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Food Processing (Industrial Report) - Ireland - January 2009

The Irish food processing industry is operating under extremely tight market conditions. It is acutely exposed to a combination of rising energy costs, high food inflation, the strong Euro/weak Sterling, expensive credit and weakening consumer demand. Exports are paramount to the Irish food processing industry which will be negatively affected, particularly as key trading partners are also facing recession.

While the market is currently facing difficult conditions, the long term indicators are positive. Demand for exported Irish produce has been growing in recent years and looks likely to continue.

This report investigates the key factors influencing the food processing industry and examines the potential for opportunities therein.

Key themes of the report:

  • Food processors are working under extremely tight market conditions battling between a fragmented supply chain and increasingly concentrated buying power.

  • Rising energy costs are squeezing already tight margins within the food processing industry. Energy can represent up to 20% of processors’ costs according to industry sources.

  • Health, traceability, labelling, and waste initiatives are helping to build consumer confidence in the food industry.

  • The industry’s long-term sustainability relies on a successful exporting strategy – so far, the signs are good.

  • Recession diminishes demand for premium Irish products as developing countries produce food at considerably cheaper prices.

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Table of contents

  1. Issues in the Market

      • Key themes of the report
        • Definition
          • Abbreviations
          • Insights and Opportunities

            • Opportunities for sales in the Far East
              • High energy costs stimulate market for energy from waste
                • Exchange rate
                  • Acquisitions and mergers
                  • Market in Brief

                    • IoI value of processed foods worth €12.4 billion
                      • Exports driving growth in the Industry
                        • Recession creates a difficult market for processors
                          • Processors hit by soaring energy bills
                            • Powerful buyer market leaves processing industry in a weak position
                              • Health and processed foods
                                • Waste costs rose by 35% between 2004 and 2006
                                  • Weak sterling will boost exports from NI…
                                    • …while the effects in RoI are “extremely worrying”
                                      • NI meat processing suffering from overcapacity
                                        • The great labelling debate resolved…as processors bear the costs
                                          • Labour gap pending as immigration levels decline?
                                          • Market Background

                                            • Key points
                                              • Structure of the Irish food processing industry
                                                • Figure 1: Structure of Irish food processing industry
                                              • Chain of food processing
                                                • Figure 2: Overview of stages of food processing
                                              • Partially-processed food as ingredients
                                                • Fragmented production characterises the Irish food industry
                                                  • Importance to the economy
                                                    • NI food and drinks processing sector
                                                      • Figure 3: NI turnover and employment in the food and drinks processing sector, 2005-07
                                                    • Agri-food sector central to RoI’s economy
                                                      • Heavily regulated industry
                                                        • RoI
                                                          • Food Safety Authority Ireland
                                                            • Environmental Protection Agency
                                                              • NI
                                                                • The Food Standards Agency
                                                                  • Gangmasters Licensing Authority
                                                                    • Environment and Heritage Service
                                                                      • Supporting bodies
                                                                        • Food Safety Promotion Board
                                                                          • RoI
                                                                            • Bord Bia
                                                                              • Teagasc
                                                                                • Food and Drink Industry Ireland
                                                                                  • NI
                                                                                    • Northern Ireland Food and Drink Association
                                                                                      • Food Promotion NI
                                                                                        • Livestock and Meat Commission
                                                                                          • Northern Ireland Centre for Food and Health
                                                                                            • Northern Ireland Seafood
                                                                                            • Internal Market Environment

                                                                                              • Key points
                                                                                                • Driving the market for locally sourced food
                                                                                                  • Irish food – quality produce
                                                                                                    • Campaigning for local food
                                                                                                      • Supermarkets’ commitment to local produce
                                                                                                        • Consumers demanding value
                                                                                                          • Exports driving growth in RoI
                                                                                                            • Figure 4: RoI food exports, 2006-07
                                                                                                          • Beef to France…
                                                                                                            • Dairy to China…
                                                                                                              • Health scares shake the industry
                                                                                                                • Individual health scares effect on the food processing industry
                                                                                                                  • Health issues associated with processed food
                                                                                                                    • Figure 5: Benefits and risks involved with some forms of food processing
                                                                                                                  • Cancer risks
                                                                                                                    • Reducing salt vital
                                                                                                                      • Obesity rates soar throughout IoI
                                                                                                                        • Change or be changed
                                                                                                                          • Regulatory burden facing the market
                                                                                                                            • Labelling food encourages consumers to make informed choices
                                                                                                                              • Green light for greens – traffic light labelling vs GDAs
                                                                                                                                • From farm to fork – the impact of food traceability
                                                                                                                                  • Waste regulations present overheads
                                                                                                                                    • Producer responsibility
                                                                                                                                        • Figure 6: Packaging waste per capita, EU, 2004
                                                                                                                                      • The Courtauld Commitment
                                                                                                                                        • Killing two birds with one stone
                                                                                                                                          • Children’s market limited by advertisement restrictions
                                                                                                                                            • Complex consumer demands from food
                                                                                                                                            • Broader Market Environment

                                                                                                                                              • Key points
                                                                                                                                                • RoI in recession
                                                                                                                                                  • Figure 7: RoI economic outlook, 2006-09
                                                                                                                                                • Effects of recession on food processing
                                                                                                                                                  • NI insulated from downturn?
                                                                                                                                                    • Figure 8: NI economic outlook, 2007-09
                                                                                                                                                  • Soaring energy prices push up processing costs
                                                                                                                                                      • Figure 9: Wholesale oil prices per barrel, 2000-09
                                                                                                                                                    • By-products can reduce energy bills
                                                                                                                                                      • Strong Euro has mixed impact for Irish market
                                                                                                                                                        • Figure 10: Euro and Sterling exchange rate, January 2007-September 2008
                                                                                                                                                      • Smaller household size lessen the urge to cook
                                                                                                                                                        • Figure 11: Average size of households NI and RoI, 1971-2007
                                                                                                                                                      • Falling immigration may cause labour gap
                                                                                                                                                        • Figure 12: Immigration to RoI, 2000-08
                                                                                                                                                        • Figure 13: Immigration to NI, 2004-07
                                                                                                                                                      • Media encouraging consumers to ‘chicken out’ of processed foods?
                                                                                                                                                        • A fowl practice
                                                                                                                                                          • Commodity costs increase as inflation hits the market
                                                                                                                                                            • Impact of inflated commodity prices
                                                                                                                                                              • Figure 14: EU food inflation increases, April 2007-08
                                                                                                                                                          • Market Value and Forecast

                                                                                                                                                            • Key points
                                                                                                                                                              • IoI food processing market tops €12.4 billion in 2008
                                                                                                                                                                • Figure 15: Estimated market value of the Irish food processing industry, NI and RoI, 2003-13
                                                                                                                                                              • Future outlook
                                                                                                                                                                • Figure 16: Breakdown of food processing market by sector, IoI, 2008
                                                                                                                                                            • Market Segmentation

                                                                                                                                                              • Key points
                                                                                                                                                                • Meat and dairy account for largest proportion of market
                                                                                                                                                                  • Figure 17: Food processing industry, sectoral growth index, IoI, 2003-08
                                                                                                                                                                • Meat and fish sectors enjoying steady growth
                                                                                                                                                                  • Figure 18: Estimated value of meat, fish and poultry processing markets, IoI, 2003-08
                                                                                                                                                                • Dairy sector contracting in 2008
                                                                                                                                                                  • Figure 19: Estimated value of dairy processing market, IoI, 2003-08
                                                                                                                                                                • Other
                                                                                                                                                                    • Figure 20: Estimated value of other processing markets, IoI, 2003-08
                                                                                                                                                                • Strengths and Weaknesses

                                                                                                                                                                  • Strengths
                                                                                                                                                                    • Weaknesses
                                                                                                                                                                    • Suppliers

                                                                                                                                                                      • Key points
                                                                                                                                                                        • RoI
                                                                                                                                                                          • AIBP
                                                                                                                                                                            • Breeo Foods
                                                                                                                                                                              • Carton Bros
                                                                                                                                                                                • Dawn Group
                                                                                                                                                                                  • Donegal Creameries
                                                                                                                                                                                    • Glanbia
                                                                                                                                                                                        • Figure 21: Financial outlook, Glanbia, 2004-07
                                                                                                                                                                                      • Kerry Group
                                                                                                                                                                                          • Figure 22: Revenue and pre-tax profits of the Kerry Group, 2003-07
                                                                                                                                                                                        • Ó' Catháin Iasc Teo
                                                                                                                                                                                          • NI
                                                                                                                                                                                            • Avondale Foods
                                                                                                                                                                                              • Crossgar
                                                                                                                                                                                                • Dale Farm
                                                                                                                                                                                                  • Dunbia
                                                                                                                                                                                                    • Foyle Food Group
                                                                                                                                                                                                      • Irwin’s Bakery
                                                                                                                                                                                                        • Moy Park
                                                                                                                                                                                                          • Core business
                                                                                                                                                                                                            • Willowbrook Foods
                                                                                                                                                                                                            • Buyers

                                                                                                                                                                                                              • Key points
                                                                                                                                                                                                                  • Figure 23: Profiles buyers
                                                                                                                                                                                                                • Multiples
                                                                                                                                                                                                                  • Aldi and Lidl
                                                                                                                                                                                                                    • Aldi
                                                                                                                                                                                                                      • Lidl
                                                                                                                                                                                                                        • Asda
                                                                                                                                                                                                                          • Co-op
                                                                                                                                                                                                                            • Dunnes Stores
                                                                                                                                                                                                                              • Iceland
                                                                                                                                                                                                                                • Marks & Spencer
                                                                                                                                                                                                                                  • Superquinn
                                                                                                                                                                                                                                    • Tesco
                                                                                                                                                                                                                                      • Symbol operators
                                                                                                                                                                                                                                        • ADM Londis
                                                                                                                                                                                                                                          • Barry Group
                                                                                                                                                                                                                                            • BWG Group
                                                                                                                                                                                                                                              • Henderson Group
                                                                                                                                                                                                                                                • Musgrave
                                                                                                                                                                                                                                                  • Foodservice
                                                                                                                                                                                                                                                    • Outsourced catering
                                                                                                                                                                                                                                                      • Fast food outlets
                                                                                                                                                                                                                                                        • Supermac’s
                                                                                                                                                                                                                                                        • Appendix

                                                                                                                                                                                                                                                            • Figure 24: NI food exports, 2005-06

                                                                                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                                        Food Processing (Industrial Report) - Ireland - January 2009

                                                                                                                                                                                                                                                        £827.00 (Excl.Tax)