Ireland Food and Drink Report Q1 2012 Published: February 2012
No. of Pages:101
Price: US$530
Our outlook for Ireland's long-term growth requires a rebalancing of the economy towards exports. We are fairly optimistic that Ireland will continue to see its economy bolstered by the export sector, which, in our view, stands to benefit from an economic recovery in three of its largest export markets – the US, Germany and the UK. The food and drink sectors can play a key role in this growth. As one of Europe's major agricultural producers and home to several multinational food and drink firms, Ireland's sizeable food and drink sector belies the country's small population. However, food and drink exports are still dominated by primary agriculture suggesting that domestic firms are not fully exploiting Ireland's numerous competitive advantages. Primary agriculture accounts for 60% of Ireland's total food and drink exports, compared to 40% for processed food. BMI is currently forecasting that Ireland’s food and drink exports in US dollar terms will increase by 13.3% in the five years to 2016. The importance of the prepared food and beverage sectors is expected to continue to rise, but the value of primary agricultural exports may eventually start to fall as the EU continues to pursue a free-market agenda.
Headline Industry Data (local currency) 1.2012 per capita food consumption +1.0%; forecast to 2016 +6.7% 2. 2012 alcoholic drink sales 1.2%; forecast to 2016 +8.4% 3. 2012 soft drink sales 0.8%; forecast to 2016 +4.5% 4. 2012 mass grocery retail sales +2.6%; forecast to 2016 +18.1% Key Industry Trends & Developments Beam Signals Long-Term Intentions With Cooley Buy – In December 2011, US spirits firm Beam Global announced the acquisition of Irish whiskey producer Cooley Distillery for US$95mn. Beam has pointed to the fact that Cooley operates in a fast growing category thanks to 'the renaissance in Irish Whiskey' and is one of only 'three sources for Irish Whiskey', thus representing a high-return opportunity. The deal is also significant as Beam's first major acquisition since being split from holding parent Fortune Brands, providing an indication of the type of sectors in which the firm's management is hoping to build sales. C&C Flatlining In UK & Ireland So Looks To US For Cider Opportunities – In November 2011, Irish cider maker C&C highlighted its international ambitions by sealing a deal to acquire US cider brand Hornsby's from local drinks group E&J Gallo Winery. The acquisition will cost an initial EUR16.4mn which could rise to EUR20mn dependent on the acquired businesses' performance. The move comes after C&C has made some progress in strengthening its UK and Irish divisions, but signals that the firm sees stronger room for growth within the cider sector outside of these two markets. Key Risks to Outlook Consumer spending fails to recover in line with economy – A second risk is that private consumption growth lags the wider economic recovery to an even greater extent than we are currently predicting, putting further downwards pressure on our forecasts. While there are signs of improvement in the consumer sector, the domestic economic situation is expected to remain extremely fraught, with high unemployment, an ongoing property-bubble unwind and unavoidable fiscal austerity likely ensuring conditions feel recessionary to most Irish citizens, even once headline GDP growth returns.