Record Performance Demonstrates Potential to Exploit Emerging Trends
Over Euro750 million added to export sales
All major categories record gains in 2006
Beef exports to Continental EU reach all time high, growing by 20%
Beverage exports display accelerated growth
Dairy exports boosted by increased value added sales
Wednesday, January 10th, 2007.
Irish food and drink exports recorded a strong performance in 2006 delivering double digit growth to exceed Euro 8bn for the first time according to Bord Bia's Export Performance & Prospects 2006 / 2007 report, launched today. The value of exports is estimated to have increased by Euro756 million, or 10%, to Euro8.1bn significantly outperforming growth in total merchandise exports. The jump in exports was achieved despite a strong euro exchange rate against the US dollar and ongoing competitive pressures in major export markets.
The agriculture and food industry remains Ireland's largest indigenous sector providing total employment in the order of 155,000. It accounts for over half of Ireland's indigenous exports and represents almost one tenth of the Irish economy. Total turnover of Irish food and drink is estimated at almost Euro20bn for 2006 with a relatively low import content.
Announcing the results Aidan Cotter, Chief Executive, Bord Bia commented; "Irish food and drink exporters delivered an exceptional performance in what remains a very competitive market environment. The scale of the achievement, with all major categories contributing to export growth, highlights the capacity of the industry to meet changing consumer needs and its potential to remain a significant driver of growth in the Irish economy."
There are a number of notable features to this consistent, all-round performance. Firstly, the importance of brands in underpinning industry success is reflected by the fact that the top two performing grocery brands in the British retail sector last year were Irish. This is a particularly encouraging development for some 120 Irish food and drink companies, who through their membership of Bord Bia's Brand Forum are demonstrating their commitment to pursuing this route to market. Secondly, the success of the beef sector in penetrating Continental EU markets with a further growth of 20%, which represents the fifth successive year of increased exports, demonstrates the potential offered by mainland Europe. Thirdly, with exports to Asia expected to exceed Euro300 million for the first time, driven by growth in exports to the China market, the industry is clearly on track to achieve a doubling of exports, as set out in the government's strategy for the region, by 2009.
The prospects for further growth are encouraging. "The beef industry is now well placed to capitalise on Europe's growing deficit, which Bord Bia forecasts will treble to at least one million tonnes by 2015", according to Aidan Cotter. Also, the dairy sector, where exports grew by 6% and which accounts for a quarter of the total, is set to benefit from its role as a platform for functional foods. A major factor in its success is the infant formula category, driven by the high quality of Irish Dairy ingredients whose expanding exports to the Middle East and Asia were a significant factor in growing sales in 2006.
Meanwhile, the success of cider exports to the UK demonstrates the continued potential of the strongly branded drinks sector to diversify into new markets and expand internationally. The growth in beverage exports of 26%, adding Euro284 million to export values, was also spurred on by growth in the liqueur and spirits categories where the rapidly developing Asian market promises further new opportunities.
The industry's ability to compete and expand internationally, particularly in the prepared food sector relies partly on its capacity to sustain a strong home base. "Over the last year, the trading environment on the domestic market would appear to have deteriorated compared with export markets", according to Aidan Cotter. "Seventy per cent of respondents to a December 2006 survey by Bord Bia cited price deflation in the Irish market as having a "high" or "very high" impact on their business in 2007, as against 54% in relation to the UK market, Similarly, the "strength/intensity of competition" was expected to have a "high" or "very high" impact by 77% of respondents in relation to the Irish market in contrast to just 54% in relation to the UK market".
The Irish food industry has been facing a sustained price-cost squeeze on the Irish market for almost five years now, as higher costs, particularly of energy, have combined with a failure to recover these costs through price increases. The survey results reflect the fact that, while there has been some easing of price pressures in the UK market, the opposite has been the case in Ireland. The sector's capacity to successfully address this challenge will be critical to its future development.
Commenting on the prospects overall for the coming year Aidan Cotter added "The challenge facing Irish food and drink exporters in 2007 will be to continue to invest in the development of new products and routes to market which will allow them to compete successfully in what are likely to remain difficult trading conditions. Bord Bia is committed to working with Irish food and drink companies to build differentiated positions in the marketplace and exploit the opportunities that are part of a dynamic and fast-changing market."
"Indeed, Bord Bia's survey of Irish food and drink companies reveals an increasing focus on innovation, with 30% of sales last year generated by new or reformulated products, up from 27% in 2005. Moreover, 68% of companies have indicated they will develop new products over the next 12 months, with 49% saying they will reformulate existing product lines. And the prime motivator for both new products and reformulations, cited by 74% of respondents, is based on nutrition, health and well-being. Other motivators include a focus on more natural ingredients, premiumisation, diet and, not surprisingly, convenience", he concluded. Bord Bia's initiatives for 2007 will include:
Marketplace, a showcase for Irish food and drink companies which will be attended by 200 plus trade buyers from around the world;
Bloom, the first major garden show for consumers in Ireland taking place in Dublin's Phoenix Park in June;
A Centre of Excellence, a resource to provide best practice for small food and drink firms to develop business;
The Food & Drink Industry Awards will acknowledge particular achievements by food and drink companies;
The Brand Forum, a source of marketing insights and best practice for companies wishing to pursue the branded route to market; An increasing focus on Market Knowledge, expanding the portfolio of analytical reports and leading edge market intelligence;
Foresight4FOOD, an expanding programme to assist and stimulate the development of innovative food and drink products;
Food Dudes, national roll-out of a programme targeted at primary school children to increase consumption of fresh produce; Feile Bia, a programme designed to allow foodservice establishments with credible traceability schemes differentiate themselves to consumers;
European Beef Promotion, the final phase of the current three year programme to increase consumer loyalty of Irish Beef across European markets.
Garden Centre Quality Awards, designed to raise the quality of presentation in Irish Garden Centres of ornamental horticulture.
Bord Bia will also be conducting marketing and promotion campaigns in all of our key export markets, participating in all of the major international food and drink exhibitions, and working with individual Irish food and drink exporting companies to maximise their success in overseas markets in 2007.
