Food firms need to tap potential, says expert

EOIN BURKE-KENNEDY

Most Irish food and drink companies are not spending enough on innovation to tap the potential for growth presented by the rising number of middle-class consumers in Asia and South America, according a leading food industry expert.

David Hearn, head of consulting at Deloitte, also believes many producers are unprepared for the imminent ending of Cap-style interventions in the various EU food sectors.

Mr Hearn said the food industry here faced a market opportunity that was “the envy of almost every other business sector”. However, he said it remained to be seen if the sector would take advantage of the opportunity.

He bases his assertions on a recent Business Trends report by Deloitte, which suggests hundreds of millions of people are being lifted out of poverty across the developing world, resulting in a dramatic increase in demand for more sophisticated food products.

The report predicts that by 2020, 3.2 billion people will be “middle class” – up from 1.8 billion in 2009.

This change in global demographics is happening at the same time as the liberalisation of the EU’s main food markets under the aegis of Cap reform.

Opportunities

“All of this offers huge opportunities for those in the food industry who are capable of developing and scaling up to meet that demand,” Mr Hearn said.

He said Ireland’s food and drink industry already accounted for an annual turnover of €25 billion, including €10 billion in exports, and sustained nearly 230,000 jobs – making it one of the economy’s strongest sectors.

"It supplies the majority of produce to Ireland's €14 billion domestic grocery and food service sector, is the largest net exporter of dairy ingredients, beef and lamb in Europe, the largest exporter in Europe of powdered infant formula and the UK's largest supplier of food and drink."

"The opportunity for Ireland, if it can develop further as a food and beverage centre of excellence, is enormous," Mr Hearn said.

However, a recent Deloitte survey found most Irish food and drink businesses spent less than 3 per cent on research and development, with many spending less than 1 per cent.

Trends

If this continues, he said, Ireland would miss out on these global demographic trends, potentially surrendering emerging markets to others.

The key was to move away from exporting primary food products such as live animals and freshly harvested crops and into developing more advanced, integrated products with the use of modern production technology, such as sports nutritional drinks and energy supplements.

“Increased consumer sophistication, including concerns over sugar and salt, require product reformulation and mean businesses must develop more nutritional foods whilst maintaining price and taste. Those with the best technology will thrive.”

In France Evian offers a fridge-mounted device that helps you automatically order more of their products when your supply is getting low, he said.