Still 1st for sales too! Another year, another first. Once more, Brennan’s is the best selling bread in Ireland. And we’re also up a spot, now number three in the Nielsen top 100 brands. So if you want to stock the best sellers, choose the entire Brennan’s range and stick with a winner.
In this months issue 2 NEWS
26 FOCUS ON IGNITION PRODUCTS
6 DRINKS NEWS- CHAMPAGNE BUBBLES UP FROM SEA
34 FOCUS ON BREAKFAST CEREALS
The world’s oldest champagne has been at the bottom of the sea for almost 200 years and it still tastes pretty good.
36 FOCUS ON BISCUITS
40 OWN LABEL 8 BOTTLED WATER A MUST FOR US CONSUMER The recession, critics of plastic bottles, and tap water promoters may have affected bottled water sales in 2009, but the spring definitely hasn't run dry.
Own-label accounts for one third of total food retail sales. It is estimated that sales of own-label and private-label products account for around 35% of all grocery purchases by Irish consumers.
10 MAKING WAVES IN NATURAL AND ORGANIC Even in trying economic times, American consumers continue to see the value in natural and organic products — to a point. While we care about the health of our bodies and our planet, we're also concerned about our wallets maintaining a healthy weight. 18 OPEC FOR MILK PRODUCERS 20 GREENCORE MERGE WITH NORTHERN FOODS Shares in Irish convenience foods group Greencore soared by 29 per cent after it announced plans to merge with Britishbased rival Northern Foods to form a new entity called Essenta. 22 BACK TO BASICS 23 EVOLUTION NOT REVOLUTION Careful to describe his vision for M&S as “evolution” rather than “revolution”, Marc Bolland outlined what can best be described as a “back to basics” approach for the chain.
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Fizz long gone from Britvic
Britvic chief executive Paul Moody must rue the day he ever decided to buy C&C’s Irish soft drinks business. Britvic paid a frothy €249m at the top of the cycle in the summer of 2007. While that gave it ownership of most of the leading sot drinks brands in Ireland, it coincided with the collapse of the Irish economy. The fizz has long since gone from the deal and
after three years of struggling through the recession, barely making a bob here. Moody has decided to write down the value of the asset when its full-year results are released. Britvic’s Irish revenues fell by 5.2 per cent in the year to the end of October, while the group as a whole recorded growth of 16.4 per cent. “Clearly when we were doing the deal nobody had
Burke gets Simon Burke the executive chairman of Superquinn, has just got a new gig”. He has been appointed chairman of Hobby Craft, the British arts and hobby chain. `”I finished as chairman of Majestic Wine in the summer after 10 years, and was quietly looking for something else,” said Burke. Burke has been splitting his working week between Dublin and London for years, but is very busy here these days. Superquinn has
the perspective on the global economy that we have experienced,” Moody said. “The decision was the right one at the time. We still believe that we have got the brands and the infrastructure to support our business.” For now, Moody is keeping mum on how much of a haircut Britvic will take on its Irish acquisition But it’s sure to be substantial. Britvic has already extracted €27 million in synergies from the Irish business, and closed its Cork plant with the loss of 65 jobs. Manufacturing is now focused on its facility in Kylemore in southwest Dublin. More pain could be on the way, with the company indicating that “employee engagement” on its latest restructuring proposal has begun. With a tough budget ahead, the prospects are not getting brighter for Britvic in Ireland for the foreseeable future.
Aryzta on the rise
Bakery group Aryzta saw underlying revenues fall by 1.7 pc in the three months to the end of October 2010. It was a slower decline than in previous months, indicating that the tough trading conditions which hit the company’s revenues last year may be improving. Aryzta’s sales last year were hit by falling consumer demand, particularly in Ireland and the UK. In terms of outlook, the company reiterated its target of earnings per share growth of 45 per cent for the year. Aryzta, which has it primary listing in Zurich and secondary listing in Dublin, was formed in 2008 from a merger between Swiss baker Hiestand and the Irish firm IAWS.
yet to replace Sheena Forde, the former director of operations who left in the summer. Meanwhile, Superquinn will open its 26th store in Dublin’s Rathgar, next month. It opened recently in Dublin’s Heuston South Quarter. “In the very tough times we had to pause for thought - only a madman would have kept on opening stores,” he said. Any expansion
now will be “pretty cautious stuff”. Trading began levelling off about four months ago. “I’m not going to pretend it is getting better, but it has stopped getting worse.” Discounter chic is not as prevalent as it used to be, when people were shopping in Lidl and boasting about it, are now sick of shopping around. I think they have realised it is timeconsuming.”
SuperValu Inc launches Diabetes Programme At a time when 26 million Americans are living with diabetes, Supervalu Inc. is launching a comprehensive, whole-store health and wellness programme - Living Healthy with My Diabetes. The programme offers a variety of resources to make life easier for customers living with diabetes, including educational materials, health screening tests, group and individual diabetes education and training programmes, medication management consultations, nutrition information, dietary tools, products and other services. “Our neighbourhood grocery stores are uniquely positioned to be a one-stop solution for people with diabetes,” said Chris Dimos, Supervalu’s president of pharmacy operations. “In addition to offering nutritious foods in our grocery aisles, our pharmacists and dietitians can help educate customers, provide personalised training and guide them to the information, products and services they need to maintain a healthy lifestyle. The programme is part of our commitment to provide convenient, affordable health and wellness solutions to our customers.” In addition to the resources that will be available year-round, Supervalu’s nationwide family of stores – including Acme, Albertsons, Cub Foods, Farm Fresh, JewelOsco, Shaw’s/Star Market, Shop ’n Save and Shoppers
Food & Pharmacy – will kick off the programme with special, limited-time offers between Nov. 7 and Nov. 20 in honour of American Diabetes Month, including free blood glucose test screenings; health
screenings for A1C, cholesterol and liver function and savings booklets for discounts on diabetes-related products. Programme elements available year-round include “Eating Healthy with
Diabetes” store tours, guided by specially trained pharmacists and registered dietitians; diabetes-friendly menu ideas and recipes, which can be accessed online through store websites; in-store pharmacy services; general nutrition information from registered dietitians; and diabetes products such as test strips, glucose tablets, blood pressure monitors and lancets. The reported incidence of diabetes has climbed to 11.3 percent of American adults, and if current trends continue, 15 percent will be living with diabetes by 2015, according to the Gallup-Healthways WellBeing Index. “Beyond the pharmacy, our stores offer tips and tools to help customers living with diabetes better manage their diets,” Dimos said. “Managing diabetes with a food plan is about understanding the importance of balanced nutrition and choosing from a variety of food groups throughout the day. Our stores offer the resources that people with diabetes need to enjoy controlled portions of foods from every food group, so they can eat what they love, balanced with what they need.” Supervalu Inc. operates 4,280 stores including 1,160 traditional retail stores, including 813 instore pharmacies; 1,210 hard-discount stores; and 1,910 independent stores serviced primarily by the company’s traditional food distribution business.
November 2010 3
Dunnes Stores UK profits up Profits at Dunnes Stores’ business in Britain rose by 68 per cent last year in spite of the difficult economic backdrop there. Latest accounts for Dunnes Stores (UK) Ltd show it made a pre-tax profit of €4.32 million in the year to the end of January 2010. This compared with a surplus of Stg£2.2 million in the previous year. The retailer’s turnover rose by 10.6 per cent to Stg£32.5
Food increases predicted Food inflation is returning in force, with Unilever the latests company to foreacst price rises this year. Th Anglo-Dutchmaker of Dove soap and Lipton tea, which has seen negative pricing for five straight quarters, said Latin America had already reversed course to become the first continent to weather price increases. This follows similar comments from fellow food producers General Mills and Kellogg, which expects to raise prices by 200 to 300 basis points next year. Food groups that pushed through price increases in the third quarter include Danone of France and Kerry Group. Unilever’s comments
came as it surprised the market with a better-thanexpected set of thirdquarter results. Organic sales growth rose 3.6 per cent year-on-year while the underlying operating margin - which many analysts were expecting to narrow - expanded by 20 basis points The company reported “difficult” conditions in Ireland, Spain and Greece. While Unilever is winning market share in a number of areas in Europe, “the real aim for us is more consistent performance”, chief financial officer JeanMarc Huet said. “The consumer in Europe isn’t well and that will continue for a while.”
million. Shareholders’ funds were Stg£16.6 million, up from Stg£13.4 million in the previous period. Dunnes Stores does not disclose any financial information for its 116 grocery and textiles stores in the Republic as they form an unlimited entity, but accounts are filed for its subsidiaries in Northern Ireland, Britain and Spain. Dunnes operates six stores in England and five in Scotland.
PERFECT FOR SANDWICHES
Champagne bubbles up from the sea bed The world’s oldest champagne has been at the bottom of the sea for almost 200 years and it still tastes pretty good. Two bottles were cracked open recently that were discovered in July in a shipwreck, 50 metres below the surface, in the waters south of Aaland, Finnish’ controlled archipelago of 6,500 islands in the Baltic sea. The Aaland authorities only discovered while recorking some of the bottles that they contained two varieties of Champagne, Veuve Clicquot and Juglar, an old house now part of Jacquesson. While 168 bottles were found, many were broken and others contaminated. Both Champagnes may be 185 years old. The oldest Veuve Clicquot held by the Champagne house dates back to 1893, said Francois Hauekeur, a winemaker with Veuve who is assisting with preserving the Champagne. The sweetness of the Champagne prompted speculation that it might have been headed for Russia, but the location of the shipping lane where the wreck was found suggests Finland is more likely While its exact age is not yet known, marine archeologists estimate that the twin-masted schooner on which the bottles were found dates from the second quarter of the 19th century. Plates on board were manufactured by Rorstrand porcelain factory between 1780 and 1830, the Aaland Board of Antiquities says. The divers also discovered bottles of what may be the world’s oldest beer.
When one of the Champagne bottles was brought to the surface earlier, the pressure change caused the cork to pop. One diver took a swig from the bottle expecting it to taste of seawater and realised that it was good. The team drank some from plastic beakers, resealed it and took it to
sommelier Ella Grussner Cromwell-Morgan to taste. Despite the fact that it was amazingly old, there was a freshness to the wine,” she said. “It wasn’t debilitated n any way. Rather, it had a clear acidity which reinforced the sweetness. Finally, a very clear taste of having been stored in oak casks.”
The champagne was so well preserved because it lay horizontally, under pressure, at a low temperature and in the dark. Aaland plans to auction one bottle of each Champagne in coming months and sell others in the future. Five bottles will be retained and others will be used in a special blend of Champagne.
Bottled Water still a must for US Con
The recession, critics of plastic bottles, and tap water promoters may have affected bottled water sales in 2009, but the spring definitely hasn't run dry. Consumers have grabbed extra bottles during the summer of 2010 to boost sales. Sparkling water, the new category star, continues to grow in sales as an alternative to carbonated drinks. Bottled water manufacturers are adding tempting flavours and plastic-saving packages to keep sales flowing. To be sure, the recession exerted its mighty influence on all beverage category sales last year, according to New York-based Beverage Marketing Corp. Bottled water dropped slightly more than carbonated soft drinks (CSD) in 2009. The categories were down 2.5 percent and 2.3 percent, respectively, while the entire beverage category dropped 2.7 percent. After sales hit new heights in 2007, at $5.2 billion, FDM bottled water
sales dropped to $4.7 billion in 2009, a report from Chicago-based market researcher Mintel notes. Many consumers took the typical recessionary route and opted for private label water, causing brands like Aquafina to drop prices, sometimes to less than a penny an ounce, or about half the typical price. Hitting the Bottle One Midwest retail executive who requested anonymity notes that unit sales of private label bottled water at his company's stores are up 10 percent over last year. "Our business has been growing even with the difficult economic environment. Retail prices have been falling, and this can be attributed to lower cost of supply options available to the retailer," according to the exec, a category management director at a grocery chain. "We had above-average temperatures this summer that supported higher sales. We also have experienced some supply disruptions
with private label, as it appears some bottling companies had more demand than capacity at times this summer." While the recession may be one reason for sales dips in the category, there are others. Some consumers spurned bottled water because of the use of plastic, while other groups touted local tap water, citing no difference from bottled water. To counter plastic-bottle critics, some manufacturers developed new containers such as NestlĂŠ Waters North America's new lighter-weight bottle with a smaller lid that uses less plastic. Aquafina, from Chicago-based PepsiCo, has a new bottle that uses 50 percent less plastic than the 2002 version. Manufacturers also countered tap water boosters by promoting water drawn from pure sources.
The Lineup The bottled water category has three main
segments: convenience serve or PET (referring to the bottle's plastic), jug or bulk, and sparkling/mineral. Convenience serve (PET) is by far the largest of the three in sales and drives category growth.
The convenience serve segment is up 7.2 percent in supermarket sales vs. a year ago, according to Nielsen numbers. The record-hot temperatures this past summer boosted sales in the segment. "By factoring out the increase due to hot weather, convenience serve is still up between 3 percent and 5 percent this year," notes Dan Friedrich, VP customer development for Greenwich, Conn.-based Nestlé Waters North America. Jug/bulk water sales, the second-largest category segment, felt the recession's pinch more than the other two categories. Sales fell $71 million, from $742 million in 2007 to an estimated $709 million in 2009, according to Mintel, which cites trading down to private label or trading out of the segment entirely as the chief culprits. Nestlé Waters is working to improve performance in the bulk water segment. "A couple of things needed to happen to improve the
multiserve category," Friedrich explains. One was a more developing attractive, stackable display, and the other was competitive pricing. "Retailers asked us to help them with displaying this product, so Nestlé Waters came up with 3-liter displays with bottles that nest into each other so they can be stacked. The displays come on a stable, shrink-wrapped pallet ready to drop on the sales floor." The displays are more attractive than the old cardboard setups and waste much less paper. While it took three years to get retailers to accept the new displays, Friedrich says the 3-liters are selling well, especially at a 99-cent price point. "By being more competitive on price, we are helping reverse this category segment's negative trends," he adds. "With some slight growth occurring, our goal is to bring bulk category sales up to flat. Most growth is still in convenience serve." And the bubble hasn't burst for consumers who prefer a fizzy alternative to regular bottled water. While sales of sparkling/mineral water were down in 2007 and 2008, 2009 signaled a change, with unit sales inching up 2.7 percent, while all other categories of bottled water dropped. Sales are even bubblier this year, with unit sales up 6.24 percent in this, the smallest of the bottled water categories (SymphonyIRI Group calendar years 2007, 2008, 2009 and 2010, through Aug. 8). Water, Water Everywhere From premium international brands such as Perrier and San Pellegrino to regional waters drawn from
local springs, Nestlé Waters is the leader in bottled water, at 27.9 percent of category sales, according to Mintel. Nestlé regional spring waters include Deer Park, Ice Mountain, Ozarka, Poland Spring, Arrowhead and Zephyrhills. Poland Spring and Arrowhead are also available in sparkling varieties featuring fruit essence flavours. Nestlé Pure Life Purified water, available across the country, is produced through a multistep filtration process and enhanced with a mineral blend. The line includes natural fruit-flavoured waters. For the fourth year in a row, Nestlé Pure Life will support National Breast Cancer Awareness Month in October with pink-ribbon packaging on the half-litre 24-pack. In 2009, 2.5 million cases were sold, resulting in a $250,000 donation to the Breast Cancer Research Foundation. Coca-Cola's Glacéau products rank second in sales, at 21.6 percent. The
brand targets young adults through events, Facebook, and ads featuring celebrities drinking its vitaminwater, Smart Water and new vitaminwaterZERO product lines. Hydration is the theme after a case was recently filed against Atlanta-based Coca-Cola by the Center for Science in the Public Interest, citing little nutrition and plenty of sugar in the drinks. PepsiCo was third in bottled water sales in 2009, at 14 percent, per Mintel. The company targets a youthful demographic with SoBe Lifewater featuring its trademark lizard, and social marketing. Recent promotions include prizes based on cap codes and the chance to choose the newest flavour. Potential for bottled water sales remains positive. According to data from Schaumburg, Ill.-based Nielsen for the 52 weeks ending June 12, bottled water sales in six major U.S. markets are already exceeding CSD sales and expected to surpass consumption over time. These markets include Las Vegas, San Francisco, Boston, San Diego, Miami and Los Angeles. What's more, bottled water is a planned purchase. According to a 2009 study by Barrington, Ill.-based consultancy Willard Bishop, over 85 percent of shoppers plan to buy bottled water before coming to the store. "Retailers need to change how they think about bottled water and how they handle it in the store," Nestlé Waters' Friedrich says. "It's not a traffic draw, so they do not have to cut prices so low, because shoppers are already planning to purchase it."
November 2010 9
Making Waves in Natural and Organic By Jennifer Strailey As the natural and organic category continues to gain clout with consumers, PG shines the spotlight on 10 grocery chains that are excelling at playing up its appeal. Even in trying economic times, American consumers continue to see the value in natural and organic products — to a point. While we care about the health of our bodies and our planet, we're also concerned about our wallets maintaining a healthy weight. Organic beets for $4.99 a bunch? Most folks likely have far greater priorities at the present time, like their mortgages. •See the results of our national audit of meat products in 2007, including important trends •At the forefront of Hannaford's success with merchandise, safety and performance boosting systems. •Delivering freshness & extending product quality life with an extensive range of packaging innovations •Offering the highest quality meat
package available with consistently better protection, appearance & value •Research on beer market to understand beer consumer dynamics & shopper behaviour That said, according to the Organic Trade Association's (OTA) 2010 Organic Industry Survey, U.S. sales of organic food and beverages were up 5.1 percent in 2009 over 2008. The
highest-growth category was organic fruits and vegetables, which grew a notable 11.4 percent last year over 2008 sales. The survey also found that organic nonfood sales grew 9.1 percent in 2009, to reach $1.8 billion. In all, total U.S. organic sales were $26.6 billion in 2009, up 5.3 percent from 2008. Who's selling the lion's share of natural and organic? Last year, traditional supermarkets, club stores and mass merchandisers increased their share of organic food sales once again. According to the OTA survey, mass market retailers sold 54 percent of the organic food in 2009. Natural retailers came in second, responsible for 38 percent of total organic food sales. Mass market retailers also sold more organics in 2008, with 45 percent of organic sales, while natural food channels represented 43 percent that year. One of the reasons for the success of traditional supermarkets, club stores and mass merchandisers in the natural/organic arena may be their
reputation for price competitiveness in comparison with natural food stores. Retailers on Our Organic/Natural Radar Here are 10 retailers (in no particular order) that are on our radar for their efforts in natural/organic. A recent Nugget Markets
newsletter invited customers to look for Fair Trade products such as coffee at all of its stores. 1. The Kroger Co. The country's strong and growing base of mommy bloggers is positively glowing over the quality and price of organic products at Kroger. "Kroger kicks booty!" writes blogger Jo Wehage on www.Healthyalterego.com In May, Wehage went shopping at her local Kroger and compared its prices on 12 organic fruits and vegetables with prices at a variety of other retailers. "Our friends at Kroger had the best price of any store on six out of the 12 items," she noted in her blog, adding, "Another really impressive thing about Kroger was how close their organic pricing is to their conventional."
Cincinnati-based Kroger's 2003 launch of its store brand of natural and organic foods marked one of the larger brand launches for the retailer in its more than 100-year history. Today, its Naturally Preferred line of premiumquality natural and organic products and Private Selection organic items continue to sell well. What's more, Kroger has launched more than 80 Fresh Fare stores in recent years — locations that feature expanded organics departments and other upscale amenities.
Nugget Market Since 1926, Woodland, Calif.based Nugget Markets has been a family business founded on highquality products and low prices. Today, Nugget does a great job of getting the word out about its prices and puts its money where its mouth is. The regional independent — which offers conventional items along with a host of natural and organic selections — has created a Price Survey that invites shoppers to compare a list of 25 regularly bought grocery store items at Nugget prices with the prices on identical items at other area stores. Shoppers who complete the survey can then enter to win a $1,000 Nugget gift card via monthly raffle drawings. But Nugget Markets is about more than pretty prices. It's also a place to learn about food and how it's grown and made. Consider the retailer's September newsletter, which focused on Fair Trade products offered at its stores.
Hannaford Supermarkets sells green and builds green. It received platinum LEED (Leadership in Energy and Environmental Design) certification for its Augusta, Maine, store. Hannaford Supermarkets For a traditional grocery store, Hannaford Supermarkets stocks a healthy selection of natural and organic products. According to the retailer, a Delhaize Group banner based in Scarborough, Maine, the average Hannaford store carries about 3,000 all-natural and certified organic products, which run the gamut from
fresh meat to produce to bakery items, health and beauty care, natural products and more. cleaning Hannaford's website notes, "We're adding more organic & natural products to our shelves every day." The retailer also guarantees that its customers will love its Nature's Place store brand of natural and organic products, or "we'll double your money." Whole Foods Market After 30 years in business, Austin, Texas-based Whole Foods is the country's undisputed leader in natural foods retailing. It regularly receives attention for its environmentally sound practices. The retailer is also incredibly successful — even in a down economy — reporting 2010 third-quarter sales of $2.16 billion dollars, up 15.2
percent over the same period last year. For the nine months ending July 4, 2010, the company reported $6.91 billion in sales, an increase of 11.3 percent over the previous year. Publix Supermarkets Like most conventional supermarkets in the past decade, Lakeland, Fla.-based Publix Supermarkets, introduced its own natural/organic store brand, but then the retailer did one better. In 2007, Publix turned its private label GreenWise brand into an entire market concept. Touted by the retailer as a "destination for all-natural, organic and earth-friendly shopping, and so much more," Publix's GreenWise
Market first opened in Palm Beach Gardens, Fla. Today, the retailer has two other GreenWise stores, both in Florida: one in Boca Raton and the other in Tampa. Additionally, Publix has made it easier for shoppers to identify natural and organic products in all of its stores by giving these products their own special label. Safeway With some 1,700 stores, Pleasanton, Calif.-based Safeway made a huge splash in the ever-growing ocean of natural/organic products when it launched its national "O Organics" line in 2005. Today, the O line includes more than 300 certified organic foods, most recently bowing items for kids, toddlers and babies. O Organics is essentially Safeway's
answer to affordable organic eating. It's complemented by another Safeway private label brand, Eating Right, which emphasizes "better-for-you" foods, again at affordable prices. What distinguishes Safeway is its relatively comprehensive approach to natural/organic, promoting these products as part of a bigger-picture push to help customers achieve better nutritional health and wellness. With this in mind, Safeway in 2008 launched FoodFlex, a free online nutritional tool that allows shoppers to compare their purchases with USDA recommendations and design shopping lists to meet their nutrition goals.
November 2010 11
Trader Joe's One key to Trader Joe's success in natural/organic is that the Monrovia, Calif.-based retailer has been known first and foremost for everyday gourmet at great prices from day one. Trader Joe's also uses symbols on its store shelves to make it easier for shoppers looking for healthier options. Everything from no gluten to vegan to kosher has its own symbol. With estimated annual sales of $8 billion, Trader Joe's has enjoyed phenomenal success in some 344 stores across 25 states. Walmart No retailer made bigger waves with its entry into organics than Walmart. Some scoffed. Others were scared. But few could have predicted the positive press and recognition that the megaretailer would receive just a few short years after its launch into the natural/organic arena. Everyone knew that Walmart would make organics more affordable, but what about the quality? Writer Corby
Kummer ate his previously skeptical opinion of organics from Walmart in the March issue of The Atlantic. After critical comparative taste tests, Kummer found that Walmart's organic produce was as good as, and in some cases better than, that of the nation's leading natural food stores. What's more, in the past five years, Bentonville, Ark.-based Walmart has set off a resurgence of smaller organic farms. Costco Costco began introducing organic products in its trademark caseload sizes more than five years ago, and quickly won the attention of Boulder, Colo.-based New Hope Natural Media for doing its homework and carefully choosing its products. Today, a review of the Costco website and store shelves reveals a bevy of organic products, from mushroom gift baskets to tea to bone-in kosher beef to cotton linens for babies.
With more than 500 stores, annual sales revenues of nearly $70 billion and one of the strongest reputations around for saving consumers money, Issaquah, Wash.-based Costco is one to watch in the world of organic retailing. H-E-B From its Central Market Organics to its "Say No to GMOs" campaign, HE-B is a leader in the natural/organic arena, as it is in so many other areas of progressive retailing. You can read much more about why the San Antonio-based regional grocer is definitely on our radar this year in PG's "Retailer of the Year" feature on page 24 of this issue. Committed to becoming 100 percent supplied by renewable energy, Walmart, whose organics have pleasantly surprised its critics, opened a wind turbine-powered Sam's Club in Palmdale, Calif., earlier this year.
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Alcohol Campaign Fails DR
McCambridge on the rise
Dr Ann Hope, a former adviser at the Department of Health outlined number of policies on alcohol that are not working at a recent presentation to a Dublin joint policing committee meeting. With a national substance strategy due to be completed shortly and Alcohol Action Ireland (AAi) preparing its pre-budget report for submission, alcohol misuse is now firmly on the agenda. However, despite Hope’s claims, based on research by the World Health Organisation (WHO), the state continues to use both schools and media as a conduit for alcohol
education. In 2009, the Health Service Executive (HSE) which is tasked with promotion - spent around €400,000 on mass media including broadcast and outdoor advertising a website and leaflet campaign. Hope pointed out that while some measures have an impact - taxes regulating availability and drink-driving counter measures - others do not. Outside of school and media, she highlighted advertising content regulations, industry selfregulation, warning labels and alcohol-free activities. According to the recent
Rand Report by the European Commission’s Department of Health, it is now 50% cheaper to drink at home than it was 15 years ago. The alcohol market here is said to be worth in excess of €6bn a year and as a country, we are still trying to come to terms with how we monitor its use and tackle binge-drinking. Ireland is the thirdlargest consumer of alcohol in the world and, according to the country’s chief medical officer, Dr Tony Holohan, 100 people a month die from alcoholrelated illness or accidents, translating to one person every seven hours.
A debt restructuring at McCambridge Group Holdings has helped to pave the way for a return to the black for the Irish family bakery. The group has posted operating earnings of €10.4m in the year to June 2010, compared to an operating loss of Stg£14m in the nine months to June 2009. The “remarkable turnaround” has been attributed to widespread rationalisation and consolidation of facilities and investment to “enhance factory efficiencies”. McCambridge, the Galway company which purchased Inter Link Foods, a quoted baker, for Stg£75m in 2007, retained profits of Stg£1.7m in the year to lst June. The profits were only achieved after a tax rebate on losses of Stg£6.5m. Group chief executive, Neil Fraser said that McCambridge, whose brands include Soreen malt bread, delivered an “excellent performance overall in the year against the backdrop of a challenging environment”. The company warned that rising commodity prices represented a challenge in the coming year.
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C&C pensions deal with Unions
C&C has struck a deal with unions to cut pension benefits for workers at its cider-making plant in Clonmel and increase employee contributions to its defined benefit (DB)
scheme. The company had been in negotiations with workers for months to slash its €47m pension deficit, which doubled in the six months to the end of August, according to interim results recently released. In May, Siptu threatened to refer the company to the Labour Relations Commission in a row over a management threat to try to plug the deficit by cutting benefits unilaterally and raising contributions. However, unions and the
firm agreed to scrap the automatic 3% a year increase that existed under the DB scheme. Workers have also agreed to boost their current contribution, which is about 5% of salary, by 1% each year until 2013, according to Siptu. About 150 of the firm’s Irish-based, workers out of the group’s 1,100 employees, remain members of the DB scheme. The rest have moved over to cheaper defined contribution or hybrid schemes, which do not guarantee a level of payouts for retired workers.
Tim Kenny, Musgrave’s group finance director said salaries “are quite strong” in the UK. In Ireland, Kenny said trading is “solid but we still have food deflation”. Volumes are up but prices are down. “The consumer is being very careful with their pennies and their pounds”, he added. Kenny indicated that turnover would be down this year, but declined to comment on profitability. Musgrave reported a surplus of €70 million in 2009. ”I’t wouldn’t be appropriate to say (about profits) at this stage...the last three months of the year in the run-up to
Christmas are always very important for the business.” He said a “small number of stores” have closed in Ireland this year. “But that’s just the normal cut and thrust of this business.” On a positive note, in January, Musgrave won approval from the Pensions Board on its application to adjust the benefits paid to members in order to tackle the deficit in its scheme. Any increase in payments to members will now be discretionary rather than automatic. The good news for staff is that they won’t have to make any additional contributions to the scheme.
UK boost for Musgrave
The Irish market might be a struggle for wholesale group Musgrave at present, but accounts just filed in the UK show the business there has turned a corner. Musgrave Retail Partners GB Ltd, which comprises the Budgens and Londis chains in Britain, shows that the group returned to the black in 2009. Musgrave made a profit of €4.2 million last year compared with a loss of €6.3 million in 2008. Last year’s loss related to costs of restructuring the business in the UK through the combination of Budgens and Londis under the one umbrella. Musgrave expanded its footprint in the UK in 2009, paying €14.4 million for 13 retail stores from Somerfield. These were mostly in the south of England and are now operating as part of the Budgens chains.
Weekly earnings slip Average weekly earnings fell by 1.6 per cent in the year to the end of June, according to new figures from the Central Statistics Office (CSO). The data shows that earnings in the public sector fell by 4.4 per cent compared with a decline of 0.7 per cent in the private sector. Overall, average weekly earnings fell to €690.48 in the end of the second quarter, compared to €701.73 a year earlier. The largest decline in wages was in the education sector, where earnings fell 8.3 per cent. Earnings in transport and storage fell 7.3 per cent. The fall in public sector pay rates was attributed to last December’s budget. In the first half of this year, weekly earnings fell in companies of all sizes. The statistics show average weekly paid hours fell to 31.7 in the second quarter of 2010, a decline of 0.2 hours or 0.6 per cent over the year. In the private sector, average hourly earnings were unchanged over the 12 months to the end of June at €19.32. Public sector hourly earnings fell by 4.2 per cent from €30.0 to €28.81. Over the year to June 2010 public sector employment fell 2. per cent while private sector employment fell 3.7 per cent.
Organic - No Better - No Worse
Costly organic vegetables are no better for your health than those grown conventionally, a study has found. A two-year experiment which involved scientists growing potatoes, carrots and onions under both organic and traditional conditions has found the health-giving properties of each are virtually identical. The chemical compound in vegetables that fights cancer, heart disease and dementia was found to be present in virtually the same amounts in both types. However, the Irish Organic Farmers and Growers Association said the study, which was carried out by environmental science in Denmark, was not relevant to organic production in Ireland. The group insisted that
organic food produced here is healthier because our soil is kept more fertile by rotation of crops. In the study, scientists at the University of Copenhagen cultivated a total of 72 plots of land, half using traditional farming methods, including treating them with pesticides, non-organic fertilisers and added nutrients. The other half were farmed organically, under conditions recommended by various organic food organisations, which involved using natural aids such as manure instead of fertiliser. The result showed little difference in the amount of the key compound, polyphenols, in either the onions or the carrots, though there was a slightly higher level in organic
potatoes than in conventional ones. Crops were grown at different times of year and in different parts of the country because factors like the type of soil, the difference in climate and attacks by pests play a major role in the amount of polyphenols producted by plants. However, the Irish Organic Association said Danish organic farming was different. Grace Maher, developmental officer at the association, said that unlike in Denmark, soil in Ireland is kept fertile by rotating crops. “Crop rotation is an integral part of organic farming. It is essential to prevent the build-up of pests and disease in the soil, but it is also important as it means that nutrients
are not continually being depleted from the soil. This means that nutrients are readily available in the soil for crops to absorb. “This is an isolated study and our research has shown that the main reasons people buy organic food is that it is free from pesticides, free from GM materials. It also has high animal welfare standards and is climate friendly. We also believe that organic food is more nutritious,” she said. “On the issue of cost, organic food is extremely cost competitive and fruit and vegetables bought in season are often cheaper than conventionally produced food, particularly if sourced directly from the producer”.
November 2010 17
Opec for Milk Producers
The Irish Dairy Board was asked to pursue the possibility of setting up a global group similar to Opec to represent milk producers, with other big international companies or State agencies. Hugo Maguire, a town of Monaghan co-operative delegate, proposed his idea to Kevin Lane, chief executive of the dairy board at the annual conference of co-operative societies. Maguire asked Lane if it would be feasible to link up with dairy marketing giants like Zealand and Campina in Europe to meet the challenges from multinational retailers. “We should try set up an organisation to do what the oil producers do in Opec for milk producers and
processors worldwide,” he said at the Irish Co-operative O r g a n i s a t i o n S o c i e t y ’s national conference. Lane said he was in the process of meeting other major global marketing companies on a range of issues and it was possible the issue might arise. He said fragmented marketing of Irish dairy products internationally was costing money and a unified marketing arm was needed rather than individual companies competing in markets and driving down the price. He also put a cost on increasing the milk output by 50 per cent here in 10 years’ time at over €800 million. He said it would cost processors €400 million. There would be a need for
up to €300 million in working capital, finance and storage facilities, and marketing infrastructure and investment in acquisitions and a growth would cost a further €200 million. Lane said he expected growth in the dairy sector was a potential “good news” story at a critical time, but there were still many obstacles to overcome. The society, which represents 150 co-operative businesses, also put forward its figures on the cost of expanding milk output. It said it would cost those increasing their milk output dramatically 30 cent per litre of annual capacity. The society said the time was right to re-establish the link between milk supply and co-operative shareholding, which had been weakened by the imposition of EU milk quotas and co-ops diversifying into non-dairy areas. It also proposed establishing a minimum shareholding by all members relative to their supply.
Income not affected by tobacco rules
Last year’s removal of instore tobacco displays and advertising has not affected retailers’ incomes, research commissioned by the Office of Tobacco Control (OTC) has found. The research, conducted by the University of Nottingham, found there had been a decline in tobacco sales, but attributed this to “broader phenomena such as the global recession”. The advertising and display of tobacco products at retail counters and vending machines has been prohibited since July 2009. Ireland was the first country in the EU to introduce such legislation and this research is the first study of its type. Dr Casey Quinn, research and economist, said there had already been a general downward trend in cigarette packet sales before the ban, and that “no statistically significant change in cigarette pack sales was observed following implementation of the legislation”. Positively, there has been a decrease in awareness of smoking among young people since the ban. Recall of tobacco displays among teenagers decreased from 81 per cent before the legislation to 22 per cent afterwards. Among adults this decreased from 49 per cent to 22 per cent. This showed “encouraging signs” that the legislation would “protect young people”, said the OTC.
Largo Foods doubles operating profit
Crisp maker Largo Foods more than doubled its operating profit in 2009 in spite of a 6.5 per cent decline in sales as the benefits of a major restructuring of the business in recent years began to bear fruit. The maker of the market leading Tayto, King and Hunky Dory crisps posted an operating profit of €9.9 million last year compared with a surplus of €3.9 million in 2008. Sales declined to €88.2 million in 2009 from €94.4 million a year earlier, as the company largely withdrew from producing own label crisps for supermarkets in the UK. “We stopped doing most of the own label sales in the UK as it was uncompetitive,” chief executive Ray Coyle said. Largo achieved a €10 million reduction in its cost of sales last year, following a restructuring of the business that reduced its headcount from about 700 to 560. This followed a €7 million investment in automation at its plants in Ashbourne, Co Meath and
in Donegal. “We continue to work on our overheads,” Coyle said. “We’re making further investment in machinery and focusing on products with extra value.” Its interest costs, which are largely associated to the acquisition of Tatyo in recent years, were reduced to €6.9 million from €8.1 million in 2008, as the company continues to reduce its debts. This resulted in the company recording a pretax profit of €2.7 million in 2009 compared with a loss of €3.8 million in the previous year.
This performance allowed the company to reduce its accumulated losses to €13.8 million last year from €17 million in 2008. Coyle said Largo’s sales and profits in 2010 would be of a “similar level” to last year. “Next year will be better,” he said, adding that he expects Largo to add €5.8 million in new sales, largely from launching new products to its range. Largo is spending €2.4 million on a new production line that will be fitted in December to make rice chips, a snack food popular in the United States.
“Nobody has done this in Europe yet,” he said. Coyle expects the rice chips - which will be promoted as a healthier snack food choice - to achieve sales of €15 million in a full year. “We’ll be selling in the UK and continental Europe.” Largo’s debts have been reduced to about €70 million from a peak of €104 million, Coyle said, and the company will continue to reduce borrowings. “We need to generate Ebitda (Earnings Before Interest, taxes, Depreciation and Amortisation) of €14 million a year just to stand still,” he said. Improvements in productivity levels at its Irish plants had enabled the company to reinstate a 5 per cent cut from 2009 this year, he explained. But he said the company would seek further efficiency improvements from its workers this year as it seeks to remain competitive. Largo has operations in England, Moldova, Libya and China.
November 2010 19
Greencore merge with Northern Foods NEWS
more than 30 per cent for the combined entity. The new company expects to achieve annual savings in overheads of Stg£15 million about Stg£20 million in purchasing and £5 million in tax efficiencies. At least half of these cost benefits are expected to be achieved within 12 months. “The merger offers compelling business benefits to both sets of shareholders,” Coveney said. Essenta’s corporate headquarters will be in Ireland, where it will also be tax resident. Northern Foods’ head office in Leeds will close and Coveney said additional jobs are expected to be created at its HQ in Dublin. But the emerged entity will be listed on the London Stock Exchange; its reporting currency will be sterling; and the bulk of sales will be derived from the UK. Its chairman will be
Anthony Hobson, who holds the same role with Northern Foods. Greencore chairman Ned Sullivan will be Hobson’s deputy. Northern Foods’ chief financial officer Simon Herrick will assume the same role with Essenta and will move to Dublin. Greencore is the world’s biggest sandwich maker and sells one-in-three Yorkshire puddings in Britain. It also produces ready meals under licence for Weight Watchers; has a range of chilled and ambient sauces; and sells cakes and desserts. Northern Foods’ products include Fox’s biscuits, Goodffella’s pizzas and a range of frozen foods under the Donegal Catch and Green Isle brands. It also makes sandwiches and salads, and chilled ready meals. The combined entity generates sales of Stg£200 million from manufacturing activities here and sales into Ireland from British operations,.
The Irish Dary Board was recognised as the Exporter of the Year 2010 at a recent awards ceremony. The Irish Exporters Association recognised the Irish Dairy Board for its success with the Kerrygold brand in the international market. Last year the Irish Dairy Board exported €780 million of products to 90 countries. It is the largest exporter of dairy goods in the country and accounts for 60 per cent of all Irish dairy exports.
The Emerging Exporter Award went to Hot Irishman, a Carlow company which has developed a number of spirit brands including Irish whiskey, coffee and cream liqueurs.
IDB comes out on top Patrick Coveney
Shares in Irish convenience foods group Greencore soared by 29 per cent after it announced plans to merge with Britishbased rival Northern Foods to form a new entity called Essenta. The 50-50 merger will create an Anglo-Irish business with sales of €2 billion and 17,00 staff. The deal has been
recommended by the boards of both companies. Greencore chief executive Patrick Coveney, who will take the reins at Essenta if the deal is approved, said the merger would yield synergies of Stg£40 million a year. He described the cost savings as very significant and said they would lead to an improvement in profit of
Video chain to sell wine and food
Xtra-Vision, the video rental and retail chain with 185 stores in the north and south of Ireland, will begin trialling fast-food counters in some of its larger outlets in the new year, said Peter O’Grady Walsh, its chief executive. The group also plans to buy more liquor licences, which will select stores to sell bottles of wine to customers who want to buy a drink to go with their movie. Xtra-Vision has already obtained about 10 liquor licences, although it has stalled the wine rollout across the group pending legal clarification on a recent circuit court application it made for a
drinks licence. O’Grady Walsh said the group plans to sell wine in at least 12 stores. “We are seeking clarification on the basis upon which a wine licence can be granted to stores of our type,” he said. “Then we’ll roll the concept out. On
the fast food, it will probably be pizza or oriental or something like that.” Only the larger format Xtra-vision stores will sell hot food. “In four of our stores we are also trialling the concept of installing internet cafes. We think there is great
potential for that to work”,” said O’Grady Walsh. The chief executive was a member of a consortium that bought the group for million from €20 Blockbuster. O’Grady Walsh said that since taking it over, about €6 million had been invested in the group, mainly on the installation of a new point-of-sales system and on a new website. Up to a further €3 million is expected to be invested next year. He said that about a third of its revenues were from its traditional DVD and games rental activities, while th rest came from the retail sales of electronic products such as games consoles and iPods.
Bank of Ireland Corporate Banking has announced that it has partfinanced the establishment of Valeo Foods ("Valeo"), a new Irish-based food company that will combine the businesses of Origin Foods, the food division of the ESM and AIM listed, Origin Enterprises plc ("Origin"), together with the business of Batchelors, the leading privately-owned Irish ambient food company. Valeo will be owned by CapVest Limited ("CapVest") (55%) and Origin (45%).
The total amount of debt raised for this transaction was €90m. Valeo will bring together a diversified and powerful portfolio of some of Ireland’s leading consumer brands including Odlums, Shamrock and Roma from Origin, and Batchelors, Erin, Sqeez and Lustre from Batchelors. Bank of Ireland has worked closely with Origin and has a strong relationship going back over 20 years. CapVest is a leading European private equity firm and has been supported by Bank of Ireland in previous investments in the Mater Private and United Coffee, one of Europe’s leading coffee companies. CapVest has a strong record of success as a longterm investor. Commenting on the
transaction, Tom O’ Mahony, CEO Origin, said "Origin enjoys an excellent relationship with Bank of Ireland. The corporate team is particularly knowledge -able in our sector and very responsive to our requirements. They remain consistent supporters of Origin’s strategic reposition -ing and on-going development. We are delighted with Bank of Ireland’s support and role in this transaction and look forward to their involvement in the future development of Valeo. " Seamus Fitzpatrick, cofounder of CapVest, said "We have worked successfully with Bank of Ireland in the past and we were delighted to partner with the corporate banking team once again on the financing
of this innovative and exciting transaction that sees the creation of a powerful new Irish business in the food sector." Tom Hayes, Chief Executive, Bank of Ireland Corporate Banking commented on the transaction: "Bank of Ireland is pleased to support CapVest in executing its strategic footprint into the food sector. Bringing together respected Irish brands to create a unique company led by a strong management team will ensure Valeo is well positioned for future domestic and international growth. We are also delighted to continue our relationship with Origin and look forward to supporting the company through its next phase of development."
Origin and Batchelors combine
November 2010 21
It’s Back to Basics NEWS
Irish people are going back to basics by supporting small artisan suppliers of products such as duck eggs and country butter, Euro-Toques Ireland said as it presented its annual food awards. The awards are selected by chefs and cooks and honour people who have made an outstanding contribution to Irish food. This year’s awards focused on people who keep Ireland’s traditional culinary heritage alive. Euro-Toques Ireland commissioner general Feargal O’Donnell said many foods traditional to Irish culinary heritage had been forgotten in a changing world where convenience was most important. “The mindset of Irish consumers has altered and we are now increasingly seeking locally sourced, seasonal produce in restaurants and in retail, recognising that we need to get back to basics.”. Many traditional foods were very economical “so it’s actually more beneficial in this environment to be going back to old-fashioned methods of production and being more selfsufficient”. Lissadell House and David
Langford in Sligo won an award for preserving and reviving many traditional varieties of potatoes. Langford donated his collection of heritage potatoes to the stately house in 2008 because he wanted to give the public access to the collection and Lissadell had a long history of potatogrowing. Some 180 potato varieties are growing in Lissadell with some dating back to 1768. Across the border in Co Mayo, the Cuinneog farmhouse country butter business was singled out for an award. Tom Butler said he set up the business with his family because they wanted to produce a country butter in line with Ireland’s long tradition of butter making. “It’s a totally different flavour and totally different process to other butter. It’s fermented over four days.” It is now stocked in most local supermarkets and in some Asda stores in Britain. One of the country’s oldest family butchers - O’Flynn Meats in Waterford - won an award for is quality beef production. Bobby Flynn is the fourth generation and runs it with his four sons. Their cattle are mainly grass-fed and hang on site for up to 14 days.
The ‘Mystery’ Shopper The Pharmaceutical Society of Ireland (PSI) has carried out a total of 270 “mystery shopper” visits of pharmacies around the country to ensure that strict new restrictions on the sale of products containing codeine are being properly enforced. The visits, which typically involve individuals posing as customers looking for pain-relief products such as Nurofen Plus or Solpadeine, were conducted since the start of August when new guidelines for the sale and display of the products came into effect. But despite resentment among some people at being quizzed when they looked to purchase these overthe-counter drugs, the society said it had not received any formal complaints about the guidelines to date. The PSI, which is the regulator for pharmacies in Ireland, also carried out 112 more formal pharmacy inspections during that time. Under the new PSI rules, pharmacists have to ensure customers know how to use such medicines property. As a result, codeine medicines such as painkillers and cough bottles must only be supplied under the personal supervision of a pharmacist, who must advise customers that the products only be used when considered necessary and for the shortest time possible. Sales of codeine-based products had almost halved since the new rules took effect, as customers moved towards other types of pain relief.
“Evolution” not “Revolution”
Marc Bolland, chief executive of Marks & Spencer joined the company from the supermarket group Morrison’s six months ago and has been working on his strategy since. He recently unveiled, to the accompaniment of a 17 per cent increase in first-half profits to €404m, although like others, M&S warned on tougher times ahead. It was not the profits the market was interested in, however, but Bolland’s plan to take M&S forward and this involves a distinct unravelling of several of the strategic moves put in place during his predecessors’ regime. Careful to describe his vision for M&S as “evolution” rather than “revolution”, Bolland outlined what can best be described as a “back to basics” approach for the chain. In an admission that the bewildering proliferation of clothing brands has only served to confuse the customers, Bolland is axing the
Portfolio line launched by his predecessor Rose in 2008 and will instead concentrate on building the core M&S brand under a new “only at M&S” banner. A year ago, M&S departed from its long tradition of stocking only own-brand products in its food stores. In came 400 big brand names, ranging from Marmite to KitKat, PG Tips, Kellogg’s and Coca Cola, in a move Rose believed would encourage customers to use M&S for a full weekly shop rather than just to top up on luxury items. It was seen as a way to compete more effectively against Waitrose, which last year overtook M&S in market share. Now that move has been abandoned too, with the number of non-M&S brands on offer to be slashed by 75 per cent. A halt has also been called on M&S’s unsuccessful move into technology and electrical products, such as televisions. The space freed up as a result is to be returned to the
group’s traditional homewares departments. Bolland is backing his vision for the group with the promise of an extra £300m a year on capital spending over the next few years, with a target of adding between £1 billion and £1.5 bn to UK sales by 2014, taking the group total from £9.4 billion to £11.5 billion to £12.5 billion. By 2015, he wants 95 per cent of shoppers in the UK to be within half an hour’s drive from a full-sized M&S store and he wants those stores to be brighter and easier to navigate. He is keen to rescue overseas expansion, highlighting the opportunities in India and China, although it noted that sales in Ireland and Greece “continue to be impacted by the economic downturn”. The group is targeting overseas sales, excluding Ireland, of up to £1 billion.
November 2010 23
How ‘Irish Coffee’ was invented A small museum in the west of Ireland has received €180,000 in state funding to create a life-sized hologram installation depicting how Irish coffee was invented. The grant is the largest given under the Department of Tourism and Culture’s first cultural technology scheme. It is more than twice what the National Gallery of Ireland received, and 10 times the sums allocated to the Gate Theatre and Dublin City Council. Foynes Flying Boat Museum, which focuses on the area’s aviation history,
plans to project 3D footage of three actors at its site near the Shannon in Limerick. Margaret O’Shaughnessy, the director said it was a novel way of explaining the 1942 invention of Ireland’s most famous cocktail at Foynes, the stopover for transatlantic flights before the facility now known as Shannon airport started taking the planes in 1945. “One night a flight left for New York but the weather was too bad and the plane turned back,” she said. “It was
possibly some time in the middle of the night or early morning that a passenger came in asking for a very hot coffee and the airport’s chef Joe Sheridan put some Power’s whiskey in to warm it up.” The installation will depict Lal Kirwan, the ground hostess, showing an American passenger into the canteen and Sheridan making a coffee with whiskey and cream. The passenger asks if it’s a Brazilian coffee and Sheridan replies “it’s an Irish coffee”.
With market data revealing that over 70% of households in Ireland possess an open fire, the future bodes extremely well for solid fuels that concentrate on providing convenience and cleanliness, as well as possessing strong environmental credentials. The ignition category is doing particularly well, as AC Nielsen reported in September 2009 that it was worth a considerable €35 million and 2.2% growth year on year. Zip are currently the number one ignition brand, though there are other brands that are seeking to cut into their current share. The solid fuels category are also doing well within the larger fuel market, with certain brands seeing their fuel sales continue to grow year on year. Fire logs would appear to be the largest contributor to this growth, with the brand Homestead claiming that they account for 25% of the brand’s total fuel sales. Logs have grown 4% value year on year. A further testament to the fuel category’s current strong growth is the emphasis that manufacturers have put on NPD. This has led to brands expanding value ranges, so
that they can provide an alternative to private label variants while, at the same time, providing robust margin to retailers. Indeed, both Bord na Mona and Zip have launched, and will continue to launch new products on to the fuel market, and other brands will be expected to follow their lead within the next 12 months or more.
Certain things do change as time goes by though, and mobile heaters are beginning to represent an increasingly popular choice for consumers in the current economic climate, as ‘spot heating’ a room, as an alternative to relying on the general practice of central heating, is becoming more financially and environmentally friendly. In a market that will no doubt change as time goes on, and technology becomes more the prevalent, the following are currently making big noises in the ignition
The Instant Winter Fuel Range from
Full range of convenience fuel products Clean and convenient to use National Advertising and PR campaign Free merchandising Units available
BORD NA MONA
December. The campaign will run through the peak winter months until March 2011. For over 50 years, Bord na Mona Fuels has led the way in designing innovative and convenient 'real-life- fire solutions for busy Irish consumers. Innovation lies at the cor of all activity in Bord na Mona and in accordance with the organisations strategic business direction that promises a 'New Contract with Nature'. Clean, easy and convenient are the by-words for Bord na Mona's market-leading rang of solid fuel products and its new breakthrough FireMagic Fire Maker product is set to light the way in terms of real innovation in the ignition category. In addition to Mona Fire Pak and Firelog, there is a hugely popular line of eco-friendly fuels including Premium Wood Pellets, Bord na Mona Real Logs and Eco-Friendly Logs – all made from naturally renewable resources and fully CO2 neutral. HOMESTEAD The Homestead brand was first launched in 1986, which isn’t actually that long ago but, in a relatively short space of time, it has helped the firelighter range to become a stable product within the brands portfolio, generating a considerable amount of sales in this category.
Bord na Mona Fuels Ltd, the largest supplier of solid fuel in Ireland, recently launched 'FireMagic Fire Maker', a revolutionary innovative product that guarantees the fastest and fullest 'real'fire within minutes. Quicker to ignite and generating heat faster, FireMagic Fire Maker is Bord na Mona's biggest new product development in 2010, representing a total investment of over €1 million. The new 'light and leave' product is set
to be a real game-changer within the category, coming with a cast-iron guarantee – Fire Magic will light first time,E very, time and will create the intense glow of a full, real fire within 15 minutes of first lighting it. The product is the first of its kind in Ireland. The €1 million launch campaign includes above and below-the-line media, beginning with a national TV advertising burst at the end of
It has been estimated quite recently that Homestead fuels account for around 53% of the total fuels sales within the symbol groups and independent retailers, while also managing to rival the two leading brands in Ireland. Currently, over 70% of households across the country have an open fire which, unsurprisingly, makes the ignition sector one of the fastest growing sectors in the entire household category.
NEW Lighting your fire has ne ver b een ea asier! never been easier! Simple Sim mple p & quick q tto o use Justt add fuel to Jus to create creat beautiful e fire in minutes a beautiful full fire Light Ligh ht & LLeave eavve Clean, Clea an, odourless odourless and and eco eco friendly friendlly
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PRODUCTS consumer promotions. The winter of 2009 saw Zip successfully launch their Everyday Value Firelog, and in 2010 innovation was again high on the agenda, with the introduction of a new Guaranteed Irish made fire log called “Croi na Tine”, the only firelog made in Ireland, by the Irish, for the Irish!
HOMESTEAD After the launch of the Homestead brand in 1986, the firelighter range quickly became a stable product within the brands portfolio, generating considerable sales in this category. It is estimated that Homestead Fuels account for 53% of the total Fuels sales within Symbol Groups and Independent Retailers, while rivalling the two leading brands in Ireland.
year on year. Fire logs are largest contributor of this growth accounting for 25% of total Homestead fuel sales. Firelighter sales now account for 51% of the total fuel sales in Ireland, and Homestead Firelighters continue to grow in line with the market. Homestead Brand Manager, Janice Gibney added, “Our NEW fresh look fuels packaging has given the range a well deserved face lift, while maintaining the same great quality which is now even better value, coupled with some really strong activity for 2010 Homestead continues to Bring Value Home” ZIP
26.5% value of the Ignition category comes from firelogs – which is worth over €9m annually (based on AC Nielsen MAT Oct 10). Zip are the first large scale log producer in Ireland, with other logs being produced predominantly in Holland. The manufacturing line has been designed and built by technical experts at the factory in Castlebellingham, Co Louth. “Croi na Tine” which, in Irish, means “heart of a fire”, is an innovative, new formula fire log which is 100% natural, using coppiced willow, planted and harvested on Irish soil. This high performance log is extremely convenient as it is easy to light and burns with animated flames for well over two hours. It comes with the promise of ‘A real fire that lasts – in an instant”, which is certainly what consumers are looking for. As part of the initiative to drive consumer awareness, Zip unveiled a striking television advertisement, which has been on screen since November. The campaign features both the new log and the full firelighter range.
Over 70% of households have open fires and the ignition sector is one of the fastest growing sectors in the household category. The Homestead fuels range consists of two skus of firelighters, 30’s and 60’s and a 1.1kg Fire log which was introduced to the range in early 2005. Homestead Fuels continue to grow at
Red hot products Ireland’s R number one ignition brand is
Zip, pioneers of high performance kerosene firelighters and convenience fire logs, distributed nationally by Johnson Brothers Ltd.
Zip continues to drive category growth through innovation and exciting
Never one to rest on their laurels, Zip are also in running their biggest promotion ever, giving consumers the chance to win their mortgage paid (to the value of €250,000!), and many other great prizes include Stovax Stockton 5 stoves, coupons against further Zip purchases and other smaller cash prizes. This competition has been on-pack across the firelighter range since October, and is running throughout the 2010/2011 winter season.
AS ON SE TV EN
Red hot products Red hot profits Zip is not only the No.1 in the ignition category*, it is a Guaranteed Irish brand so consumers know it is a brand they can trust. It offers customers superior performance and value for money, making it a must-have item for every household.
*AC *A C Nielsen MAT MA AT ending July J July 11/10
From cosy fireplaces in winter to perfect barbecues in summer, consumers can rely on Zip firelighters any time of the year. Stock Zip and fire up your sales figures for 2011. To order contact Alison Oâ€™Grady at Johnson Brothers on 01 408 1555 or at Alison.Ogrady#jaymark.ie.
STROGS Strogs are a new straw briquette that have recently been released into the ignition category in Ireland, and it is an important brand as it is produced by a family run business. The producers of this unique new product are Agri BioFuel Ireland Ltd, a newly formed family business, based in North County Dublin. Those who are involved in the company have a background in farming, and have developed the first product of its kind available in the Irish market, with all the raw material that is needed for its construction sourced in the local areas of Garristown and Oldtown in Co. Dublin, from cereal growing farmers.
Once they have bought in the necessary straw, the company then makes the briquettes on its family farm. Therefore, Strogs can claim to be both 100% Irish made, as well as being 100% carbon neutral. The makers of Strogs believe that the new enterprise “will generate local jobs and benefit the local economy at a time when green energy and security is vital for the Irish economy going forward into the future”. The group has also remarked that the presence of clean and cheap straw “may become an alternative to expensive coal”. Furthermore, it is easy to calculate the costs of using straw as a fuel. Agri Bio-Fuel claims that the cost of obtaining the same amount of energy is, at least in the case of strawfiring, around 35% lower than coal-
firing. Thanks largely to the presence of modern technology, boilers nowadays using the straw and other bio-fuels can also reach efficiency of 80-90% at a very low gas emission. Strogs can be burned in a number of different places, most notably open fireplaces, ceramic stoves, culm stoves, kitchen stoves, biomass stoves and central heating boilers, provided they are recommended by the manufacturer of course. Their straw briquette offers plenty of advantages, such as providing an environmentally friendly fuel with no sparks. Strogs are also a long burning fuel which give excellent heat, and are suitable in open fires and solid fuels appliances where recommended.
Flogas has just celebrated an extremely successful year as the exclusive distributor for Superser mobile heaters in Ireland and the UK. Early snowfalls in November and December 2010 saw sales for Superser heaters soar as households looked for ways to keep warm without breaking the bank. Retailers looking to stock up on Superser mobile heaters for the winter months should contact Flogas on 0419831041 or www.flogas.ie Over the years, Flogas has noticed that, during an economic downturn, sales of Superser mobile heaters actually increase. Eoin O’Flynn of Flogas said, “This is because they provide the perfect solution for cost-conscious customers looking to control their heating bills. Superser mobile heaters are extremely useful as an instant, economic and portable way to ‘spot-heat’ a room quickly, as many customers find it far cheaper than turning on the central heating for an hour or two.” Superser heaters – choice of two models For homeowners who want instant heat that’s both stylish and useful, Flogas supplies two very contemporary looking and stylish mobile heaters, the Superser Radiant and Superser Catalytic. In particular, the Superser Catalytic burns without a flame and has lower touch temperatures, making them safer and it’s fitted with easy glide castors, which allows for trouble-free moving from room to room.
Stay ‘Super’ warm with and Superser 34 TGm
Light my Fire…. Very little beats a real coal fire in a home but increasingly fewer people want the hassle that comes with it, so gas fires have become a very fashionable lifestyle choice. The solution for those homeowners who are not on the natural gas grid is to have it piped in from their own back garden using stand-alone propane cylinders. Two are usually installed with an automatic changeover device so when one cylinder runs out, the customer can phone for a replacement cylinder. Flogas operates a nationwide network of distributors in strategic locations to ensure constant and speedy deliveries direct
to customers, whatever the weather. Propane direct dealers have been reporting strong annual sales growth and many of our customers want the benefits of gas in the home for fires and cooking but are either not on the natural gas grid or don’t want to go through the hassle of changing, so find propane cylinders in a discreet corner of their back garden a very practical alternative.” Something’s Cooking! Professional chefs always prefer to cook on gas and Flogas customer Neven Maguire of MacNean House & Restaurant, Blacklion in Cavan said “Many people
are opting for gas to cook up tasty dishes for family and friends as it offers clean and controllable heat.” Changes in eating habits and the trend towards stirfry dishes which work best when cooked on gas has meant that many people are looking at this option either for existing or new homes. A nationwide network of Flogas aftersales personnel are on 24-hour call for appliance repairs and maintenance. Flogas supports all its products and services and plans through innovative dealer promotions, excellent point of sale material, targeted advertising and public relations. For further information on Flogas
products and services, just contact 041-9831041 or visit www.flogas.ie Natural Gas for SMEs Flogas’s entry into the commercial and residential natural gas market several years ago has also been an unqualified success and it is currently offering small to medium businesses an 11% saving on the price charged by Bord Gais Energy Supply for its natural gas. Said Eoin, “Our guaranteed 11% price saving on the price currently charged by Bord Gais Energy Supply is the most competitive offer in the marketplace for small to medium business customers.”
November 2010 35
BREAKFAST CEREALS Breakfast cereals are consumed by most adults and children and have been a staple part of the Irish breakfast for a number of decades. As a result, the market is currently in a state of maturity, with activity and competition remaining fierce across the board. Manufacturers are desperate to hold onto (or expand) their market share, and have engaged in plenty of aboveand below-the-line promotion as a result. On the whole, the breakfast cereal category is a very steady one, but it has, like the entire food industry, been critcised over the nutritional levels of their products. Irish society is becoming more and more concerned with the issue of child obesity, which means that the salt, fat and sugar content of breakfast cereals have come under scrutiny. On top of this, manufacturers have also had to deal with falling levels of consumption among some key consumer groups. If you couple this with the current downturn in the Irish economy, it would be very easy to assume that the breakfast cereal category would currently be facing into a period of decline. However, this is not the case and, in fact, 2009 saw a substantial increase in the value of the market from the previous two years. In 2007, the value of the breakfast cereal market stood at â‚Ź109.5m. Two years down the road, and it has risen to â‚Ź114.3m, which gives it an average annual growth of 2%. Even though the consumption levels among certain groups is off, overall it is quite healthy, with 36 TGm
breakfast consumption having grown by 1.5% over the past year. This tells us that there isn't too much wrong with the market, and the task of winning back those who may have lost interest in breakfast cereals isn't as daunting as it may seem from the outside. It appears that the cereal manufacturers are on the right track at the minute, with the recession providing opportunities for producers of breakfast products. Consumers are trading up in the breakfast category with the home breakfast market in the UK performing very well in particular. Convenience and health are key trends for the sector, and this has seen up to 16 billion occasions for eating breakfast cereals in the United Kingdom. This is something that the Irish market would do well to heed, as it could make breakfast cereals an even more powerful commodity than it already is.
Cereals feature in 60% of all breakfast meals and sales rose by 2.8% in volume and 5.5% in value last year. With 32% of all sliced bread being consumed in the morning as toast, this is the largest bread consumption occasion and represents a key opportunity for bakery companies to increase sales. Category research highlights a demand for healthier breakfast options and innovation in the sector focussing on health with ingredients such as wholegrain, vitamins, minerals and fibre proving popular choices, presenting opportunities for bakery and cereal manufacturers. With Cereals proving to be so popular, it is inevitable that certain brands would dominate over others in terms of the overall market share.
K being probably the most popular of the ones that they currently in stock. They also house cereals like All-Bran, Apple Jacks, Frosted Flakes & Mueslix, as well as selling Beverages, Cookies, Crackers, Snacks & Frozen Breakfasts amongst other items. WEETABIX
Considering the variety of products that Kelloggs have available to them, it is quite commendable that Weetabix have managed to secure a 16% share of the breakfast cereal market. This shows us that the UK-based company is held in
With 44% of the market share, Kelloggs are, without a doubt, the top dogs in the Irish Breakfast Cereals Market. Founded in 1906 by Will Keith Kellogg, the company has its worldwide headquarters in Michigan, USA, and a current global revenue of US$12.6 billion. Their European Headquarters are based in Swords, Co. Dublin, which serves as a major boost to the Irish economy to have such a large operation on these shores. It certainly has the desired impact on the market, as the company tends to be worth up to â‚Ź220 million in value each year. They have a vast number of products in their range, with Corn Flakes, Rice Krispies and Special
good esteem in Ireland, and can be found in a number of households across the country. It helps that there is plenty of nutrition in their products, and with the family-friendly packaging that is available, it is more than ideal for a busy breakfast table on a weekday morning. It can be easily dissolved and broken up into smaller pieces, which means that (along with the accompaniment of warm milk) it can easily be eaten by toddlers as well as young children.
In this time of uncertainty, there is always room for Independentlylabelled products to make their mark. Consumer boredom starts to kick in as people start to grow tired of spending money on the same brand over and over again. Therefore, this has seen a rise in private label brands in recent times, with the breakfast cereal being an especially advantageous sector in this regard. Recent figures have shown that private label brands have a 13% control of the market share, which puts it within touching distance of the popular Weetabix. For the record, private label brands are typically those manufactured or provided by one company for offer under another company's brand. Companies in Ireland who tend to offer their own-labelled brands include Tesco, Dunnes Stores, Centra, Aldi & Lidl. They offer a cheaper alternative to brands/products that are already well-established, but may not be easily affordable for all consumers. Products like Orange Juice, CocaCola and Tea Bags are sold as private label brands, and usually enjoy some pretty decent sales at peak times, as people feel that they will get good value from their purchase.
November 2010 37
BISCUITS & CAKES producers/manufacturers within the biscuit category have had to rethink their strategy when it comes to promoting their various products. The trend towards being healthy is certainly one that will appeal to people, especially a younger demographic, so this had led to the vast majority of NPD (new product development) and market campaigns focusing on the message of health and indulgence to the extent that they are now both subsectors in their own right.
As one might expect, the effects of the downturn, as well as the overwhelming desire for consumers to change their eating habit so that they can enjoy a healthier lifestyle, has meant that the biscuit industry has had to deal with a significant drop in their sales volume. However, before one tries to dissect why the Biscuit market has fallen off in the last couple of years, it should be pointed out just how strong it was at the turn of the century. For instance, in 2002 alone, the market grew in value by an impressive 13.7%. The following year, it was estimated that the biscuit category in Ireland was worth up to â‚Ź290m. They have also been regarded in the past as being the third largest grocery category. 38 TGm
This makes it extremely difficult, therefore, to keep the volume of sales going at the same rate as it did before, and plenty of hard work is needed to restore it to the prosperity of the past. It would be unfair to put this sales drop down to just the economic situation in Ireland though, as this merely helped the compound the situation. According to the last report that was released, the value of the Irish Biscuit Market had fallen to â‚Ź240m (a rather substantial fall off from seven years ago), with a total volume of 35 million kilos. Again, this volume level is somewhat worrying for those in the industry, as the annual market sales volume was 40.1 million kilos just a few short years ago. All this has meant that
This is a certainly a sensible thing to do and, as time goes by, will help to bring new customers, as well as re-igniting some of those who may have lost interest in their products. However, it is unlikely to happen over night, and it won't be easy for the biscuit industry to convince health-conscious consumers to spend their hardearned money on their various products. Chocolate Biscuits are said to make up 25% of the output in the biscuit category, which may put off those interested in maintaining their health and well-being, as they might feel that the chocolateflavour will disrupt their eating habit in a negative way. There are a number of biscuits available that are classified as 'gluten-free' though, and these are definitely increasing in sales and popularity. In terms of the major players in the Irish Biscuit Market, there are a few brands that tend to enjoy a major share of the market overall.
BISCUITS & CAKES concern about their future as there has been recent speculation that Danone will sell Irish Biscuits to international private equity group Hicks, Muse, Tate & Furst.
Manufactured by Irish Biscuits from its base in Tallaght, West Dublin, Jacobs is by far the most dominant biscuit brand in Ireland, with an estimated 45% share of the market, putting them ahead of their nearest rivals, McVitie. Irish Biscuits are owned by French company Groupe Danone, and are thought to generate sales in excess of £100m annually. In 1998, the company earned operating profits of £5.1m, on sales of £92.8m, with pre-tax profits reaching £2.1m. This shows that Irish Biscuits have managed to maintain steady sales during difficult times, and as Jacobs are such a strong source of their output, it tells us a lot about their endurance levels. Jacobs produce a number of household brand names such as
Furthermore, there has been talk that Hicks Muse are in talks to acquire Jacobs, which would also incorporate the Club Milk snacks. As with any potential acquisition, it is hard to gauge how it will turn out for the various parties involved, but it is understood that if a deal is done, it will not involve the production of cream crackers, which will at least ensure that Jacobs don't lose total control of their operations. MCVITIE’S
Fig Rolls, Mikado and Kimberley, and they also claim to be the originator of the savoury cream cracker. However, there is a slight
Though not as dominant in the market as Jacobs, McVitie's does nonetheless enjoy a strong presence in the Irish market. It has a number of biscuit & cake ranges, which can be found in all good stores across the country. Amongst their biscuit ranges are Digestives, Ginger Nuts, Hob Nobs, Rich Tea, Penguin, Gold Bar and All Butter Shortbread. They also sell cakes like Golden Syrup Cake, Jaffa Cakes, Jamaica Ginger Cake & Lemon Cake. Owned by British multinational firm United Biscuits, McVities has an Irish base on the Naas Road. It has a market share of around 19%, putting it firmly in second place behind Jacobs in the Irish Biscuit Market.
In recent times, McVitie's have launched their new Teacakes range
which boasts 40% milk chocolate, yet doesn't come with a premium price tag and contains only 75 kcals each. The delicious new product is expected to mix up the relatively stable Irish teacake market which is currently worth â‚Ź2.5 million. CADBURYS
Cadbury's is another brand/ manufacturer that enjoys a good presence in the Irish Biscuit Market. They are seen as the leading confectionary manufacturer in Ireland with a share in over 50% of the chocolate market.
excellent sales and successful innovation. Major product innovations in the year included Wispa Gold, Giant Buttons and Bitesize Clusters, Peanuts and Raisins. In Ireland, Cadbury finished the year with strong share gains (+210bps) and also with their market share at a record high of 13%, up two per cent from the previous year.
When you take into consideration that Irish consumers spend over â‚Ź325 million on confectionary products each year (and consumption continues to grow by around 3% each year), it is clear to see just how well Cadbury's are doing. This is further evidenced by Cadbury's performance last year, during a very difficult economic period in both Britain & Ireland. Revenue, both here and across the water has risen by 7%, driven by November 2010 41
OWN-LABEL Own-label accounts for one third of total food retail sales. It is estimated that sales of own-label and privatelabel products account for around 35% of all grocery purchases by Irish consumers. •However, own-label’s share of total sales varies quite significantly depending on the outlet formatthey are sold in. •For instance, while own-label or private-label product sales account for the vast majority of sales through discounters, they account for only around 20% of sales through convenience stores andaround 40% of total sales by major supermarket chains. •Despite the stronger than anticipated growth in own-label sales in Ireland, own-label’s share o fthe Irish market is still relatively low by international standards. •For example, according to the Private Label Manufacturers Association (PLMA), own-label’sshare of the UK grocery market stood at around 47% of total volume and 43% of total spend in 2009. All-Ireland own-label sales valued at €5.2 billion in 2010 On the basis of a 35% market share, it is estimated that own-label sales in Ireland in 2010 will be in the region of €5.2 billion – with the RoI market accounting for €3.6 billion and the NI market accounting for €1.5 billion (£1.2 billion). •This is based on Mintel’s valuation of the total food retail market in Ireland at €14.8 billion in 2010, €10.4 billion of which is attributable to the RoI market and €4.4 billion (£3.7 billion) to the NI market. •Mintel forecasts that own-label sales should reach around €3.8 billion in RoI and €1.6 billion (£1.4 billion) in NI in 2014. Demographic changes challenge own-label growth. Both in NI and RoI, projected changes in the make-up of respective populations suggest some
challenges for future growth in sales of own-label products in the years to come. •For instance, population projections both for NI and RoI indicate a growing proportional importance of men over women in the years ahead, with growth in the number of men projected to outpace that of women until 2020, at least. •According to TGI (2009) data,
men are somewhat less favourably disposed towards own-label brands than women, in that they are more likely to believe that ‘well-known brands are better than a shop’s own brand’. •Similarly, in both NI and RoI, the coming decade will see a quite dramatic shift in the make-up of the population, with older consumers representing a higher percentage of the total population.
Market in Brief Brand Loyalty in Food and Drink and Irish Consumers' •In both instances, the strongest growth will be in the 55+ cohort – which will grow by 27% in NI and by 31% in RoI during the period 20082020. •This presents a challenge to ownlabel brands because it is, according to TGI data, older consumers who are most inclined to agree that ‘well-known
brands are better than a shop’s own brand’. Shopping and spending altered by recession Occasionally out of choice, but mostly out of necessity – due to mounting pressure on incomes and reduced confidence – a significant number of Irish consumers have made adjustments to their shopping behaviour and have begun to more
closely scrutinise their spending. •On the issue of how the recession has affected their lives, more consumers (43% in RoI, 36% in NI) cite ‘shopping habits’ than anything else. (Source: Toluna, 2010). •In terms of how the recession has forced consumers to reassess their lifestyles, more consumers responded that the recession has forced them to ‘be more careful with how I spend my money’ than anything else.
November 2010 43
OWN-LABEL label food and drink products would appear to be strong. •Despite the undeniably increased price-consciousness on the part of consumers, it remains ‘value for money’ that Irish consumers deem most important when grocery shopping, according to TGI (2009) data.
•Feeling the effects of the recession when shopping – and having to allocate spending more carefully – has led increasing numbers of Irish consumers to cheaper, better-value alternatives to premium-quality and established brands. Own-label food and drink brands have been major beneficiaries of this shift. Special offers and low prices on consumers’ minds In terms of how exactly consumers’ shopping habits have changed as a result of the recession, it appears that consumers are more price-focused, more methodical in their planning and budgeting and more inclined to have a keen eye for special offers and promotions. •In particular, TGI (2009) data show that almost two thirds of all Irish consumers are drawn to special offers, while almost as many decide on purchases before doing the shopping (perhaps to protect against unwanted or unaffordable impulse purchases).
•With around half of all consumers claiming to always look for the lowest possible prices (compared to just 43% in both cases in 2006), the opportunities to increase sales of own-
Food and drink prices: Rising in NI, falling in RoI As of May 2010 (the latest available data), annual price inflation for food and non-alcoholic drinks is 1.8% in the UK (including NI) and 6.3% in RoI. •Despite this increase in food prices in NI, the rate of increase nonetheless lags that of overall inflation (3.4% for the 12 months ending May 2010).
Market in Brief Brand Loyalty in Food and Drink and Irish Consumers' •However, given that NI households spend more on food than the average UK household, any increase in food prices inevitably hits NI consumers hardest. •Despite the significant decline in food prices in RoI, food prices there are still far higher than average food prices in the European Union – almost 30% above the EU27 average. Half of consumers reconsidering brand value In all, 46% of RoI consumers and
39% of NI consumers are now considering ‘whether or not branded goods are worth paying more for’, according to Toluna data. •Certain demographics, such as women and ABC1s are particularly likely to be reconsidering brand value. •While it is undeniable that ownlabel products have emerged as serious contenders to brands – in some sectors more than others – the consumer data do indicate that brands do still retain importance and relevance for many consumers. •A small majority of consumers (52%) only buy certain types of ownlabel products, which suggests that they strongly prefer brands for some product types. •A smaller proportion of consumers – around four in ten – claim to be entirely unmoved by whether a product is branded or not, claiming that ‘branding doesn’t matter to me as long as I get good value for money’. This suggests that, for 64% of NI consumers and 58% of RoI consumers, brands are at least of some importance. •However, any suggestion that branded products are of higher quality to own-label products is strongly rejected by Irish consumers, with fewer than 7% agreeing that own-label are inferior to branded products.
November 2010 45
OWN-LABEL Opportunity to grow own-label alcohol sales, but stigma persists One area in which own-label product ranges have had comparatively little impact is alcoholic drinks. According to Mintel’s consumer data (Toluna, May 2010), just 23% of NI and 19% of RoI consumers have purchased own-label alcohol in the last 12 months. •The alcoholic beverage sector is one in which there is a high level of brand presence, alongside heavy investment in innovation, advertising and promotion, all of which represent a significant barrier to entry for new brands (including own-label). •Moreover, Mintel’s consumer data suggest that there may remain an element of stigma associated with nonbranded alcoholic drinks. •However, despite this, there do appear to be opportunities that ownlabel alcohol products can exploit. •Entrenched opposition to ownlabel alcoholic products among Irish consumers is minimal, with just 18% of RoI and 13% of NI consumers agreeing with the statement ‘I would never think of trying own-label alcohol’
(Toluna, May 2010). Market in Brief Brand Loyalty in Food and Drink and Irish Consumers' Tesco the dominant retailer across Ireland Tesco is the dominant retailer across Ireland, with more than three quarters of consumers shopping there regularly (at least once a month), according to Toluna (2010) data. •Aside from Tesco, only Lidl commands a high level of ‘regular’ custom from both NI and RoI consumers, while Marks & Spencer, Supervalu and Dunnes – despite all having stores both in NI and RoI – attract low levels of consumers in one or both markets. •All other retailers are either entirely or primarily concentrated in one market or the other, which obviously limits their reach in their non-market (either NI or RoI). •All of the retailers that Irish consumers shop in ‘regularly’ offer ranges of own-label products, ensuring a high level of availability of such products for all consumers.
Fruit and vegetables top ownlabel purchases •More than two thirds of Irish consumers (67% in NI, 71% in RoI) have purchased own-label fresh fruit and vegetables in the last 12 months, making these items the most popular own-label purchases among both sets of consumers. •This is due to the highlycommoditised nature of such products. Paying a price premium for a highly-commoditised product is difficult for consumers to justify to themselves – there is practically no processing, added value or added convenience for the consumer. •While dairy products are the fourth most-commonly purchased ownlabel products among NI consumers (54% of whom have bought own-label dairy products in the last 12 months), these products rank second among the most-commonly purchased own-label items among RoI consumers (with 61% having purchased own-label dairy products in the last 12 months).
•The popularity of certain other products – in particular, tinned/jars of food and frozen foods – as own-label purchases stems from them being price- as opposed to quality-driven items in the eyes of consumers. • Further down the overall ranking of the own-label products bought by Irish consumers tend to be those with a high level of added value – such as ready meals, bread products and meat/fish/poultry products (particularly likely where these products are cooked or prepared). •For instance, compared to ownlabel fresh fruit and vegetables, which are purchased by well over two thirds of consumers, the above-mentioned products are bought by in or around 40% of consumers. Although consumers have a relatively high tendency to purchase own-label varieties of everyday treats (such as biscuits), those products typically purchased for special occasions or infrequent/ irregular treats are less likely to be own-label.
November 2010 47
Own-label products now mass market and mainstream With more than two-thirds of Irish consumers buying standard own-label food and drink products, and significant minorities buying other price-bracket ranges (value and premium) and other segments (whether fair-trade, organic or ‘betterfor-you’), it is apparent that own-label products have been embraced by the mass market. Market in Brief Brand Loyalty in Food and Drink and Irish Consumers' •According to consumer data commissioned by Mintel for the purposes of this report, just 12% of RoI and 8% of NI consumers ‘do not buy own-label products’ at all. That 88% of RoI and 92% of NI consumers do – occasionally, at least – purchase own-label food and drink products represents an overwhelming endorsement of own-label by Irish consumers. (Source: Toluna, 2010).
•Although more consumers choose own-label products in accordance with price (whether premium, standard or value), even the more niche categories attract a high level of purchasing. For example, more than a quarter of all Irish consumers have purchased ownlabel fair-trade products, and around one in eight has purchased organic own-label products. Overall, view of own-label is positive As part of the exclusive online consumer research into Irish consumers’ shopping habits and attitudes towards own-label products, consumers were asked to identify those words/terms that they associated with own-label products •In overall terms, Irish consumers’ perception of own-label products is a favourable one. The average response rates to ‘positive’ terms are far higher than to the various ‘negative’ terms, among both NI and RoI consumers. •While RoI consumers are three times as likely to associate own-label
products with a positive word/term than with a negative word/term, while NI consumers are four times more likely to do so. •However, while consumers clearly identify own-label products with being cheap and offering good value, they do not associate own-label products with being anything else: they have no distinct characteristics or personality to them
KNORR CHEF OF THE YEAR
A trip to NOMA in Copenhagen, recently voted The Best Restaurant in the World, and a coveted title of ‘Best Student Chef in Ireland’ are up for grabs for ambitious young chefs in this year’s Knorr Student Chef of the Year competition, launched today in Limerick IT Department of Culinary Arts. Now in its 14th year, Knorr Student Chef is the biggest competition of its kind in Ireland and has become a respected and keenly fought contest in the Irish Culinary world. Established by Unilever Foodsolutions in 1996, the competition has put many former winners on the path to professional success and aims to discover the most talented and creative chefs coming through the ranks of Ireland’s 12 catering colleges. This year’s high-profile judging panel includes David McCann, the award-winning Head Chef at the five star Dromoland Castle, Mark McCarthy, Executive Head Chef of Unilever Food Solutions and Joe Mulcahy, Course Director at Limerick IT School of Culinary Arts.
The theme of this year’s contest is International Culinary Classics, a brief that will give the students huge choice and test their knowledge and understanding of classic dishes from all over the world. Students must produce a starter and main course and each entry will be evaluated on creativity, practicality and effective use of the Knorr Puréed herbs range of products, as well as workmanship, composition and presentation. Commenting at the launch, Executive Chef at Unilever Foodsolutions, Mark McCarthy said, “Knorr Student Chef is a brilliant opportunity for talented amateur cooks to showcase their cooking skills and demonstrate their innate culinary creativity in front of leading food professionals. Irish diners are becoming much more adventurous in their food tastes, and with the growth of international cuisine in the Irish restaurant scene, this year’s challenge is particularly pertinent and I’m excited about seeing the diversity and skills on show by our next generation of master chefs.” Guest judge, David McCann of
(l-r): David McCann , Exec Chef Dromoland Cas Dromoland Castle Hotel added, “With an increase in the number of people applying for chef places in catering
David McCann, Exec Chef Dromoland Castle; Jenny Roberts , LIT Student; Kevin Boyle, LIT Student; Joe Mulcahy, Course Director LIT Culinary Arts and Mark McCarthy , Exec Chef Unilever Foodsolutions
colleges across Ireland, I expect the calibre of entries and competition to be at an all-time high this year. As a judge, I am looking for the student that demonstrates a genuine love for food and has an informed understanding of
the provenance of ingredients. Creativity is also hugely important, and I think the international theme this year gives great scope for showing real imagination and culinary flair.” Previous winners have gone on to
tle; Mark McCarthy , Exec Chef Unilever Foodsolutions and Jenny Roberts , LIT Student
enjoy exciting careers in Ireland’s food industry and the opportunity is there for students to follow in their footsteps. Last year’s winner, Billy Garvey from Galway has just won a coveted place in the kitchen of No. 8 Bar and Restaurant in Galway, working under acclaimed chef Jess Murphy. Commenting on his win last year, Billy said, “I’ve had an amazing year since becoming Knorr Student Chef of the Year - it was a massive boost and helped me get a fantastic job straight out of college in Bar 8, a world-class restaurant in Galway. The competition is a huge test of culinary skill and knowledge, but as a student it’s important to have something to reach for. Knorr Student Chef has changed my life, and have given me the motivation to keep going and be the best chef I can be.” As well as the title of Knorr Best Chef, the overall winner will win a trip to Copenhagen to taste the food of René Redzepi in NOMA, voted Best Chef and Best Restaurant in the World respectively. Runners up in the competition will win a set of classic Wüsthof kitchen knives, a world famous brand of chefs’ knives used by top chefs in professional kitchens.
(l-r):Mark McCarthy , Exec Chef Unilever Foodsolutions; Aoife McGuigan , Marketing Manager Unilever Foodsolutions; Jenny Roberts , LIT Student; Kevin Boyle , LIT Student and David McCann , Exec Chef Dromoland Castle
November 2010 51
When it comes to your family,
When shopping for your family, itâ€™s natural to want to choose the best for them. The Bord Bia Quality Mark ensures you know where your food has come from and that it has been produced with pride and care. So, you and your family can simply enjoy it.
Always choose the Quality Mark