Consumer Foods:
Feeding the Recovery
A Report by the Consumer Foods Council FDII
Food and Drink Industry Ireland is a business sector within IBEC
www.fdii.ie
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Table of Contents
Chairman’s Foreword
2
Head of Consumer Foods Statement
3
Sector Statistics
4
Characteristics of the Consumer Foods Sector
7
Policy Recommendations
20
Appendix 1: CFC membership
29
1
Chairman’s Foreword
Jim Mc Neil, Kelloggs Company of Ireland
Ireland has a highly successful and innovative range of prepared consumer foods (PCF) companies. Companies in this
sector constantly evolve to meet the consumer’s ever-changing demand for wider ranges of innovative and high-quality
products.
This report highlights the sector’s contribution to Ireland’s economic and social fabric in terms of employment,
economic growth, regional development, consumer choice and positive lifestyles.
The sector’s importance within the agri-food sector needs to be reflected more clearly across Government policy. PCF
companies are an integral part of Ireland’s economic and social fabric.They operate in highly competitive domestic and
international markets.
Currently, many consumer foods companies depend on the domestic grocery sector to expand their business. However,
the sector is not a level playing field.The current imbalance in power between retailers, suppliers, producers and the
consumer is unsustainable.This imbalance significantly hampers growth. Left unaltered, this situation will
fundamentally reshape Ireland’s grocery sector. This will have knock on effects for every household in terms of quality,
convenience, provenance and cost of food.The key policy intervention for the Government is the creation of a code of
practice and an ombudsman that rebalances power in the grocery sector while maintaining the dynamic flexibility
suppliers and retailers require to address rapidly changing consumer demand.
The Government’s approach to the sector can be disjointed and without sufficient cross-departmental consideration of
the impact on food companies. Health, food safety, environmental and broadcasting policy must only be formulated
after analysis of its potential impact on the agri-food sector and on the competitiveness of consumer food companies.
The consumer foods sector faces huge challenges in the future. Companies are likely to face a further period of
depressed consumer sentiment and low domestic demand. However, companies are resilient, flexible and dynamic. By
adopting the recommendations in this report, the Government can facilitate significant growth in the sector, while
maintaining a vibrant grocery retail sector.
2
Statement
from Head of Consumer Foods, Shane Dempsey
The consumer foods sector is a dynamic part of the Irish food industry. It represents a significant avenue for growth,
innovation and job employment within the industry and the wider economy.The sector contains some of the most
innovative indigenous and international companies in Ireland.
This report outlines some of the salient characteristics of the sector. Its objective is to highlight required policy actions
that the Government should take in order to realise the sector’s potential. The Department of Agriculture, Food and
Marine’s Harvest 2020 strategy predicts that “on the basis of available data the Committee believes that a growth of
40% in the output value of the sector is achievable by 2020 (using the average of the years 2007 to 2009 as a
baseline).” 1
Ireland is facing a period of economic turmoil challenging every sector of society. As we approach stabilisation and
recovery, policy-makers must adopt fresh thinking about the food sector. During the previous period of rapid economic
growth, the food sector was viewed as a traditional industry in decline. Successive government strategies sought to
generate economic growth from high-tech sectors only. In terms of regional development, growth in consumer foods
companies represents a significant opportunity.
Recent statements from relevant government departments placing the food sector at the forefront of our efforts to
generate a recovery are to be welcomed, but further innovative thinking is required, namely:
u
u
u
A better understanding of the consumer foods sector’s unique requirements.
The establishment of a mandatory code of practice and ombudsman is critical in ensuring a level playing field and a
healthy domestic sector.
Ireland must again become competitive to provide an export platform for consumer foods companies.
If the Government takes these steps, Irish consumer foods companies can contribute significantly to Ireland’s economic
recovery through job creation, innovation and significant economic growth. It can become one of Ireland’s leading
sectors in the next decade.
1. Department of Agriculture, Fisheries and Food, Harvest 2020, (2010) pg 33
3
Consumer Chapter
Foods 1 Statistics
at a Glance
265 and 280 consumer foods
companies in Ireland with an estimated combined turnover of €11 billion.
Gross output for the sector is estimated at €8.3 billion.
Consumer Foods companies employ 12,000 of the 60,000 employed
There are approximately between
directly in the overall food industry and support thousands more in the services
sector.
Under traditional GDP measurements the sector’s Gross Value Added is
€4.4 billion.
The sector is a net exporter with nearly
€1.5 billion worth of product
exported primarily to the UK.
Industrial Local Units by Statistic, Year and Industry Sector NACE Rev 2
2008
Industrial local units (number)
265
Persons engaged - total (number)
12,468
Industrial output - gross output (euro thousand)
8,981,593
Industrial input - industrial materials for processing (euro thousand)
1,593,503
Industrial input - industrial services (euro thousand)
59,779
Industrial input - fuel and power (euro thousand)
89,267
Net output (euro thousand)
7,239,044
Wages and salaries - total (euro thousand)
Exports
497,115
€2.59bn*- broken down to
€1.4bn (Prepared foods)
€1.19bn (Beverages including alcohol)
(http://www.cso.ie/surveysandmethodologies/surveys/industry/cen_indus_prod.htm). See Background Notes. * 2010 Bord Bia Figure
4
Consumer Chapter
Foods 1 Critical
requirements of the Government
The agri-food sector is now viewed as a potential engine for recovery and
growth for Ireland.This report will show that prepared consumer foods and
beverages are a vital element within the sector, generating huge levels of added
value to Ireland’s agricultural and primary processor output. However, the sector
continues to face a number of challenges.These have the potential to
significantly limit the sector’s growth and its contribution to Ireland’s recovery.
The key interventions the Government must make are:
1. Reduction of business costs and restoration of competitiveness
2. The introduction of a code of practice and an ombudsman in the grocery
sector
3. Co-ordination and enforcement of regulation across departments
4. The provision of support to companies to assist brand building and
communication with customers
5. The adoption of multi-stakeholder processes for addressing population
health issues
6. An increase in support for R&D and innovation in the sector
These steps will greatly aid Ireland’s economic recovery by realising the
potential of a significant part of Ireland’s largest indigenous sector.
5
The PCF sector is a key driver of growth
and employment within Ireland’s food
and drink industry,accounting for
nearly 33% of its employment. It is a
dynamic and innovative sector with
huge potential for domestic and
international growth. Its exports are
valued at €1.5 billon with the bulk
destined for the UK.
6
Section 1
Characteristics of Prepared Consumer Foods Sector
1. High growth potential in the sector for domestic and
international companies
The consumer foods sector includes some of Ireland’s most successful international and
indigenous companies such as Glanbia, Kerry Group and Dawn Farm Foods. International
companies such as Coca Cola, Unilever, Cadbury, Mars Ireland and Kellogg have significant
presences in Ireland. In addition, the sector is characterised by a large proportion of SMEs
producing prepared consumer foods and beverages. A significant proportion of PCF
companies are internationally focussed with most indigenous firms having established
scale from the platform of the domestic market.
The sector makes a significant contribution to Ireland’s economic and social fabric. Every
household is affected by the quality, cost and convenience of consumer foods products.
PCF companies supply the entire spectrum of retailers in communities across Ireland. In
addition, consumer foods companies are significant customers for many Irish service
companies in many sectors including advertising, marketing, legal and logistics. Finally,
international PCF companies are large consumers of Irish agricultural products and food
ingredients, underlining the importance of the sector to the wider economy.
The Department of Agriculture, Food and Marine’s (DAFM) recently released Food Harvest
2020 Strategy provides a blueprint for growth in the sector and states that:
“On the basis of available data the Committee believes that, working from a 2008
baseline, that growth of 40% in the added value output of the food and beverage sector
is achievable by 2020.” 2
To achieve this ambitious goal the Government must ensure that policy assists the
growth of consumer food companies.
Enterprise Ireland and the Department of Agriculture, Food and Fisheries estimate there
are approximately 280 indigenous consumer foods companies exporting or with
significant export potential within Ireland. The sector is characterised by a relatively small
number of large companies that account for the majority of exports and employment.The
sector must increase the levels of companies of international scale that can address EU
market segments.
The consumer foods sector is eminently placed to capitalise on opportunities in the UK
and wider EU markets due to the ability of companies to meet rapidly changing consumer
demands. An increasing level of health consciousness is one obvious example. Functional
foods are another significant growth segment for Irish consumer foods companies.
2. Department of Agriculture. Fisheries and Food, Harvest 2020 pg 33
7
The consumer foods sector is eminently
placed to capitalise on opportunities in the
UK and wider EU markets due to the ability
of companies to meet rapidly changing
consumer demands.
8
Section 1
Characteristics of Prepared Consumer Foods Sector
To capitalise on future export opportunities, consumer foods companies must fundamentally
adapt their business models, increase productivity, focus on sustainability and develop a
deeper understanding of consumer trends and potential markets. Government must increase
support programmes for consumer foods companies in this regard through state agencies.
A key challenge for the sector is its dependence on the UK market and its associated exposure
to fluctuations in the value of sterling.
The dramatic depreciation of sterling by 30% in 2008/09 placed consumer foods companies
under severe pressure, exacerbating the effects of the global downturn and wiping €400
million off the value of food exports to the UK.
Sterling is expected to remain weak for the foreseeable future.This has forced companies to
examine market diversification particularly in relation to the European market of 500 million
people.
Euro - Sterling, Euro - Dollar
24.5
1.6
1.5
0.95
EUR/GBP
1.3
0.85
1.2
0.80
EUR/USD
1.4
0.90
1.1
0.75
1.0
0.70
0.9
0.65
0.8
03
04
EUR/GBP
05
06
07
08
09
10
11
EUR/USD
Figure 1: shows the dramatic 30% depreciation of sterling and its effect on competitiveness. Source: Reuters EcoWin
9
Ireland has one of the highest levels of
retail concentration in the EU with the
three largest retailers commanding over
70% market share. The immediate
losers are suppliers as their margins are
driven down.
10
Section 1
Characteristics of Prepared Consumer Foods Sector
2. Consumer foods companies and the domestic grocery sector
Consumer foods companies with ambitions to achieve international scale, depend on a healthy
domestic grocery sector as a platform for growth. Since 2008, CSO data show that prices in the
sector have dropped by around 7%. Retailers and suppliers alike have reduced costs dramatically
and increased value promotions.This has resulted in significant job losses, restructuring and
reduced investment on behalf of consumer foods companies.
Retailer buying power is exacerbating the sector’s difficulties. Ireland has one of the highest levels
of retail concentration in the EU with the three largest retailers commanding over 70% market
share.The immediate losers are suppliers as their margins are driven down. However, primary
producers suffer the knock-on effects of retailers’ ability to drive down prices and transfer the cost
of risk to suppliers. Ultimately, the consumer will suffer. Irish suppliers will be forced to shut down,
undermining the resilience of the food supply chain by further concentrating power with larger
retailers.
There is growing concern among EU governments, the European Parliament and the EU
Commission about the negative impact of retailer buying power on food suppliers and the food
supply chain. This is evidenced by the ongoing work under the Platform on Contractual Relations
(an industry/retail Platform) which the EU Commission established in response to the High Level
Group (HLG) report on the competitiveness of the EU agro-food industry in July 2009.
Consumer Spending (seasonally adjusted)
2006
2007
2008
2009
2010
24.5
24.0
EUR (billions)
23.5
23.0
22.5
22.0
21.5
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Figure 2: shows the dramatic drop in consumer spending from mid 2007 which put extreme pressure on retailers
and food companies. Source: Reuters EcoWin
11
There is growing concern
among EU governments,
the European Parliament
and the EU Commission
about the negative impact
of retailer buying power on
food suppliers and the food
supply chain.
12
Section 1
Characteristics of Prepared Consumer Foods Sector
The net effect of retailer buying power on suppliers is to increase their cost of doing
business. This makes their products less competitive in domestic and export markets.
Ultimately, this will result in the hollowing out of the domestic food sector with highly
negative economic and social consequences for communities across Ireland.
ESRI/IIB Consumer Sentiment Index
2006
2007
2008
2009
2010
110
100
90
Index
80
70
60
50
40
30
Figure 3: shows the dramatic decline in consumer sentiment since 2006. Consumer sentiment is a barometer for
the health of the grocery sector. Source: Reuters EcoWin
Volume of Retail Sales (y-on-y % ch, 3mma)
2007
2008
2009
2010
Percent
12.5
10.0
7.5
5.0
2.5
0.0
-2.5
-5.0
-7.5
-10.0
Food Business - Value
Food Business - Volume
Figure 4: shows the decline in the value and volume of retail sales since 2007. The gap between value and volume
arises from a huge increase in ‘on promotion’ sales. Source: Reuters EcoWin
13
The Government must match these efforts by
reducing business costs and ensuring that
regulation is optimal, targeted and where
possible, does not adversely affect the
sector’s competitiveness.
14
Section 1
Characteristics of Prepared Consumer Foods Sector
3. The challenge of competitiveness
A key challenge for both the Government and companies is to regain competitiveness.
Consumer foods companies have reduced costs and significantly restructured their
operations. IBEC estimates that the recent productivity performance of Irish business is
exceptional – with a 12% increase in 2009 and 16% in the first half of 2010. 3
The Government must match these efforts by reducing business costs and ensuring that
regulation is optimal, targeted and where possible, does not adversely affect the sector’s
competitiveness.
Harmonised Competitiveness Index
2006
2007
2008
2009
2010
Index
127.5
125.0
122.5
120.0
117.5
115.0
112.5
110.0
107.5
105.0
102.5
100.0
Real HCI (Deflated by CPI)
Nominal HCI
Figure 5: shows the loss of competitiveness from 2006 up to the dramatic sterling depreciation in late 2008
following by a period of increasing competitiveness as companies restructured and cut costs. Source: Reuters EcoWin
3. 2010, IBEC, “Productivity and Adjustment: A case study examination of the productivity performance of Irish
firms, 2008-2010, pg 1”
15
Since the recession began,
consumer lifestyles have
altered dramatically and
Irish consumer foods
companies have kept pace
with this alteration in
consumer behaviour.
16
Section 1
Characteristics of Prepared Consumer Foods Sector
4. Innovation and consumer demand
Innovation is required to meet the constantly changing tastes and demand of consumers.
Innovation in food processing, in particular, enables PCF companies to create products that
allow consumers to enjoy a varied diet appropriate to the pace and pressures of modern day
living.
For example, with better storage and preservation techniques, consumers can now enjoy
foods from all over the world or indeed which would otherwise be out of season. Over the
past hundred years, advances in food science, technology, and engineering allow us to
produce nutritious, safe, convenient, and cheaper foods, which is exactly what modern
consumers demand and enjoy.
Yet food processing is often berated and beneficial innovations in the sector are often
overlooked.These innovations can be divided into a number of categories:
Meeting the demands of changing lifestyles
Changing consumer lifestyles set the context within which PCF companies operate. For
example, during Ireland’s economic boom, convenience food products greatly increased in
popularity. However, since the recession began, consumer lifestyles have altered dramatically
and Irish consumer foods companies have kept pace with this alteration in consumer
behaviour.
Bord Bia reports that “rising economic anxieties and financial constraints have led to
greater scrutiny of the market place, driving a stronger focus on value and a need to make
smarter choices. Deciding what is good value has become more complex. The
relationship of quality to price remains. However, trust, familiarity, provenance and even
wider environmental and social concerns can now form how a consumer sees value.” 4
4. Bord Bia’s Consumer Lifestyle Trends
www.bordbia.ie/industryinfo/publications/bbreports/ConsumerLifestyleTrends/Consumer%20in%20control.pdf
17
Section 1
Characteristics of Prepared Consumer Foods Sector
While convenience is still highly valued, consumers are spending more time in preparing
foods.This has led to an increase in demand for high-quality, stand-alone convenience
food products and in products for use in home cooking.
In addition, modern food packaging innovation responds to the demands of the modern
lifestyle. Quality design, food safety, convenience and environmental concerns
necessitate constant innovation in this regard. Packaging now keeps food fresh for
longer, safely and without changing the taste or aroma. For example, flavour and odour
absorbers like films and sachets have been introduced to reduce the transfer of aroma or
flavour between components. Digital technology has made ripeness indicators that
monitor and communicate information about food possible.
Sustainability
Consumer foods products increasingly reflect traditional consumer sensitivity in relation
to price and quality. However, consumers are taking an increasing number of factors into
account when deciding what to buy.Where a product comes from, the environmental
impact of its production and the company’s reputation are now all factors. Accordingly,
consumer foods companies are investing heavily in sustainability measures that reduce
or offset the environmental impact of producing and distributing consumer.
For example, food processing innovation enables the extension of the shelf-life of foods.
The application of modified atmosphere packaging means that fruit and vegetables can
be stored at home for longer, thus meaning less frequent food shopping for fresh food
and less spoilage loss.
Enhanced food safety
Many processing techniques ensure the safety of foods by reducing the number of
harmful bacteria that can cause illness.These include relatively simple techniques like
pasteurisation, drying, pickling and smoking. Food safety and traceability will continue to
be key consumer demands.
18
Nutrition benefits
Many processed foods are just as nutritious, or in some cases even more so, than fresh
foods, depending on the manner in which they are processed. Frozen vegetables are
usually processed within hours of harvest which means there is little nutrient loss before
the product reaches the consumer. Processing can also make some nutrients more
available. For example, processing tomatoes into a tomato paste or sauce increases the
amount of the antioxidant lycopene that is available to the body.
Furthermore, some processed foods are fortified to address a particular nutrition
requirement such as folic acid or iron deficiency in women. Some foods are formulated to
meet specific nutritional requirements such as food intolerance or allergy.
5. Brand building
Establishing brands is essential to PCF companies. Established PCF companies have
devoted decades to developing relationships with their customers through advertising,
sponsorship and marketing. Irish companies currently operate within some of the
strictest regulatory codes within the EU. Compliance with both statutory codes such as
the Broadcasting Authority of Ireland’s (BAI) General and Children’s Advertising codes,
and voluntary European regimes such as the EU Pledge is near total.
In addition, food companies have responded to concerns about advertising, particularly
in relation to children.The exposure of children and younger people to broadcast
advertising of certain products considered as ‘treat’ foods on Irish channels has declined
from 36.9% to 7.1% since 2002.This reflects a wider European trend of reduced
advertising to children of such products.
Given the importance of brand-building to food companies, it is essential that
government policy in relation to consumer communications is measured and based on
objective scientific data.
Food Advertising
Year
2002
2003 2004
2005 2006
2007
2008
No Spots
8055
8218
4238
4169
2775
1829
2026
1634
36.9% 34.2% 25.3% 16.8% 16.9%
9.8%
7.2%
9.9%
7.1%
Percentage
5661
2009 2010
Figure 6: shows the dramatic drop in the number of advertising spots devoted to treat foods.
Source: Institute of Advertising Practitioners Ireland
19
Policy Recommendations - Driving growth in the sector
Section 2
1. A co-ordinated approach
Consumer foods companies blend agriculture with innovation, R&D, branding, retail and
changing consumer preferences. A number of government departments and state agencies
with competing interests and objectives affect their businesses.
This often leads to the creation of regulation by one government department that
negatively affects prospects for growth. For example, the Department of Communications
has charged the BAI with prohibiting the inclusion of certain foods from TV broadcasting
without having conducted either a thorough analysis of the impact and effectiveness of
such measures or sufficient cross-departmental consultation.
Recommendations
u Both Food Harvest 2020 and Bord Bia's Pathway to Growth represent a blueprint for
growth in the sector and overall economic recovery. As such, the recommendations in these
documents should be prioritised by Government and reflected in overall policy.
u
The Department of Agriculture, Food and Marine should support the establishment of
a working group involving relevant state agencies, Government Departments and PCF
companies. This group should report on progress towards and barriers to the ambitious
targets as set out in Food Harvest 2020. It should monitor the implementation of the
relevant recommendations within the strategy and identify opportunities in specific
categories within the sector to support growth, exports and employment.
u
A central objective of this group should be to monitor and measure the implementation
of the sector development strategy across all relevant departments and state bodies.Where
appropriate, this group should also evaluate proposed legislation and regulation that can
affect the consumer foods sector.
20
2. Enhancement of competitiveness
Due to the highly competitive nature of the consumer foods business, PCF companies
are acutely sensitive to increases in business costs. Companies require a solid domestic
market as a platform for exports, and cost is a key factor in this context.
Costs must be brought down to below EU averages. An overall improvement in
competitiveness is a key step towards seizing opportunities to consolidate markets in
the EU and beyond.
Recommendations
u High utility costs, waste costs and local authority rates in Ireland are damaging
the competitiveness of the consumer foods sector. The Government must put further
reductions in place to ensure that Irish energy costs are below that of competitor
economies.
u
The sector is heavily regulated to protect the reputation of the Irish food and drinks
sector. As recommended in the Food Harvest 2020 document, regulation applicable
to the sector should be benchmarked against comparable legislation elsewhere to
ensure that unnecessary costs are not incurred.
u A number of international consumer foods companies such as Coca Cola, Kellogg’s
and Cadburys have found that Ireland is an excellent location for European functions.
This demonstrates the potential for further foreign direct investment (FDI) and
greater collaboration in Ireland. Enterprise Ireland (EI), Bord Bia and the IDA
should continue to co-ordinate efforts to promote Ireland as an attractive
location for international PCF companies.
u
More support should be given to productivity enhancement
programmes, such as EI’s lean manufacturing programme.
21
Section 2
Characteristics of Prepared Consumer Foods Sector
3. Creating a level playing field
The Irish grocery sector is a domestic platform from which consumer foods companies
can develop. A code of practice and an ombudsman are required in the sector to level the
playing field. Progress on the creation of a code has been too slow and smaller consumer
food companies in particular are being put at risk by the delay.
Recommendations
u The Government must put in place an effective code of practice backed up by an
ombudsman with the power to investigate and report on cases of abuse of buying
power. The code should govern the relationship between retailers and suppliers. In order
to ensure that it is fit for purpose and enforceable, the code should only apply to retailers
with a significant turnover. A blanket code applied to the sector as a whole will
significantly restrict the dynamics of the market and impose huge costs on the taxpayer.
u The Government must ensure that any code focuses on eliminating unfair practices
that arise as a result of the abuse of retail buying power rather than focussing on
specific commercial relations.
u
In addition, due to the dispersion of the Irish population, the arrival of
a large retailer in an area can result in local dominance and fundamentally
alter the grocery sector in towns and villages across Ireland. The social
impact of this creeping dominance threatens to alter communities
across the country over the next 20 years. The Government must be
cognisant of the unique social fabric of Irish communities in any policy
affecting the domestic grocery sector.
22
Case Study 1
Positive Initiatives
The food and drink industry in Ireland has invested significantly over the past
number of years to improve the range, choice and nutritional profile of food and
drink products available to the Irish consumer.
Product reformulation and fortification
Consumer food companies have engaged in significant reformulation initiatives
such as the FSAI salt reduction programme.This campaign supports the FSAI’s
long-term goal of reducing the average per head of population intake of salt
from 10g per day to 6g per day by 2010 through partnership with the food
industry and state bodies.
Food companies have been working to reduce saturated fats in their products.
Throughout the 1990s, food companies began to remove trans-fatty acids (TFAs)
from their products. In 2008, the FSAI found that 80% of pre-packaged goods
contained little or no TFAs.6
Many food categories are rich sources of essential micronutrients. Micronutrients
occur naturally in products such as meats, vegetables, potatoes, fish, eggs, fruit, or
are fortified during the manufacturing process in the case of breads and
breakfast cereals.
6. FSAI:Trans Fatty Acid Survey (2007): Retail Products
23
Section 2
Characteristics of Prepared Consumer Foods Sector
4. Support for brand building
Strong brands are a key characteristic of consumer foods companies. Significant investment is
required to build recognition and trust among consumers.
Bord Bia’s Pathways to Growth strategy states:“High margins in the food business usually come
from innovative products and/or strong brands. It will be difficult for Irish firms to win the
branding game individually.”
In building brands, companies make hugely positive contributions to society, act as good corporate
citizens and address their social responsibilities. For example, due to concerns about obesity and
marketing to children, food and beverage companies have dramatically changed how they market
and advertise their products. Advertising for treat products now accounts for as little as 7% of all
adverts shown during children’s programming on indigenous broadcast media.
As brands make a significant contribution to the country’s economic and social fabric, government
policy should ensure that Ireland is an attractive market in which to invest in brand development.
Recommendations
u The Government should recognise that collaborating with brands and communicating with
consumers through genuine multi-stakeholder forums is the most effective way of achieving
policy objectives. The Food Safety Authority of Ireland’s (FSAI) co-regulatory approach to salt
reduction has achieved excellent results and is considered an exemplar of an effective population
health initiative.
u The Government should carefully analyse any policy that restricts the ability of companies to
communicate with the consumer or damages brands. For example, nutrient profile models
should not stigmatise food and should be very carefully assessed before any introduction.
Upcoming advertising regulation should be informed by objective scientific evidence gathered
about the Irish population’s requirements. It must also take account of the effectiveness of
advertising restrictions on issues such as obesity.
u The mandatory country-of-origin labelling should not be imposed on consumer foods
products due to the complexity of the sourcing of ingredients from multiple international
locations. A harmonised EU-wide approach to such labelling should be sought by Ireland.
u Ireland should assertively influence EU policy to ensure that guideline daily amount (GDA)
labelling is adopted across the EU.
24
Case Study 2
Positive Initiatives
Increased consumer choice: healthy options
Consumer health is a key innovation driver for PCF
companies. Companies are constantly innovating to improve
and enhance the nutritional quality of their products.This activity
includes reducing the level of ‘nutrients of concern’(such as salt and
saturated fat) and increasing the amount of ‘positive nutrients’(such as
fibre, calcium, iron, etc.) in existing products.
Companies have also made significant investments in the marketing and
promotion of lower calorie, lower fat, lower salt and lower sugar varieties of
many leading brands. In addition, the consumer can now choose from a much
wider range of portion sizes. More than 25% of new products are introduced
to the market on the basis of being more healthy (FDII member survey, 2008).
For example,in soft drinks,sugar-free variants are well-marketed and are
positioned as an alternative to regular versions.The result has been a massive
growth in market share for low and no sugar varieties over the past number
of years,with the no added sugar: added sugar ratio moving from 28:72 in
1987 to 57:43 in 2007. 7
7. 2009, FDII, Enabling Healthier Lifestyles, Pg 10
25
Section 2
Characteristics of Prepared Consumer Foods Sector
5. R&D support
Innovation in products, packaging, processing and food safety are critical in developing
trust in consumer foods brands and represent a real route to competitive advantage.
More industry involvement in the creation of state-sponsored research is to be welcomed.
A focus on food-related research, and collaboration with third-level institutions is key to
positioning the agri-food sector within the smart economy. Recent trends such as the
phenomenal interest in healthy foods, a strong focus on value, nutrition labelling and
sustainability provide opportunities for innovative companies. However, adverse
economic conditions, including the retail environment, dissuade consumer foods
companies from significant investment in innovation.
Recommendations
u More consumer-focussed initiatives are required to encourage innovation across a
greater range of consumer foods categories. Greater links need to be developed between
third-level institutions and industry with graduates’ skills more closely aligned with
industry’s requirements.
u
With both consumers and regulators seeking ongoing reductions in certain nutrients
such as salt and saturated fat in foods, government support must be provided to
companies in researching how to overcome inherent technical hurdles.
u
Enterprise Ireland’s Leadership for Growth programme for the food sector, which
focuses on strategic innovation, is to be welcomed in relation to increasing the levels
of international experience and ambition in the sector.
u
Public sector investment in R&D must be aligned with the needs of the food and
drink sector to allow the industry to develop and maintain competitive advantage
through product innovation, processing efficiency and advances in consumer safety.
26
Case Study 3
Positive Initiatives
Labelling
In 2008/2009, 19 of the top consumer foods companies in
Ireland launched an integrated communication strategy,
co-ordinated by FDII, to promote GDAs and to help consumers
understand how to read the labels more effectively.
GDAs are a neutral,science-based tool designed to give consumers the on-pack
nutritional information they need to make informed choices. GDAs are a
widely accepted form of labeling designed to help consumers.The GDA guide
generally appears front of pack, where space permits, and informs consumers
exactly how much energy and key nutrients are in each portion of a particular
product. In addition, it shows how these figures relate to the percentage GDA for
each.
GDAs have been voluntarily put in place in Europe in full partnership/consultation
with the relevant European institutions. Research by the European Food
Information Council (EUFIC) (based on 11,600 in-store interviews and 5,700
in-home questionnaires across six EU countries) shows that GDAs are widely
recognised and understood by consumers.
An FDII survey in 2010 found that 78% of branded food products now carry GDA
labels.The majority of retailers have also adopted the system, with GDA labels
now appearing on 95% of their product range.
27
Conclusion
The Irish consumer foods sector has the potential to contribute
significantly to Ireland’s economic recovery. Companies within the
sector are export-focussed, innovative and dynamic. However, consumer
foods companies require targeted support and a co-ordinated response
from the Government and state agencies.
A number of challenges face the sector.These have the potential to
significantly limit the sector’s growth and therefore, its contribution to
Ireland’s recovery.
The key interventions government must make are:
1. reduce business costs and restore competitiveness
2. introduce a code of practice and ombudsman in the grocery sector
3. co-ordinate the creation and enforcement of regulation across departments
4. support companies in brand-building and ensure their ability to communicate
with consumers is not unnecessarily curtailed
5. adopt multi-stakeholder processes for addressing population health issues
6. increase support mechanisms for R&D & innovation in the sector
If the recommendations made in this report are implemented, these
steps will greatly aid Ireland’s economic recovery by realising the
potential of a significant part of Ireland’s largest indigenous sector.
28
CONSUMER FOODS
Structure
Consumer Foods
Council
Food
Processors and
Suppliers Group
Public Affairs
Group
Regulatory
and Environment
Committee
Product
Associations
Irish Bread Bakers
Association
Chocolate,
Confectionery &
Biscuit Council
of Ireland
Snack Food
Association
Irish Soups & Sauces
Irish Coffee
Council
Irish
Breakfast Cereals
Association
29
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