
The fact that health and drink lobbies are in tune for once is a real sign that the time is right for legislation. When it comes to the narrative on alcohol misuse in Ireland, it’s not often you get the public health and drinks lobbies singing from the same hymn sheet. In a recent debate which included Prof Joe Barry Trinity College Dublin and treatment counsellor Rolande Anderson. representing the drinks industry was Pádraig Cribben, chief executive of the Vintners Association, The public health lobby has consistently argued for reduced per-capita consumption of alcohol, while the drinks industry spend millions each year in marketing and advertising
trying to achieve the opposite effects. Consensus is therefore not easily reached between the two. Yet, what was remarkable about the debate was that both the public health and the drinks industry (as represented by the vintners) agreed on the need for tighter controls on below-cost alcohol pricing. This could be very significant. In both Ireland the UK, significant shifts in drinking patterns have emerged in the past decade. Less and less drinking is taking place in bars and restaurants, with the off-premises retailers, such as supermarkets, garages and off-licences, now the main dispensers of alcohol. This is creating
problems for publicans, but also for society as a whole. The conscientious publican is being bypassed by a whole generation who can buy alcohol significantly cheaper than ever before. Part of the alcohol Bill brought in by the Scottish Nationalist Party recently in a bid to tackle Scotland’s significant alcohol problems sought to introduce minimum alcohol pricing for the first time in any EU state. What this would have allowed for was a set minimum price (somewhere in the region of 25-75p) per unit of alcohol, thereby bringing to an end belowcost selling in retail outlets. Many aspects of the Bill were passed with little debate, including a
clampdown on cheap drink promotions and tighter ID controls. Yet the minimumpricing part was rejected after hard lobbying by the Scottish drinks industry. The Irish Government has a chance to address this issue in the next budget. In contrast to the Scottish experience, the fact that vintners and the public health lobby occupy the same position on this may pave the way for a part concensus approach. These are measures the Irish Government will have to legislate for themselves as there is no great European concensus when it comes to specific legislative measures aimed at tackling below-cost selling. Partly this is because Europeans engage with alcohol very differently from country to country. Generally in Europe, the further north you travel the less alcohol is associated with food and the more it is seen as a means of mood altering in its own right. In Ireland the drinks industry website for promoting responsible alcohol use meas.ie - advises drinkers to “eat well” before going out; the separation of alcohol and food is culturally assumed. The legislation is needed at this point because supermarket chains and other off-trade retailers are alleged to be engaged in scandalous practices of selling low or below-cost alcohol. The other area of concern the Government needs to tackle is outdoor alcohol advertising. It is now time to impose stricter regulations on where alcohol products can be advertised publicly.
July/August 2010 11
Co-founder of Aldi dies
Aldi co-founder Theo Albrecht, who revolutionised low-cost retailing with his brother Karl, has died aged 88. He leaves behind an estimated €16 billion fortune, making him Germany’s second richest man and the world’s 16thrichest. A recluse for four decades, only a handful of known photographs exist of Mr. Albrecht. Born in Essen in 1922,
he grew up working in his mother’s grocery store with his brother Karl, who was two years older. After wartime service, and a spell in a prison-ofwar camp, the brothers set up their own grocery store in Essen in 1948. The limited range of products, later a trademark of their no-frills retail concept, was more a product of post-war food shortages than longterm planning. In 1961, the brothers
decided to split their business into two, reportedly over a disagreement on whether or not to sell cigarettes in their stores, known as Albrecht Discount and later shortened to Aldi. Karl called his cigarettefree company Aldi Súd (South) and traded in the southern half of Germany this company would eventually expand into Ireland. Theo headed Aldi Nord
which, over the years, has stuck more rigorously to the founding principle of low cost through high volume and limited range - even after he stood down from day-to-day operations in 1993. “As founder and pioneer in discount trade, Theo Albrecht influenced the fortunes of our company for decades,” said his company in a rare statement, noting his “far-reaching innovation in German retail.” His hard-nosed negotiating skills came in handy in 1971 when after being kidnapped, he reportedly negotiated down the ransom demand to a final Dm7 million. After 17 days imprisonment, he was released unharmed. His kidnappers were caught two years later and given eightyear sentences. Mr. Albrecht went to court and won the right to have the ransom written off as a taxdeductible business expense. A lover of golf, his only known extravagances were a collection of old typewriters and a Nice apartment.
P&G dismisses double-dip recession
Procter & Gamble, the world’s largest consumer goods company, dismissed the threat of a double-dip recession in the US, but said it did anticipate a bumpy path towards economic recovery in its largest market. ”I think the economic recovery in the US will be uneven... we are seeing that already, chief executive Bob McDonald told Wall Street analysts as P&G reported quarterly and full-year results that reflected the frugal mood of many of its US consumers. But “we don’t expect a double-dip recession,” he said. P&G said it expected sluggish growth to continue in its developed markets in the year ahead, with an increasing divide between the shopping behaviour of those with and without jobs. “In developed markets we see a bifurcation,” McDonald said. “Our new initiatives that
are premium priced continue to do very well, and I would say that they appeal to the people with jobs. At the same time we also see... consumers without jobs.... trade down”. During the past quarter in the US, the company successfully launched new premium-priced products, such as a new Pro-Glide version of its Gillette Fusion razor, while also pursuing frugally minded consumers with lower-cost versions of its products, such as Bounty and Charmin Basic toilet paper.
P&G said it expected its global organic sales excluding the impact of foreign exchange, acquisitions and mergers to increase by between 4 and 6 per cent in the coming year, compared with the 3 per cent seen in its 2010 fiscal year. But it predicted much of the growth would come from emerging markets. McDonald, who took over as chief executive last year argued that fourthquarter and full-year results showed that his strategy of pursuing profitable top-line
“ Our new initiatives that are premium prices continue to do very well, and I would say that they appeal to the people with jobs...”
growth through increased innovation and marketing was working. Net sales rose 5 per cent to $18.9 billion during the quarter, while full-year net sales were up 3 per cent against a year ago, to $78.9 billion. Volume unit sales increased by 8 per cent, with emerging markets growing at more than twice the rate of the US and western Europe. P&D, the world’s biggest advertiser, said it increased its advertising spending by about $1 billion, close to 11 per cent of sales. “The reason we are growing market share on 60 per cent of our business today is that we are supporting it with advertising, as opposed to a year ago,” said McDonald.
July/August 2010 15
Profits up 12 per cent at Barrys
Cork-based wholesale distributor James A. Barry & Company Ltd has announced an increase in pretax profits to €3 million for 2009, an increase of 12 per cent on its 2008 results. Turnover reported in the financial year ending January 31st 2010, showed a fall in sales from €212.5m in 2008 to €207m in 2009, which the company attributed to a slowdown in consumer spending and a reduction in
the average “cost per box” across the distribution business. The company attributed its performance to a reduction in its cost and increased levels of services to its customer base. Managing director Jim Barry said the company had managed to increase net profits on a reduced turnover through aggressive management of its cost base and prudent management of credit risk. “The Irish retail
environment continues to be extremely competitive and operating margins continue to be squeezed,” the 2010 Ernst & Young Entrepreneur of the Year nominee said. “Our profits in 2009 were driven primarily through reducing our cost base, outperforming the market and reinventing our retailer offering. Our desire to grow and outperform the market is deep-rooted and we continued to invest heavily last year - first in acquiring the Carry Out specialist offlicence business at the tailend of 2009. “The full benefit of that takeover is expected to add €42 million to our annualised turnover reported next year. We also recently invested €1.5 million in doubling the capacity in our central distribution facility” said Barry. The company said it was actively seeking new sites across Ireland for Buy Lo, its discount store brand, with the aim of opening another eight stores before the end of 2010. The group also plans to double the number of Carry Out stores nationwide by 2012. Founded by James A Barry in 1955, the company originally sold fruit and vegetables in the north Cork area. It now supplies products to more than 700 stores operating under the Costcutter, Carry Out, Buy Low and Quik Pick brands, as well as trading in more than 10 other countries. The company employs 240 staff and operates
from a central distribution centre in Mallow, Co Cork.
‘ A N D ’. . . . . . . .
An era of the ‘and’......... According to Tim Mobsby, Dublin-based president of Kellogg Europe we are in “the era of the ‘and’,”. “The expectations keep ratcheting up. You have to do the basics and then you have to that and that and that,” he said. But Kellogg’s is doing something unexpected in Ireland: it is hiring. Fifty new jobs will be in place by the end of the year with most of the positions based at the 104-year-old company’s European headquarters in Swords. Even with a 12.5 per cent corporation tax rate to enjoy a multinational like Kellogg’s is not expected to be here in uncompetitive old Ireland, when it has a variety pack of cheaper countries to choose from. It helps that Ireland has the highest per capita consumption of cereals in the world - a statistic that Mobsby, somewhat paradoxically, attributes in part to Ireland’s dairy tradition. “It certainly didn’t do us any harm - the fact that we have a very well-developed business in Ireland,” says Mobsby, an Englishman who arrived in Dublin in 2005 when Kellogg’s first set up its European HZ in Airside Business Park. “I don’t like the term business-friendly because I think it sets the wrong tone, but there’s an environment here that is actually conducive to doing business,” he says. “Cost, obviously, is a factor, and the cost base
here is probably not its greatest advantage, I’ll be honest about that. There are some unfortunate consequences in the current recession, but there may be some positives for the longer term as well if it actually makes Ireland more competitive in the European context.” Not that Kellogg’s has had to cut the pay of its 200 staff. “We’re fortunate in that regard,” says Mobsby, who also goes by the title senior vice president of Kellogg International. The food industry has undergone changes since Mobsby, a marketing specialist, ended a sevenyear stint at Heinz to join Kellogg in 1982. Shifting product - Kellogg’s shifted almost €9.9 billion in 2009 - is just the starting point. These days there are traffic lights to negotiate. Kellogg’s has been named as one of the key players in the food industry’s estimated expenditure of €1 billion in lobbying to prevent the introduction of the traffic lights food labeling scheme, which had been advocated by the UK Food Standards Agency, among others. In June, the European Parliament sided with the industry and voted against proposals to oblige manufacturers to label their products with red, amber or green symbols to denote the amount of fat, saturated fat, salt and sugar per serving. MEPs voted instead for the
industry’s favoured method of front-of-pack labelling of guideline daily amounts (GDAs). “People talk about lobbying, but actually the way a lot of regulation comes about is about collecting input from a whole variety of stakeholders. We’re a player, in that we contribute to that debate actively.” While health campaigners says traffic lights are better at preventing consumers from buying unhealthy food and simpler to understand, the industry and some nutritionists complained it was too simplistic. “I would describe common sense prevailed,” said Mobsby. “The problem with traffic lights is they suggest there are good and bad foods, and we would argue that there’s no such thing as good and bad foods there’s good and bad diets. “The traffic-light system tends to demonise certain foods. If it gets labelled red, if a consumer sees red, it doesn’t say moderation, it says stop, don’t go there.” GDAs, on the other hand, are “more friendly, more practical” and “not as complicated as people believe”. Anyone who spent their childhood breakfasts reading the nutritional panels on the side of cereal boxes and wondering what vitamin B12 was all about will know that cereal companies were among the
first to provide any information. “Industry can move that much faster in many respects than regulators can. We can decide what we
leave Dublin. “Ireland is our home now, that’s where we’re based, we treat is as home” While Mobsby expects the recent bout of consolidation in the food industry to continue the cereals segment is already “reasonably well consolidated”, particularly in Europe. Despite “disappointing” quarterly sales figures released, Kellogg’s has increased share in its two key European markets, the UK and France as well as in Ireland, where AC Nielsen figures show it has a 58 per cent share of cereals. Meanwhile, the financial crisis has reminded him of the importance of what he calls the “ordinary person” test. “What would an ordinary person do is a good way of thinking about how business today should operate. What is reasonable as judged through the eyes of an ordinary person” And if you can pass that test, you don’t tend to do too badly.” want to do “boom!”. On the other hand the words “full of salt” and “full of sugar” do tend to be uttered by nutritionally conscious parents in connection with Kellogg’s products - a connection Mobsby is understandably keen to break. “There’s about 40 per cent less salt in our range of cereals, if you combine all of the tonnes of cereal that we sell, than 10 years ago. Now there was never a lot in the first place, but the science around salt is actually very, very strong so, as that has come along, we’ve tried to respond to that.” Sugar is more of “a
perceptual issue”, he believes. “Sugar tends to attract a vast amount of attention, which I would argue is disproportionate with the realities of the science, but hey, the science in the end doesn’t matter, it’s what the consumer feels, what they want. If the consumer thinks we have too much sugar, we have too much sugar, and we’ll find ways to take it down.” As with salt reduction, “it’s critical that we do it at a speed that the consumer can accept.” Kellogg’s calls this modification of products “renovation”. Mobsby disputes the suggestion that the evolution of cereal to cereal
bars has negative nutritional consequences. He says people use cereal bars as an alternative to fattening snacks, rather than as a processed breakfast. Mobsby is not complaining about the greater entanglement of industry with “the social agenda” that has redefined his job. Since he swapped beans for All-bran he hasn’t looked back, with his career taking an upward spiral around Kellogg’s, from its UK based in Manchester to its corporate headquarters in Michigan, to Paris. Neither Kellogg’s, or Mobsby and his wife have any immediate intentions to
July/August 2010 21
Thin people release the fork! Started 50 years ago by a carb-loving mum in New York, WeightWatchers has grown into a lucrative international franchise whose dietary advice is now endorsed by UK scientists. Not bad for a commercial franchise started in 1963 by a compulsive eater who didn’t have a full-length mirror, because she hated the view. Jean Nidetch, was in 1961 a cookie-obsessed working mother fed up with yo-yo dieting and appetite suppressants on prescription. It was only when she took her 214lb, 5ft 7in figure to a New York city public health clinic that she lost 72 pounds at a rate of two pounds a week. Such was her bulbousto-babe transformation that family and friends gathered around her kitchen table to hear how she did it. The message was public health doctors had taught her was basic: eat less and exercise more. She patented it, told her friends, and she put her family on the programme. She told anyone who would listen that food wasn’t the answer to life’s challenges and to stop eating for comfort, love and excitement. Word spread, and before long she had a club of women gathering in a room above a pizza restaurant. Then Nidetch, had her eureka. She branded her kitchen-table wisdom WeightWatchers. Just like McDonald’s, she franchised across the US. Within a decade, franchises in 48 US states were pumping back money. In 1978 she got out
and sold high to Heinz for $71.2 million - a phenomenal amount even now. Nidetch became a rare role model to other women in an age when aggressive selling was seen as unfeminine. WeightWatchers held on to her as a spokeswoman for a while, then replaced her with Lynn Redgrave, Sarah Ferguson and, currently, the AfricanAmerican actor Jennifer Hudson - a considered choice, as WeightWatchers members are traditionally
it won’t say what its profits are. But you can do the sums. Every week 40,000 Irish people attend meetings run by 150 self-employed instructors, including four men who run 31 men-only groups. Most of these 40,000 pay a one-off registration fee of €20, followed by a weekly fee of €10 per meeting. That’s a gross income of up to €20 million a year across the Irish franchise for what amounts to a support group.
middle class, female and white. Ireland has one of WeightWatchers Internationals most successful franchises. started 31 years ago by 13 people, nine of whom are still involved, Ireland’s franchise is a profitable registered company, though
Out of that gross - an average of €133,000 an instructor - you have to subtract overheads: a percentage to the main franchise, discounts for students and older people, lower rates for people who pay for a six or 12-week programme in advance, free membership for the one or
two “gold” members in every group who have kept the weight off, rents, teaching materials, travel, tax and so on. Even if you cut the €133,000 per instructor in half, it’s still a good average income. Some instructors, conduct two meetings a week, others do eight, so, as with all sales schemes, the harder you work, the more money you can make. Keeping up with technology, WeightWatchers give every member a swipe card that contains their personal information payment, weight and the “points” they are allowed to eat. The simplified points system replaces the painstaking task of counting calories and weight portions. Save a few points during the week and you can have a couple of pints, a bottle of wine or a dessert at the weekend. Sticking with the programme should produce an average weight loss of one or two pounds a week, but keeping the weight off requires a lifetime of changed habits. WeightWatchers at Home is a new service in Ireland where individuals join online and get a weekly personal phone talk with an instructor It lacks the group dynamic, but needs must. Would 12 weeks really take the L out of your flab? The medical research Council found that the 58 per cent of people who stick with the 12-week programme lose 5.2kg on average, with committed members losing 5 per cent of their weight. It’s slow, it’s effective and it can be lucrative.
Dunnes urged to boycott
Revenue seeks information Tobacco smuggling has reached record levels, with more than 127 million illegal cigarettes seized so far last year, but 120 million of these were accounted for by a single operation at Greenore, Co Louth.The proportion of counterfeit cigarettes among those seized is also on the rise, from about 50 per cent last year to almost 80 per cent so far this year. Revenue recently announced the results of a two-week crackdown on cigarette smuggling carried out this month. A confidential freephone number, 1800 295295, has also been introduced for members of the public to provide information about smuggling or the sale of illegal cigarettes. Revenue Commissioner Liam Irwin warned people who bought cigarettes on the black market that they were putting money into the hands of criminals. “Anyone tempted to buy cheap cigarettes from an irregular source of supply must realise that there is a high possibility that they are buying counterfeit
goods, which provide an unknown additional set of health risks, as the product is not the subject of quality control,” he added. “These actions are not just robbing the exchequer of much needed funds, they are also hurting local businesses.” Airports, freight terminals, markets, postal services and white van operators were all targeted during the blitz, which resulted in the seizure of cigarettes and tobacco worth almost €6 million. The action resulted in four arrests, and 73 prosecutions are pending, Revenue said. Some 1.3 million of the cigarettes were seized from passengers alighting from aircraft; most of these were smuggled from the Canary Islands, Poland and China, according to Tom Talbot, head of the Customs criminal investigation branch. More than half the 343,000 cigarettes seized in the post were imported from China.
Dunnes stores has received a petition signed by 6,000 of its customers which calls on the supermarket chain to stop stocking Israeli products because of its policies on Palestine. The Ireland Palestine Solidarity Campaign (IPSC) handed in the petition to Dunnes Stores’ head office in Dublin after collecting the signatures in stores around the country over recent weeks. IPSC chairperson Freda Hughes said all supermarkets selling Israeli goods would be targeted eventually but Dunnes had been chosen to start the campaign because of the historical significance of the anti-apartheid strike at the retailer in the 19890s.
Companies threaten to axe jobs Coca-Cola in Sligo, Baxter in Castlebar, Hollister in Mayo and Allergan in Westport have told the government that they may have to cut jobs if €220m is not spent improving the N5, a 134km national route running through Longford,
Roscommon and Mayo. A spokesman for the four firms said that they were “embarrassed” by the condition of the road during visits by senior staff from their international headquarters in America. Up to 3,000 people are directly employed by the companies, while an estimated 6,000 more jobs are reliant on them. The four multinationals are part of the Mayo Industries Group, which met Brian Cowen, the Taoiseach, and Noel Dempsey, the Transport Minister, a year ago to outline these concerns. They claim they were given assurances by the government that the problem would be addressed.
July/August 2010 23
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€138m Description: Sales & Business Support DCC House Brewery Road Stillorgan Co Dublin Tel: 01 2831011 CEO/MD: Tommy Breen DCC markets and distributes leading own and third party branded food and beverage products within growth segments of the Irish food and drinks market as well as the UK wine market. Among the key segments within its portfolio are snack foods. The group markets and distributes KP, Ireland’s leading savoury snackfood brand including nuts and popcorn, and many other well-known own and third party branded products throughout Ireland. Among these is
McCoys crisps and Hula Hoops snack ranges DCC is also one of the main distributors of ground coffee, and wines including the Findlater Wine & Spirit Group under the RobtRoberts brand and is also a leading supplier to the off-trade wine market in the UK with its Bottle Green Wine business. RobtRoberts are
responsible for some of the best known brands in the country including tea, coffee, snack foods, soft drinks, wine and confectionery. Robt-Roberts distributes a combination of own brands and “principals’’ brands to all trade sectors including multiple, symbols, cash & carry, independent TSN’s, garage forecourts, and off-licenses. The company is focused on impulse products such as snack foods and confectionery and on growth markets such as coffee and wine to the foodservice markets. Robt-Roberts has been blending 24 TGm
and packing tea in Dublin since 1905 and its range includes a decaf and fair trade offering. The company has also been roasting coffee since 1905 and this continues today at its factory in Tallaght. It specialises in premium coffees that are 100% Arabica. Each pack has a valve at the back to ensure maximum freshness. Robt-Roberts is also the exclusive distributor for the Robinsons for Milk range in Ireland In the healthy food segment, DCC distributes Kelkin, Ireland’s premier health foods company. The Kelkin brand is a well established and trusted brand which offers consumer a healthy choice with Functional Foods, Organic, Gluten Free, Dairy Free and sugar free products featuring strongly in the range. There are over 80 products in the range including Multivitamin drinks, Cranberry Juice, Apple Juice, Natural Muesli, Microwave Popcorn, Honey and sugar-free preservatives. Some of the brands represented by Kelkin include Jordans Cereals, Phileas Fogg snacks, Hipp Baby Food and St Dalfour Spreads.
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€76m Description: Wholesale & Retail Distribution C/O Musgrave Ltd Ballycurreen Airport Road Cork Tel: CEO/MD:
021 452 210 Chris Martin
The Musgrave Group has been a success story since 1876 and has become a national and international retail giant with a turnover of €4.8bn. It is the partner to entrepreneurial retailers and foodservice professionals across Ireland. The group supports well known retail brands both here and in the UK and Spain including SuperValu, Centra, Daybreak and Day Today in Ireland; Budgens, Londis, Mace and XL Stop & Shop in the UK and SuperValu, Dialprix and Dicost in Spain. It is also well known in Ireland for its wholesale brands Musgrave Cash and Carry and Musgrave Foodservices. Musgrave had a strong set of results for 2008, with retail and wholesale sales increasing. Group profits were down 20% to €75.5 million. Musgrave Group itself generated sales of €4.8 billion and if you combine turnover of all of their retail partners across all four markets together the company had a turnover of €7. billion, an increase of 6%. Unsurprisingly, for a group with its years of experience, the business model has worked extremely well so far. Musgrave’s operates over 240 SuperValu stores and over 500
Chris Martin ceo
Centra stores in Ireland. In addition, Musgrave has been investing significant resources in developing the Centra brand and its corporate image. This has involved focussing the Centra brand around the core idea of “bright ideas for everyday living” and has led to a range of new developments including the popular convenience deli offering “Good to Go” range. Sales at Centra stores increased 15% to €1.383bn. Musgrave has accomplished a great deal towards strengthening the Budgens and Londis brands. As with the brand work in Ireland, this has been about establishing clear points of value and differentiation and leveraging Musgrave’s proven business model and retailers’ position in local communities. The work to date certainly points the way for the future, but at the same time helps Musgrave understand just how much more is required to continue to raise the bar. In the UK, its priority in recent years has been in ramping up
IT and logistics to support its retailers; committing to a five year plan of improvement to the supply chain with the aim of making it the best in the country. And this was carried out through sustained investment and by placing retailers at the heart of the programme. Another important area of achievement for the retailer has been in the area of corporate social responsibility (CSR). In the Republic of Ireland it became the first indigenous Irish company to win Chambers Ireland’s President’s Award for Overall Outstanding Achievement in CSR, and in Northern Ireland it received Business in the Community’s Company of the Year, both in recognition of it’s contributions to the environment, the workplace, and the community. It has also developed a sustainability agenda to support the retailer in the local community with initiatives such as packaging reduction and recycling. July/August 2010 25
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€240m Description: Food processing Prince’s Street Tralee Co. Kerry Tel: CEO/MD:
066 718 2000 Stan McCarthy
Kerry Group is a leading branded consumer foods processing and marketing organisation. It is also a leader in global food ingredients and flavours markets. The group has grown organically as well as through a series of significant acquisitions in its relatively short history, from its commissioning of its first dairy and ingredients plant in Listowel, Co. Kerry in 1972 to a global player with sales in excess of €4bn. The group is best known for its consumer foods division. Through a series of acquisition in both branded and private label sectors, Kerry Foods’ brands are leading household names in both the Irish and UK markets including category brands such as Denny, Dawn, Ballyfree, Low Low, Kerry Spring as well as Cheesestrings and Walls. Kerry Foods is also a major supplier of added-value chilled foods and it has top positions in most of its markets and has developed a well balanced business supplying supermarket private label. Its major markets are chilled convenience foods. The division supplies both its own leading brands and private label products to major retailers. Kerry Foods has fine tuned its innovation capturing key snacking and convenience food trends with its 26 TGm
brands. The Denny range of meats is one of its top Irish brands and continues to innovate to suit changing market trends. For instance, consumer usage of rashers has developed outside the more traditional fry or grill usage and they are now part of general snacking patterns. This includes usage in BLT’s, pizzas or pasta dishes. Kerry has made its rashers more convenient to suit these trends through the introduction of its microwaveable lines under its Denny and Walls lines. In addition, Kerry’s chilled juice and smoothies are enjoying a major growth in Ireland and its Dawn brand holds a leading position. The general increase in penetration of butter and butter spreads in Ireland can be explained principally by the introduction of a range of both spreadable and healthy products which are low in fat and salt. This has encouraged many consumers who want a healthy convenient option to put butter back on the kitchen table. The butter market is enjoying higher levels of market penetration. This increase is
also related to the success of some well established butter brands; however it also demonstrates that even with a strong marketing campaign there are always ways to improve growth. Since the 1970’s Kerry Foods has been to the fore in developing high quality dairy and low fat spreads at the group’s flagship plant in Listowel. It enjoys leading positions with its brands including, Low Low, Kerrymaid, Golden Olive, EasiGold and Golden Olive to name a few. There is a particularly low consumption of cheese in Ireland compared with other European countries. Ominously, consumer research highlights a decline in consumption levels in recent years while global cheese consumption soars. However, within the sector itself, there is a growing demand for noncheddar varieties and speciality cheeses. Cheese snacks have also been a growth segment for some time, driven by an increasing demand for lunchbox products in the growing snacking trend.
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Kerry has also developed its cheese and cheese snack portfolio following its acquisition of Golden Vale. The range includes cheddar cheese blocks, sliced packs, savoury cheese spreads and cheese snacks marketed under the Charleville, Easi Singles, Golden Vale and Cheesestrings brands. Kerry Foods was launched as a public company in 1986 and it is listed on both the Irish and UK stock markets. The group has developed as one of the largest and technically advanced manufacturers of speciality ingredients in the world. Kerry Ingredients incorporates core technologies and global resources in speciality ingredients, seasoning systems, sweet ingredients, nutritional systems and speciality proteins provides innovative, practical product solutions to food. Developing the nutrition area is an obvious focus for growth. Nutrition is a consumer trend driven by growing awareness of the link between diet and health. Trends show consumers are now seeking additional nutritional benefits from the food they eat, leading to a demand for fortified foods (i.e. mineral or vitamin enriched), dietary supplements, sports drinks and bars etc. Obviously, milk is an ideal source of proteins and minerals and the dairy component of the international nutrition market is estimated to be worth about $15 billion annually and is growing rapidly. Kerry Group supplies over 10,000 food, food ingredients and flavour products to customers in more than 140 countries. The group has manufacturing facilities in 19 countries as well as sales offices in 20 countries worldwide. The groupâ€™s headquarters are in Tralee, Co. Kerry, it employs 20,000 people throughout its manufacturing, sales and technical centres across Europe, North America, South America, Australia, New Zealand and Asian markets.
n/d Description: Retailing 46-50 South Great Georges Street Dublin 2 Tel: CEO/MD:
01 4751111 Margaret Heffernan
Dunnes Stores is an icon of Irish retailing and a powerful marketing force. One of the few Irish-owned retailers, the guiding principles of this company has always been good
quality and competitive prices. Dunnes combines grocery, textiles and homeware at 151 stores and employs 18,000 people. Dunnes has a 24% share of the Irish grocery market, placing it second only to Tesco. The company has elements of great business which it is constantly tweaking but never straying too far from its formula. Dunnes has seen the value in moving into non-food areas, aside from homeware and textiles with the introduction of CDs, DVDs and marketing one-off promotional offers. In addition, the chain has adopted a highly successful M&S approach to marketing by inviting celebrities to introduce new lines at its stores. A host of high profile names such as Paul Costelloe and Twiggy have been recruited in recent years to give a sharper edge to its clothing and homeware offerings.
July/August 2010 27
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Dunnes has always been attuned to new trends and responds quickly to what consumers want. Take a browse through any of its stores and this quickly becomes evident. So successful has its homeware department been, the company has opened a number of upmarket and standalone homeware stores. In recent years it has seen stores open throughout the country including its 45,000 sq ft outlet in Enniscorthy, Co. Wexford, as well as those at Edenderry, Mallow, Letterkenny, Leopardstown, Cork and Portlaoise and a standalone homeware store in Carlow. The St Bernard brand was founded in 1956 and it is a symbol for value in Irish retailing. The company operates from 111 stores in the Republic; 24 stores in Northern Ireland; seven in England; 4 in Scotland and 5 in Spain. The first store in Northern Ireland opened in 1971 and this expansion continued at a fast pace. Its first foray outside of Ireland was in Spain
on the Costa del Sol in 1980. In the UK the company has expanded with textile stores only and it purchased its first Scottish outlet in 2000, a second in Glenrothes in 2002, a third in Clydebank in 2004 and a fourth in Parkhead. The company is run by a board of directors including managing director Frank Dunne, director of textiles, Margaret Dunne and Andrew Street chief operating officer. Dunnes Stores has kept things in the family and a new generation of Dunne off-spring is waiting in the wings to shine. Insiders say Anne Heffernan, Margaret’s daughter is the next leading light in the company. Anne is a doctor by training but changed path and joined Dunnes in 2000 and now works on store development on the grocery side of the business. She is apparently well liked and takes an innovative approach to the business. Frank Dunne’s children are not involved in the business. Then there’s Michael Heffernan, Anne’s brother who has been
involved in the business most of his life. However a more likely rival to Anne Heffernan is her cousin Sharon McMahon, daughter of late Elizabeth McMahon. Sharon is a qualified solicitor who also works in the business. It is believed that all of these family members will feature prominently in the company’s decision making in the future. Dunnes Stores (Bangor), the holding company for the retailer’s operations in the North and Britain, paid its shareholders a dividend of €33.6m back in 2006. This was the first time the owners had taken a sizeable dividend from the Co. Down company. Dunnes Stores (Bangor) is the only significant company in the group which publishes its financial information. Dunnes Stores is a company which knows its market well and gets on with it as outlined by Andrew Street, the company’s chief operating officer; “We look forward to developing our store numbers and creating further employment into 2010.”
TOP 100 COMPAN
€-19m Description: Fuel/Convenience retailer Topaz House Beech Hill Clonskeagh Dublin 4 Tel: CEO/MD:
01 202 8888 Eddie O’Brien
Topaz Energy Ltd is Ireland’s leading energy and forecourt retailer. Since 2005, Topaz has successfully acquired the retail and commercial fuels operations of both Shell and Statoil in Ireland. Topaz Energy is now the largest Fuels distribution business in Ireland and one of the country’s largest privately owned companies. Topaz Fuel is involved in all aspects of the Irish oil business including retail, commercial fuels, lubricants and home heating oil. The company has significant interests in the storage and distribution of oil products and owns the worldwide rights for the Fareplay Convenience brand, the number one forecourt retailing brand in Ireland. Topaz Energy acts as a licensee of the Shell and Statoil brands in Ireland. Building on the heritage of 100 years in Ireland, the group combines innovation and growth with customer service and aims to become the leading oil company in Ireland. Topaz operates a network of approximately 350 petrol filling stations across Ireland. It is the master distributor for Shell lubricants in Ireland and it supplies the complete range of Shell products.
The group also offers a range of fuel card services with the Topaz Fuel Card and Statoil fuel cards, tailored to suit individual business needs. It also offers the Statoil Routex fuel card for customers buying fuel in the UK, and on the Continent and this currently includes 17,000 sites in 34 countries. Topaz is also the leading terminal operator in the country and owns and operates a number of oil import and storage facilities in Dublin (2), Cork, Galway (2), Limerick, Derry and Greencore. The Topaz network is further enhanced by a web of Authorised
Distributors who operate 64 depots across the country, fed by large articulated road tankers. The group sells its products through a network of 145 Shell branded retail service stations across 32 counties. Of these 45 are directly owned and operated by Topaz and 105 are independently owned and operated. Many of Topaz stations are opened 24-hours and also provide convenience retailing – the answer to today’s fast-paced lifestyle by providing the convenience of onestop shopping. July/August 2010 29
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n/d Description: Supermarket Retail Gresham House Marine Road Dun Laoghaire Co. Dublin Tel: CEO/MD:
01 280 8441 Tony Keohane
Today the group is Ireland’s largest food retailer operating 135 multi-format stores nationwide and employing 13,500 people. Its share of the grocery retailing market is a sizeable 25.% with turnover of €2.9bn, 32% of which is accounted for by its own brand portfolio of products. Over €500m has been spent in the business over the last five years mainly in the development of new and replacement stores, modern IT systems and logistical developments. Tesco operates supermarkets under the ‘Tesco Ireland’ brand as well as retail formats under the Tesco Ireland Local, Tesco Express and Tesco Metro brands. Tesco Metro stores are sized between standard Tesco stores and the Tesco Express format is mostly located in town and city centres. These stores are largely convenience stores mainly stocking food with an emphasis on higher margin products alongside everyday essentials. In addition 29 Tesco stores across the country operate on a 24-hour basis. Consumers are familiar with Tesco’s own brand offerings and the company now offers a ‘good, better and best’ policy for its product categories. This now encompasses 30 TGm
several product categories such as food, beverages and some non-food lines. On-line grocery shopping was first introduced in 2000 with over 17,000 registered customers Chief executive Tony Keohane appointed to the job in February 2006 said it best when he described the focus on the customer as being more ingrained in the DNA of Tesco than most others; “there is less that happens by chance”, he once shrewdly commented. And right he was too. In 2006, for example, someone in the echelons of Tesco sat up and noticed a certain pattern taking place in the highly lucrative Irish petrol forecourt sector. Tesco first stepped into this market in Ireland in 2003, having taken the plunge else-where and in the UK back in 1974. The group now operates 15 petrol stations alongside its supermarkets including among others those in Finglas, Wexford, Dundrum, Killarney, Maynooth. The Tesco retail concept is now bigger than food; it’s a one-stop-
shop and this exploration of nonfood lines is in constant development. The simple fact is that non-food lines like toiletries, drapery or fashion have larger profit margins than grocery lines. This is further emphasised when sold by supermarket chains in large, low-rent out-of-town premises. It was reported last year that in the UK Tesco accounts for every pound of every 8 spent on anything. The dominance of supermarkets of nonfood lines is being felt by more traditional players. For example, Tesco’s successful clothing line the Cherokee and Florence & Fred lines are among the fastest growing clothing ranges on the high street. Tesco’s rise to a 25% market lead has been well-documented. From the introduction of non-food lines, to breaking in to the petrol forecourt market and operating 24hour stores, the chain has taken a break-neck approach to innovation. Long may it last.
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€30m Description: Wholesaler fruit and vegetables Total Produce (Fyffes) Charles McCann Building Rampart Road Dundalk Co. Louth Tel: CEO/MD:
042 933 5451 Rory Byrne
Fyffes is the oldest fruit brand in the world and is most easily identified with the banana although it also markets Fyffes Gold Pineapples and Fyffes Melons. Bananas are one of the most popular fruits and in Europe they are one of the biggest selling items in supermarkets. This has much to do with the fact that the banana contains just 95 calories, has little fat and has one of the best, most natural and biodegradable wrapping. Fyffes is one of the largest importers and distributors in Europe with a turnover of €500m and an infrastructure that reaches across the globe. The group is a true global player operating in a considerably fragmented industry. Fyffes is primarily involved in the production, procurement, shipping, ripening, distribution and marketing of bananas, pineapple and melons. It currently markets fruit in Europe and the US under the Fyffes, Turbara and Nolem brands. Although Fyffes enjoys a prolific position in the global fruit business, the market has faced volatility on a large scale which has taken its toll on all players. In the last two years,
the industry has had to contend with exchange rates, spiralling raw material prices as well as Banana import regulations implemented in 2006. In March, Fyffes stated that its profits were in line with expectations given a changed environment due largely to new EU importing regulations. The group’s statutory pre-tax profit declined to €38m from €105.8m in 2005. However, group revenue from continuing operations rose €406m from €386m. The adjusted EBIT (operating profit, before exceptional items, amortisation, interest and tax including the equivalent share of joint ventures operating profit) for Fyffes continuing operations dropped to €19m in 2006 from €79m the previous year. This reflects in particular the changes in EU import regulations which cost Fyffes €40.9m in the year mainly due to the significant increases in import duty. Analysts say a strong balance sheet holds the key to the company’s future. The fruit group plans to double in size over the next five years. At the end of 2006, Fyffes reported net funds of €80m placing it in a more optimistic position to make acquisitions than most of its competitors. Analysts also believe there is significant potential for synergies in relation to the acquisition of a rival banana group. The growth in revenue reflects the impact of the acquisitions of Brazilian melon producer Nolem in January 2006 and the full year impact of the acquisition of Turbara in North America in the final quarter of 2005. In addition, Fyffes grew its banana volumes by 6% and its pineapple volumes by 25% during 2006. A number of key restructuring programmes have taken place at Fyffes. In April 2006, Fyffes outlined details of a property company it had spun out of the group and listed separately. The property is
Blackrock International Land and initially traded with 30 properties with a combined gross asset value of €207m. The following September, the group announced a demerger of its general produce and distribution business into a separately quoted company. Fyffes current operations comprise broadly two distinct businesses; its tropical fruit business and its general produce business. The general produce division is the larger of the two businesses and has sales of an estimated €2bn which compared to €500m within tropical produce. The tropical fruit business is considered highly capitalised with €200m in cash and other liquid assets including a 40% stake in Blackrock International Land. The group’s chairman, Carl McCann commented that this would make it ‘very much able to play strongly in the arena of the big deal’. He referred the general produce division as ‘stable, steady business’. He added that the general produce firm, which will be listed on the Dublin stock exchange, could probably spend up to €30m on acquisitions each year and thus maintain a double-digit growth rate. The underlying general produce operations are growing by 4% per year. McCann said the decision to demerge the general produce division had been prompted, in part, by the success of the Blackrock initiative. Fyffes shareholders get one share in the new entity for each share they own in the existing group. McCann handed over the chairmanship of Fyffes to his brother David after the demerger to become chairman of the new company. This restructuring of the business has been generally well received in the trade however; obviously such consolidation has brought the possibility of acquisition into the equation. July/August 2010 31
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€100m Description: Cheese/Nutritional ingredients Glanbia House Kilkenny Tel: CEO/MD:
056 777 2200 John Moloney
Glanbia is not just an indigenous Irish success it is a global consumer foods triumph. Over the last few years, it has reached out to new markets expressing an impressive eye for innovation while retaining its core product values. No mean feat considering it was first formed as a result of the merger between Avonmore and Waterford dairy cooperatives. The group now boasts a turnover of €2.2bn and enjoys leading positions in key dairy markets such as milk, cheese, fresh dairy products and fresh soups and sauces. The group’s principal activities are carried out through three divisions, food ingredients, consumer foods and agri-business. Under its food ingredients division it processes a range of cheese, and whey protein ingredients. The division also supplies the global nutrition industry with a wide range of solutions designed to address specific health and wellness benefits. The consumer foods it provides are liquid milk, chilled foods and pork processing as well as mozzarella cheese. This division also supplies branded and valueadded liquid milk, fresh dairy 32 TGm
cheeses, soups and spreads to the retail market. Among the group best known brands are Avonmore, Yoplait, Everybody, Snowcream and Premier Milk. Glanbia is based primarily in Ireland, UK and USA and serves markets for dairy and meat products across the world. In total the group employs 4,000 people in Ireland, the UK and the US. Quoted on the Dublin and London Stock Exchanges; the Group is ranked among Europe’s largest dairy companies and is one of the world’s
largest cheese manufacturers. It holds strategic positions in the US cheese and European pizza cheese sectors. The dairy market is a constantly shifting one, where trends must be created as well as catered to or the consumer will simply move on. Two of the most important segments of the dairy market are health and indulgence with a focus on convenience thrown in for good measure. For instance, the increasing trend towards convenience food and snacking on-the-go has probably
TOP 100 COMPAN
encouraged many consumers to switch categories and purchase yogurt drinks instead of the traditional pot of yogurt because they are more easily consumed when pressed for time in the morning or throughout the course of the day. Hence, manufacturers face a challenge in encouraging increased consumption unless the product is made more accessible for out of home usage. For Glanbia, an obvious focus for growth is developing the nutrition area. Nutrition is a consumer trend
driven by growing awareness of the link between diet and health. Trends show consumers are now seeking additional nutritional benefits from the food they eat, leading to a demand for fortified foods (i.e. mineral or vitamin enriched), dietary supplements, sports drinks and bars etc. Obviously, milk is an ideal source of proteins and minerals and the dairy component of the international nutrition market is estimated to be worth billions annually and is growing rapidly.
Whey, a bi-product of cheese is the basis of many protein drinks and nutrition bars that are a rapidly growing part of the food business and Glanbia wants to participate in these on a larger scale. It is used in a range of health products, nutritional supplements and functional foods – those that are promoted as providing a health benefit beyond basic nutrition. Glanbia is active in advanced technology nutrition products such as wpi, milk minerals, and lactoferrin. The Group is also active in formulated milk powders, serving markets where dietary, supply chain or economic needs drive demand. Moreover, it is the second largest supplier in this global market which is growing extremely rapidly. Innovation is integral to Glanbia’s success abroad. In October 2006, it opened one of the largest cheese plants in the world. The plant, located in New Mexico propelled the group into the big league as the largest producer of cheddar cheese in the United States. Glanbia operates the plant and markets the product while its joint venture partners, Greater Southwest Agency provides the milk supply. New Mexico is the fastest growing milk production region in the US and Southwest Cheese chairman Mike McCloskey said this growth had generated a desire for partnership with a major food producer. Glanbia’s expansion plans are not limited to the US. In 2007 it opened a manufacturing plant in Shanghai in China to produce specialist ingredients for customers. The plant in Shanghai focuses on whey-based nutritional products. The office generates sales of about €12m a year. The group’s ability to diversify and expand its portfolio beyond basic dairy to consumer foods, ingredients and agri-business is what makes Glanbia one of the great Irish success stories of this century. July/August 2010 33
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n/d Description: Brewing/Distilling / Manufacturer of beers and spirits Diageo Ireland, St. James’s Gate Dublin 8 Tel: 01 453 6700 CEO/MD: John Kennedy The word Diageo comes from the Latin word for day (dia) and the Greek word for world (geo). Diageo’s roots in Ireland stretch back two centuries and today it brings Irish brands such as Guinness and Bailey’s Original Irish Cream Liqueur to global markets in 150 countries with a turnover which exceeds €10.150bn. Diageo Ireland is headquartered in St James’ Gate Brewery in Dublin. Bailey’s Irish Cream is produced in its facility on the Nangor Road in Dublin; and its regional sales offices operate from Kilkenny, Cork, Galway, Limerick, Sligo; and in Northern Ireland its headquarters are in Belfast. Diageo Ireland employs thousands of people directly and has exports worth hundreds of millions. In this country, Diageo Ireland is synonymous with Guinness, its signature Irish brand. The company claims that 10 million glasses of the black stuff are consumed each day and it is the world’s number one stout. Guinness continues to be a strong brand for the group with year on year sales up 2% for the first six months of the financial year up until January of 2009. Internationally, its sales were up 7% during this period 34 TGm
enjoying strong growth in Africa and Asia with sales of 22% and 18% respectively. Like most companies however, the famous brand has not escaped some of the fallout of the economic downturn. John Kennedy, CEO Diageo Ireland explains; “Europe is one of the toughest areas to grow for a consumer goods company and we have seen some slowdown in markets that were growing at an exceptional rate like Russia. The biggest thing that has happened more than consumer spending is our customers and wholesalers are very cautious about keeping stock so the traditional stock levels have gone down. The wholesaling industry in Spain for example went through a massive de-stock in December which was one of the big things that affected our results. So while there is a consumer slowdown and we have to watch that, there are some one-off imports from customers managing the recession.” However, despite the obvious challenges of recession time, Diageo is well tuned to its customer; “We conducted research among consumers and the findings that came out were people want to turn back to their local community and the pub is part of that and we will drive that. Within the pub we are finding that Guinness and draft beer are popular because of the perceived value of a pint and therefore we believe everything we are doing to drive Guinness in the on premise is a great opportunity to push.” He continues; “We are also ramping up the innovation plan particularly around our big brands like Smirnoff in the off-trade. The trend we are trying to exploit there is the growing interest in cocktails and premixed spirits which has been in other markets for years but is coming into Ireland now so we are doing work around how we use the Smirnoff brand in this. So we are going to play hard at a more
select range of areas particularly around Smirnoff in innovation, Budweiser, Carlsberg and Guinness.” Baileys Original Irish Cream is another top brand in its portfolio. It was introduced to the world in the mid-seventies and was the first Irish cream liqueur in the world. It is the fastest growing of the eight global priority brands in the portfolio of Diageo and it is the world’s eighth largest international spirit brand accounting for 70% of the total cream liqueur category globally. Budweiser is another familiar name in the Diageo Ireland portfolio. Budweiser is brewed in Kilkenny by Diageo under license from owner Anheuser-Busch. It has been a firm favourite with Irish consumers since 1986. Its success in Ireland has much to do with its image through quirky humorous advertising which communicate the beer’s quality including the ‘Clydesdale’ and ‘King of Beer’ adverts Another firm favourite from the Diageo Ireland portfolio is Carlsberg. It s brewed in Dundalk from malted barley, yeast, hops and water where it has been brewed and marketed by Diageo Ireland under license since 1988. Globally, Diageo is the world’s leading premium drinks business with an impressive menu of beverage brands across the spirit, wine and beer categories. Just some of these well known brand names include; Bushmills Irish Whiskey, Smirnoff, Johnnie Walker and Sterling Vineyards Wines. Diageo is a global company trading in more than 100 countries across the globe. The company is listed on both the London and New York stock exchange. It employs over 22,000 people with offices in over 80 countries and manufacturing facilities in Ireland, the UK, Canada, Spain, Italy, Africa, Latin America, Australia, India and the Caribbean. Diageo was first established in
TOP 100 COMPAN
1997 after the merger of GrandMet and Guinness, and is headquartered in London. Its European division accounts for a third of Diageoâ€™s total business. There are five business units in Diageo Europe including Ireland, UK, Continental Europe, Iberia and Russia. Its top brands in Europe are Smirnoff Vodka in Ireland and the UK; Johnnie Walker In Germany and Russia; Baileys in the UK, Spain and Germany; J&B Rare in Spain and France; Guinness in Ireland and the UK and Blossom Hill in Ireland and the UK.
July/August 2010 35
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€32m Description: Export of Dairy Products Grattan House Mount Street Lower Dublin 2 Tel: CEO / MD:
01 661 9599 Michael Cronin
The Irish Dairy Board (IDB) is the biggest international exporter of Irish dairy products, servicing the needs and quality demands of customers world-wide. It was formed in 1961 and has grown in response to the changing European and global business environment. Today, it is one of the country’s main exporters and a major food distribution company with annual sales of €1.8bn. The IDB owns the well known Kerrygold brand. Kerrygold dairy products include; Kerrygold Pure Irish Butter, Kerrygold Spreadable Pure Irish Butter, Kerrygold Dubliner Irish Cheese, Kerrygold Processed Cheese Spread, Kerrygold Irish Cheddar Cheese and Kerrygold Cream for Coffee. Its product portfolio is divided into three key sectors including; retail business, food ingredients and commodity training. The Irish based marketing and sales staff is supported in their overseas operation by local agents and distributors, sales offices and subsidiary companies. Group subsidiaries in Europe and the US market a wide selection of specialised cheeses, cooked meats, fish and delicatessen products of 36 TGm
both Irish and non-Irish origin. The IDB operates and trades in a variety of markets across the globe. However, its main focus is increasing sales within the EU through improved distribution and marketing structures. The IDB’s main products include cheeses, butterfats, whey products, powders and casein & caseinates. Its Kerrygold range include, butter, cheese and cream products. Kerrygold Pure Irish Butter is a salted sweet cream butter with a smooth rich taste. Its naturally soft texture and wholesome purity are all derived from the full cream that is key among Kerrygold’s brands. Kerrygold Spreadable Pure Irish butter is 100% pure Irish butter made with only the finest quality milk from cows grazing on lush green pastures. This yields a cream with naturally softer fat which when double churned, makes Kerrygold Spreadable even softer and easier to spread.
Kerrygold Dubliner Irish Cheese is a unique cheese type with a distinctive rounded flavour, achieved by combining a secret recipe and the skills of the Kerrygold master cheese maker. The cheese is typically matured over 12-months during which time it is checked by experienced cheese graders to ensure that it has a consistently high flavour profile. Dubliner is a versatile cheese suitable for vegetarians, that can be used on a cheese board, in sandwiches and in a range of recipes. Dubliner is particularly delicious as an aperitif cheese served cut into cubes or slices. In the cream sector, the IDB has Kerrygold Cream for Coffee. Made from pure Irish single cream, Kerrygold Cream for coffee is a unique ‘ultra heat treated’ to preserve freshness and extended product life. The brand is an ideal compliment to a coffee. Available as ten connected ‘snap-off portions’ with sealed printed foil lids, each portion contains 10ml.
Almond to arrest decline of Baileys ...
With a 7% drop in sales to the end of last December, Phil Almond, global marketing director for Baileys, sets about arresting the decline in Baileys sales in the last few years. Almond, 48, is no stranger to the Baileys brand. As head of Diageo’s UK marketing team he was responsible for the company’s biggest brands, which include Guinness, Smirnoff, Bells and Pimms. He was appointed to the Bailey’s job a year ago and spends about three days a week at the St James’s Gate. The slide in the sales of Baileys may not be as severe as some drinks on the market but Almond isn’t taking any comfort from that and has plans to reverse it. Part of the decline is the fact that Baileys is sold as a premium product, and the reluctance of consumers in its main market of North America and Western Europe to splash out is hurting. It doesn’t help that, despite the fact it is the seventh biggest-selling spirits brand in the world, for most people it isn’t their regular tipple when they wander into a pub. “Baileys is currently something you treat ourself to. In a recession people hunker down and we’re suffering from that. There’s a tendency for consumers to come off things they regard as a treat or indulgence,” he says. “We have huge numbers of people who say they love it and drink it regularly and relatively few who do drink it regularly compared with other alcohol drinks. It tends to be more of an occasional drink and it tends to be more seasonal. It is not often somebody’s main drink. It is something they will turn to now and again.” While never neglected by its parent company, Baileys has fallen off the radar a bit and Almond says there will be a new marketing drive to give the brand a push. Added to the campaign to reinvigorate sales is the launch of another flavoured version of Baileys, to supplement existing ones such as coffee, caramel and mint, which have proved popular with consumers. Just what the new flavour is will remain a mystery for another few months as
Almond says it is a closely-held secret within the company. The danger, though, with too many variations on flavour is that it takes away from the original product, he says. “It is a brand that responds to marketing pressure. The main thing is
the taste. You do too much and you go too far away from the base brand and you risk damaging it. It’s not like vodka where you can add mixes. People know and love and have an expectation of a Baileys taste,” he says.
“ Managing big brands in a recession is the right place to be. You look at most of our brands - Bushmills is 400 years old, Guinness is 250. These brands have seen more economic crises than we will ever see and they’ve come through because they are great products..”
Though sales in Ireland are “stable to slightly declining”, Almond says there are a few tentative signs that its major international markets are showing improvement. “The US is tough but slowly coming out of recession. Britain is looking strong for us actually this year. Other markets you’d expect - Spain, Italy and Ireland - are still very tough.” In the near-term Almond is focusing on rebuilding sales in America and Europe, where Baileys still hasn’t exploited its full potential. “If I could get the per capita sales in the US to be the same as Canada that gets me more than two million extra cases. If I could get four other European markets to the same level as the UK I could get another two or three million cases. So that is before I even start on places we haven’t really been. But he is eyeing emerging markets, which account for a lesser proportion of Baileys sales than many other brands in the Diageo portfolio. He also points to Brazil, where there are now 23 million people who would be defined as middle class consumers,
making it a market the size of Australia at the moment. “We are starting to get going in Asia but it is still relatively small. We’ve been busy in our core markets of Europe and North America but are only getting into emerging markets. If I’m looking five or 10 years out I would want the proportion of Baileys in those emerging markets to be close on what it is in the rest of the Diageo portfolio, which would be 30% and we are probably at about 10%. There is going to be a lot of growth generally in those markets and there is no reason why Baileys shouldn’t be part of that.” The enormous potential for new markets is bound to be good news for the Irish dairy industry, which supplies the milk that goes into Baileys. About 80% of all the ingredients that go into Baileys are sourced on the island of Ireland and the drink is one of the country’s biggest exports. Even allowing for the short-term challenges, Almond says he’s confident that Baileys will resume growth. It may be one of the youngest brands in the Diageo group, but he points out, Irish drinks have a history of thriving. “Great brands like this aren’t successful by accident. Managing big brands in a recession is the right place to be. You look at most of our brands Bushmills is 400 years old, Guinness is 250. These brands have seen more wars, revolutions, economic crises than we will ever see and they’ve come through because they are great products. They are safe ships in a storm.”
July/August 2010 39
G R EEN
How Green is Green?
How can we be sure that claims made by manufacturers are not a fiction invented to curry favour with concerned consumers? Which? the British consumer magazine recently tested the claims of a range of eco-friendly products commonly found on Irish supermarket shelves and many were found wanting. Brands were accused of confusing shoppers or not being able to substantiate the claims made on their green labels. A couple of Which? scientists and an environmental communications expert examined 14 everyday items and reported that nearly 50 per cent of the “eco” laundry tablets, nappies and toilet cleaners were making claims unsupported by sufficient evidence. “When companies make clear green claims it helps consumers make eco-choices with confidence. But our experts concluded that many of the companies did not provide enough evidence to back up their claims and thought that some were exaggerated. This makes it hard for people to choose,” the magazine said. Its study found that each of the eco toilet cleaners it scrutinised made at least one green claim that was not backed up by evidence from the manufacturer. Which? expressed “reservations” about Ecover, which claims that its products biodegrade rapidly and have less of an impact than conventional cleaning products on aquatic life once they have been through a water treatment plant. For its part, Ecover insisted its products were ‘fully degradable in anaerobic and aerobic conditions, going further than legislation and differentiating Ecover from market leaders”. Tesco’s “Naturally” branded toilet cleaner was criticised for claiming it was unique in containing no phosphates, despite the fact that a large number of toilet cleaners are similarly phosphate-free. Which? also questioned logos on washing powders. One had a “future friendly” stamp on its products while the other goes for “cleaner planet
plan” logo. Both could cause confusion and don’t market it clear if it is the shopper’s or the manufacturers’ action which is future friendly and part of a cleaner planet plan. A study published last year by the British government’s watchdog Consumer Focus said that two thirds of consumers found it difficult to know which products were better for the environment and more than half thought that a lot of companies pretended to be green just to charge higher prices. Whether or not that is true, one thing is beyond any doubt huge multinational companies have been hoovering up smaller businesses with solid green credentials because they know it is what consumers want. Last year Coca Cola bought a substantial share of Innocent Smoothies; Unilever has swallowed the archetypal hippy ice-cream Ben & Jerry’s; Cadbury Schweppes is pulling the strings at Green & Black’s organic chocolate while Clorox, a bleach manufacturer, has acquired Burt’s Bees, a considerably easier on the eyes manufacturer of lip balm, soaps and shampoos. While it may not matter who owns the world’s ecofriendliest companies, it certainly does matter that they tell the truth and this is an area in which many have been found wanting. Greenwashing is one of the fastest-growing areas of complaint in Britain and it has prompted the ASA to introduce a new code of conduct from next September. Under the new rules the basis of any green claim must be made clear and comparative claims such as “greener” will only be allowed if they can be justified; all environmental claims will have to be based on the full life cycle of the product and if a product has never had a negative effect on the environment, ads will not be allowed to imply the formulation has changed to improve the product. Marketing must not mislead consumers about the environmental benefit a product offers and companies will be
forbidden from drawing consumers’ attention to the absence of an environmentally damaging ingredient if it is not usually found in similar products. There are no similar guidelines here. While the Consumer Protection Act 2007 prohibits misleading advertisements and the making of false claims about goods or services to consumers, there are no explicit references to greenwashing although actions have been taken.
Stiff competition for Newspaper advertising
Newspaper advertising accounted for more than a third of overall advertising spend in Ireland last year, according to a new report. PricewaterhouseCoopers Entertainment and Media Outlook 2010, which is due to be published in September, shows that spending on newspaper advertising was €343m in 2009. The total advertising market in Ireland was worth an estimated €940m last year, according to the report. The figures emerged as PwC published a report on online advertising spending, carried out by the accountancy and accountancy firm on behalf of IAB Ireland, the trade association for the Irish online advertising industry. Television advertising accounted for €209m, while radio represented €139m last year. At €97.2m, spending on online advertising has overtaken the spend on outdoor, magazine and cinema advertising. PwC’s Bartley O’Connor said that this reflected online’s move “to centre stage”. IAb Ireland’s Suzanne McElligott described the €100m threshold as a “milestone” for online media, and said the association expects the online market to grow by a further 10 per cent over the coming year. According to the report, search advertising predominantly using the pay per click model accounted for more than 46 per cent of the overall online advertising spend.
Classified and display formats achieved a 27.2 per cent and 26.6 per cent share respectively. Meanwhile, the Broadcasting Authority of Ireland (BAI) is to increase the amount of advertising permissible on independent Irish commercial television stations. The maximum amount of advertising permitted on stations such as TV3, Setanta Ireland and City Channel will increase from 10 minutes to 12 minutes
per hour, and from 15 per cent to 18 per cent per day. The rules restrict the amount of advertising permitted during children’s programmes to 10 minutes per day. National Newspapers of Ireland (NNI) has sharply criticised the decision, which it says was taken “with undue haste” and in the absence of an impact assessment to measure the effect on other media competing in the marketplace.
Chief Executive of the BAI Michael O’Keeffe, said that while every media provider in Ireland has been challenged by the serious decline in advertising revenues in the last two years, independent Irish commercial television providers face significant additional competitive challenges due to the existence of UK-licensed services which sell opt-out advertising in this jurisdiction.
July/August 2010 41
‘Super’ Service Stations from Maxol
Oil company Maxol is on course to complete a €12 million investment in seven new ‘super’ service stations before the end of the year. The company has just opened a €2.25 million service station on a 3,200 square metre site in the west Cork town of Clonakilty. The facility has a 290 square metre convenience store, run by BWG-owned retail chain Mace, and seating for 40 customers. It is in keeping with the corporate design the company launched in the North in 2008, where it has opened super-stations in Rosepark, and Cherryvalley in Belfast, Saintfield in Co Down and Scaffot in Enniskillen. Another service station opened in Holywood, Co Down in July. In the south, Maxol invested €1.6 million in a new station in Dublin last October, creating 20 jobs. Situated on a one-acre site on Newcastle Road in Adamstown, the facility has a convenience stores of 150 square metres, also operated by Mace, a Maxwash-branded carwash centre and indoor seating for customers. Maxol plans to develop
five further sites in the south along the same lines. Three will be located in and around Cork city, and two more planned for Bray, Co Wicklow and Castlebar, Co Mayo. The company is investing €12 million in all seven sites. It has a total of 214 service stations, including 120 dealer-owned sites and 94 company-owned sites. Commenting on the new service station at Miles in Clonakilty, Tom Noonan, chief executive of Maxol said it would create 20 jobs for the area. “This is a very important development for Maxol, in which we believe that we are setting a new standard, which will become the benchmark for future forecourt convenience offered to Irish motorists,” Noonan said. “In many respects, Clonakilty is the gateway to west Cork, which is popular with foreign tourists and Irish holidaymakers alike. We are confident that our extended offering will attract many of these passing visitors into the area, which will be of benefit to the extended business community in Clonakilty.”
Willie O’Byrne, managing director of BWG Foods, said the site was an important milestone in the retailer’s partnership with Maxol. “The Clonakilty opening brings to 45 the number of Mace convenience stores on Maxol company-owned forecourts in Ireland. This is in addition to the many Maxol Mace brand partnerships within the independent petrol retail sector. Forecourt retailing remains an important and growing part of our
business, and we look forward to delivering not only great food and beverage options to consumers on the move in west Cork, but also great value too.” Established in 1914, Maxol employs 200 staff directly and 1,000 indirectly in 224 company and dealerowned service stations around the country. The company has its headquarters in Dublin’s IFSC and has annual revenue of €700 million.
O’Donnell’s secure exclusive deal
A Tipperary-based crispmaker has secured an exclusive deal with Musgrave Retail Partners Ireland, which will stock its products in 192 SuperValu and 474 Centra stores
around the country. Under the terms of the three-month contract, which has a retail value of €100,000, O’Donnell’s will supply the stores with two varieties of crisps; Irish Cider
Vinegar & Sea Salt and Mature Irish Cheese & Red Onion. The O’Donnell’s launched their crisp-making business last May as a means of generating additional
income from their family farm. They use potatoes grown on the farm to make the hand-cooked crisps and locally sourced ingredients, including cider vinegar from Con Trass’s apple farm in Tipperary and cheese from Mount Callan farmhouse in Clare. The company’s deal with Musgrave is its first retail distribution agreement. B r e n d a n Macken, category manager with Musgrave Group, said the contract was awarded as part of the retailer’s policy of supporting local Irish producers. According to Musgrave’s, 75 per cent of all stock in SuperValu and Centra stores is either sourced or produced in Ireland. “O’Donnells Artisan Crisps is both a family-run business and a truly Irish brand. We are always looking to support and help small suppliers and bring new Irish food brands to Irish consumers. We are delighted to bring O’Donnells Artisan Crisps, a seventhgeneration farming business, to join the extensive range of Irish products already on the shelves of SuperValu and Centra stores.”
July/August 2010 43
The carbonated soft drinks market is one of the most heavily advertised in the whole of the drinks market, with such recognisable brands like Coca-Cola, 7-Up and Red Bull being firmly ingrained in the thoughts and minds of various Irish consumers. Indeed, it is also the most dominant sector in the drinks market, with an estimated share of 50%, with year-on-year growth of 2.7%. The category is said to have an estimated value of €593m, and has seen a major shift towards low calorie and no added sugar items. They make up 57% of the soft drinks market, so the shift makes sense from that point of view, but the promotion of health and well-being can also be established in these areas. Soft drink products haven't always been seen as the healthiest option for a consumer in the past, so it is important that manufacturers move towards healthier options in the future as people look for ways to quench their thirst. Smoothies, juices and bottled water have grown in popularity over
the last few years, although sales in smoothies have fallen in the past 12 months or so, as they are now seen as a luxurious and somewhat expensive commodity. The carbonated soft drinks market currently has a value of approximately 446 million litres in volume. Amongst the advertising that has taken place in the recent years was the 'Diet Coke' promotions featuring Grammy awardwinning musician Duffy. Coca-Cola chose Duffy for this campaign as they see her as a hugely talented and accessible artist as opposed to just being a mere pin-up, which in turn would make the advertisements attractive to younger female viewers in the 20-35 age bracket. In the campaign, Duffy (real name:
Aimee Ann Duffy) is shown cycling through a supermarket singing one of her hit songs “I Gotta Be Me”. It was launched on British television station ITV, following the 2009 BRIT Awards on February 18th last year, where Duffy came home with three wins to her name. As a whole, the campaign has proven to be a success, although it did come in for some unusual criticism as regards the issue of health for children, as it shows Duffy riding her bicycle without protective gear. A formal complaint was lodged to the United Kingdom’s Advertising Standards Authority, but the claims were rejected. As well as Coca-Cola, the other brands in the market also engaged
in plenty of advertisements and marketing innovations, which would explain why they have always been to able to coax new customers into buying their products. There are plenty of brands that help this market to be as popular as it is, but there are a select few that would be easily recognisable to the Irish public.
COCA-COLA In every market in Ireland, there is always one brand that seems to set themselves apart from every brand in that particular market, and the carbonated drinks market is no different, with Coca-Cola enjoying an unquestionable stranglehold over the other brands currently available on the Irish market. They currently hold close to 38% of the market share of the
Carbonated Soft Drinks market in Ireland. There are currently concentrate factories in Drogheda and Ballina, and there are also bottling plants in Dublin and Belfast as well. In these factories, the concentrate is mixed with carbonated water, bottled and sold. A total of 910 people are employed in Coca-Cola businesses in Ireland, with payroll to employees being in the region of €15 million each year. This might seem like quite a bit of money, and it is, but this is only a fraction of the money that Coca-Cola contributes to the Irish economy. In addition to wages, Coca-Cola spends €50 million on raw materials and €25 million on Irish services, such as marketing and transport. That represents €90 million ploughed back into the economy by Coca-Cola each year.
Owned by the PepsiCo company (who also house brands like Pepsi, Tropicana and Walkers), 7-Up has a market share of around 10%, which means that it is well behind Coca-Cola, but is at the same time the second most tasted brand for Irish consumers. It is regarded as being Ireland's No. 1 lemon and lime drink, and has brought the true nature of 7-Up into people's homes with their 'Nature is closer than you think' motto. In accordance with this, Irish households have shown plenty of appreciation for this particular brand, with its being '100% natural flavours' being especially pleasing to those who drink it. For a while, it was bought by more households than any other soft drink in Ireland, and their sugar-free product, Britvic's 7-Up Free has sold pretty well in the past couple of years.
July/August 2010 45
Club Drinks have always had a steady popularity in Ireland, and even though there is no specific club drink that stands out as being a major seller in the market, the fact is that Club produce so many different types of drinks that they managed to forge a place in the subconscious of the average Irish consumer. At present, there are eleven different types of club drinks: orange, lemon, rock shandy, soda water, tonic, ginger ale, soda and lime, white lemonade, red lemonade, bitter lemon and apple. These drinks appeal to a number of different age groups, and also to different tastes, meaning that there is something for everybody to enjoy in their range. The most recent products that they launched were in 2007, when they released Club Diet Orange and Club Diet Lemon onto the Irish market. This was more of a re-introduction than anything, but it came at a time when being healthy was becoming a very big issue for so many people, making it a very worthwhile and engaging business decision.
Fanta, and their supplement Fanta Light, have had a very strong volume share in the past few years, with figures showing that they have had up to 26% volume share of the orange flavour market. They have been one of the most innovative and strongest performing flavour brands over the past eight years, especially since the introduction of their 'splash' and Fanta Exotic items. 2005 saw them launching their very first global brand campaign called 'Bamboocha', which was hugely successful, and they swiftly followed it with the introduction of Fanta Greenz, which was made with a blend of apple, lime and kiwi. They usually expect a market share of around 3% each year.
SNACKS - THE NORM?
From a health point of view, frequently eating snacks in between meals would not be seen as the ideal thing to aid a person's well-being, but numerous studies have shown that this is fast becoming the norm for a lot of people in Ireland today. Lifestyle can play a big part in how often people consume snacks, and crisps in particular. For instance, for those who have to work long hours, or have to deal with an extended commuter time (whether it be on bus, train or otherwise), then there is a good chance that they may start to eat snacks to keep themselves going.
Also, there are those who may not necessarily possess a strong ability to cook, and would have a strong need for food on the go, which snacks and crisps would ably provide for. In terms of value, the Irish crisps and snacks market is valued at an estimated â‚Ź194m per annum. The market has witnessed a value decline of 6.7% in the past year, yet remains one of the most profitable FMCG categories. This shows us that comfort eating has been a notable past time for many Irish people during the economic downturn. So, question is, who are the people who eat snacks/crisps, and when do they eat them? Well, snacks are generally seen as something that is aimed at a younger target audience, and there is certainly a good deal of truth in this. However, adults have also been known to take snacks, with adult snacking becoming an occasion in its own right, representing 'me-time' during the busy working day. Vending machines, which sell both snacks and drinks, are becoming a regular fixture in a lot of workplaces, so it is no surprise that more and more adults are starting to eat snacks at varying intervals. Apart from working hours, research has shown that 38% of consumers snack in the evening, when they are relaxing at home. 2% of those who have been surveyed in the past admit that they snack during or after playing sport, while 5% say they snack when they are with their friends. 9% do it when they are at work, or when they are at their desk, 13% pick a specific time of day to do it, whereas 15% take snacks if they have missed a meal for some reason. These results make for interesting reading, but it no surprise to see that many people still choose to snack when they are on the go, with 21% of those surveyed revealing that this is the most likely time that they would take a snack. It should be stressed though, that snacks does not just include sweets, as it can also mean food items which would be viewed as healthier and much more nutritious than what is considered the norm. For example, fruit is considered a snack with up to 57% saying that they snack on it regularly, with 22% also saying that
they snack on vegetables and salads. Consumers tend to divide snacks into categories based on 'good' and 'bad'. There can often be a trade-off between indulgence and health, which leads to people taking snacks that they feel will benefit their health, which they will see as far more important than the actual enjoyment of the product. The influence of both is fairly evenly spread, with 54% choosing it for health reasons, and 46% for its indulgence.
Chipsticks and Tayto Mighty Munch, as well as the traditional Cheese & Onion, and Salt & Vinegar crisps. They have also released new products like Tayto Velvet Crunch and Tayto Bistro, which have been introduced to the market following
Largo Foods is the largest Irishowned crisp and snack manufacturer, and is home to the Tayto brand. The company has a share of about 47 per cent of the Irish crisps and snacks market, with manufacturing plants in Meath and Donegal, and one in Britain. Other brands include Hunky Dorys, Velvet Crunch, Perri, King and Sam Spudz. Tayto are certainly their No. 1 brand though, and currently hold a 23.2 % value share of the crisps and snacks market, which helps to make them the top brand in this sector as well. The favourite products in their portfolio tend to be Tayto Snax, Tayto
detailed insights from consumers. Snackfood consumers are looking for healthier, great tasting products that they can eat on the go and share with friends and family, and the above two certainly have the ingredients to provide for these. Tayto's main Irish plant is in Ashbourne, Co. Meath, and they employ over 500 people, which makes them the largest snack food manufacturer in Ireland, and one of the biggest employers in the region. The potatoes used in the manufacturing of Tayto's crisps are sourced from local Irish farmers, which means that 10% of the total potato crop in Ireland ends up in bags of Tayto crisps.
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in the market over the past 12 months, and haven't shown much of a sign of dropping off. Their market share was higher in 2005 (it was 14.5% at that point), but a lot of that can be put down to the fact that King Lite was introduced the year before, which would have seen consumer interest at a greater level than usual.
Walkers, who are part of the PepsiCo International Corporation, have driven growth in the crisps and snacks market since it was introduced onto shelves in 2000. Their growth can simply be put down to the love that consumers have for the taste of Walkers crisps. Walkers have demonstrated plenty of innovation in promotions and product development. They have an extensive portfolio, which includes Walkers Crisps, Walkers Lites, Walkers Max and Walkers Sensations. Quavers, Wotsits, Monster Munch, Doritos, Dippas and Latinos also fall under the Walkers brand name. They are currently the number one crisp and snack brand in volume terms, and have outperformed the 1% overall category growth and delivered an outstanding 8% year to date growth in volume. Their core crisps growth has risen by 14% in volume as well.
King Crisps has a national market share in crisps of 11.4%, and is the number two best selling crisp in Dublin, making it a very popular choice for some consumers. Known affectionately as 'The crisps lovers' crisp', King have performed quite well
Though King has been viewed as the fastest-growing crisp and snack brand in the past, Hunky Dorys could arguably now take that tag, as they have come on in leaps and bounds in the past few years. They are currently the top-selling crinkle-cut crisp in Ireland, and with a 14.1% crisp category share, are outselling their nearest crinkle-cut competitor by almost five times. They have shown good initiative in terms of promotions in recent times as well, having launched a new ad campaign entitled 'Rugby' on April 26, which presented a somewhat unique take on the lineout, the scrum and the place kick. These ads were shot by the world famous photographer Walter Loos, with a new website showcasing all of the ads from the campaign and some additional bonus content for its digital followers. This campaign did cause quite a bit of controversy as regards the
provocative nature of the way the Hunky Dory brand was being advertised, and it has subsequently been banned as a result. However, it certainly did get people talking, and helped to raise the profile of the brand in a major way.