The flavour of success

Alison Healy, The Irish Times, 26th March 2013

The Food Harvest export target of €12bn by 2020 is beginning to look almost easy

Once upon a time, it gave people a small thrill to find Kerrygold butter on the shelf of a supermarket when they travelled abroad. Now, we would be surprised if we didn’t find a range of Irish products on foreign supermarket shelves.

Keogh’s crisps can now be bought in Australia, the US and Dubai. You’re as likely to find Cashel Blue cheese in New York as you are in Newbridge.

If you feel like one of Glenisk’s yogurts or dairy products, try Dubai, Portugal or Spain. Donegal-based Irish Premium Oysters are firmly established in Tokyo. And most impressively, Broderick’s, the artisan chocolate bar and cake makers, are now selling chocolate to the Swiss. And to the Icelanders, Danish, Russian and Japanese. The list goes on.

The success of these products abroad helps to explain why the value of Irish food and drink tipped €10 billion last year. The Food Harvest target of reaching €12 billion by 2020 is beginning to look almost easy, particularly when the growing global population is considered. It increased by 80 million in the past year and, according to the OECD, three billion people in places such as India, Africa and China will join the middle classes over this and the next decade.

Trade missions to far-flung places are no longer just about the meat and dairy sector. Now they are selling our confectionery, snacks, desserts, jams and relishes.

The Gulfood exhibition which was recently held in Dubai saw the biggest ever representation of Irish food when 17 firms travelled to the fair. It was a new experience for Keogh’s crisps, which was only set up in 2011 and its managing director Tom Keogh says it was very encouraging to see how Irish food was viewed in the Middle East. “There was a very, very, good reaction to Irish companies. There were countries from all over the world exhibiting their wares,” he recalls, “but when you went around for a look, there was no comparison when it came to the quality of the products on offer. You could see people’s faces light up when they tasted our crisps.”

Niche products

While niche products are making great strides, the meat and dairy sectors still account for our most valuable exports by far. Meat and livestock exports accounted for a third of food and drink exports last year and were worth €3.3 billion, according to Bord Bia. And dairy products exceeded the €3 billion mark for the first time. Milk quotas will be removed next year, leaving Irish farmers free to produce as much milk as they like for the first time in 30 years and the sector has major plans for expansion. Milk volumes are expected to increase by 50 per cent by 2020.

Bord Bia’s chief executive Aidan Cotter says there has been very strong demand for Irish dairy products in China. “That looks set to continue,” he says. Food and drink exports to China increased by more than 40 per cent to reach €390 million last year and it’s now our second-largest dairy market and third-largest pork market.

Japan opened its beef market to Ireland in December and that will begin to pay dividends this year. Offal is sold for a higher price in Japan than in Ireland so it could be a valuable market. “That is exactly the kind of development that our beef industry needs in order to maximise returns,” says Cotter. He is also optimistic that the reopening of the US market to Irish beef will allow us to tap into a niche market for high-quality beef, produced from grass.

However, while these new markets are exciting, they pose logistical challenges. It takes 42 days to ship product to China, for example. It takes an hour to fly to Britain and the United Kingdom is still our most important market, accounting for 42 per cent of Irish food and drink exports.

And it could become even more important with the news that its population is due to grow by 10 million people in the next 25 years. This is in contrast to the rest of Europe where the population is expected to peak in 2020 before declining.

There is a growing optimism in the UK about the economy too. Recent research by Bord Bia found that 38 per cent of UK consumers feel the economy is going well – up from 13 per cent since last year.

“Certainly there are grounds for optimism for the UK market,” says Cotter.

Drinks sector

That market accounts for almost a third of our beverage exports. But, overall, beverage exports fell slightly last year to €1.25 billion. Whiskey led the way, with double-digit growth, and helping to offset declines in cider, beer and cream liqueurs. Whiskey sales were particularly strong in the US, followed by Europe, Russia, Asia and Australia. That global love affair with Irish whiskey is expected to continue this year.

It seems the biggest challenge facing the food and drink sector lies in managing all this expansion while protecting the environment. Some 300 companies have now signed up for Bord Bia’s Origin Green sustainability programme which involves meeting a set of environmental standards. The target of having Origin Green-approved companies producing 75 per cent of our food and drink by the end of this year will be comfortably met, according to Bord Bia.

All of which gives our food and drink sector the undeniable flavour of success. “Not long ago, when Irish food was mentioned, you thought of very few brands – Guinness, Kerrygold – then you were clutching at straws,” Tom Keogh says. “Now we are seen as the green island. We have an identity as producers of premium products. And if we get even a small percentage of that premium market abroad, it would be enough to keep us going day and night.”
Challenges for the sector
The food and drink sector is not without its challenges. Commodity prices can swing either way overnight and lots of volatility is predicted for the dairy sector when quotas are abolished. StubbsGazette’s 2014 Food and Drinks Industry Report highlights several other challenges facing the sector. “Climate change may be the wild card,” it says, noting that coping with the effects of climate change has become a reality.
“Indeed the food and drinks industry doesn’t have absolutely everything going for it. The banking crisis and associated credit crunch has limited funding to primary producers,” it says, but adds that larger companies are considered well funded to continue on their paths to growth. “On the retail side price pressure is relentless with private label brands providing an increasing challenge to brands as customers modify their buying behaviours in the age of austerity,” the report adds.
“There is also the factor of creeping bureaucracy with quality control and requirements on traceability adding sizably to the cost base.” But it adds that these costs could be justified when the potential cost of a food scare is considered.
“The effects of the foot and mouth outbreak of 2001, to the pork contamination crisis of 2008 to the horse meat adulteration scandal of last year, show the fragility of the reputation of the food and drinks industry,” it says. “More than most it is susceptible to catastrophic setbacks.”

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