Major changes in lifestyle and eating habits, coupled with significant changes at corporate level, have fundamentally changed the structure of the Irish food industry. At its simplest, today's food companies must either be very large or very small to survive.

"If we look at start-up companies in the food sector even a decade ago they were mainly setting up to supply the domestic market. Now companies have either to be big enough to compete on a large scale or they need to target specialist niches," says Ms Julie Sinnamon, manager of food and natural resources at Enterprise Ireland.

"The changes have been driven by a number of factors. The advent of central distribution by the multiples is one and legislation on food safety and hygiene another. A third is the trend towards buying convenience and ready prepared foods."

Ms Sinnamon cites the Ballymun-based sandwich making company, Freshwise, as an example of the new breed of food company. Freshwise is a joint venture between IAWS, Glanbia and Brennan Brothers. It employs 200 people making sandwiches for sale in retail outlets.

"This is an example of a company set up in response to changes on two levels," she says. "Far tighter food safety regulations have made it difficult for outlets such as newsagents which used to make sandwiches on site to continue doing so. Secondly, time is at such a premium that working parents are increasingly buying ready-made sandwiches for their children's lunches."

But while large companies such as Glanbia and IAWS may have no problem raising the finance for such ventures, Ms Sinnamon says that high start up costs make it very difficult for private individuals to fund major new food businesses. "We have seen a fall off in the number of large start-ups and an increase in the number of small ones, with most entrepreneurs opting for high value niche products," she says.

Two niche food producers whose companies have stood the test of time are Lir chocolates and Cashel Blue cheese which are 13 and 16 years in business respectively. Ireland may not be the first State to spring to mind when the conversation turns to chocolate, but the last 10 years have seen a burgeoning of home produced chocolates and Lir is one of the longest on the go.

"Our aim on set up was to produce top quality handmade truffles using the best ingredients we could find. When we started we were on our own. Now I think there's about 17 companies making different chocolate products," says Lir's joint managing director, Ms Mary White.

"I think we've survived because our product is very good and from the outset it was targeted at a luxury niche. Secondly, my partner Connie Doody and I share a similar vision for the company which is vital for a smooth running working relationship and thirdly, we have always had very committed staff.

"But running a small business with limited resources often feels like going uphill in the wrong gear. You are also vulnerable if circumstances change. For example, the bottom fell out of our world when Tesco bought Quinnsworth.

"We enjoyed an excellent relationship with Quinnsworth for nine years but we didn't know if Tesco would still want us. As things turned out it worked to our advantage and we're now in 600 Tesco stores in the UK."

Jane and Louis Grubb began making Cashel Blue in 1984 and Mr Grubb describes it as "a gamble which paid off". About 50 per cent of their output is currently exported to the UK but Mr Grubb says opportunities are now opening for them in the US. The recent launch of a new sheep's milk blue cheese is also expected to expand their business in overseas markets.

The Grubbs opted to make a soft blue cheese because no one else was doing so at the time. "We knew the market for blue cheese was very small compared with cheddar and that we were confining ourselves to a very specialist niche. But it proved to be lucky. Mitchelstown had been producing a blue cheese and they had created an awareness and demand for it, so from a marketing point of view we benefited from their efforts,"' Mr Grubb says.

The Grubbs are dairy farmers and their desire to diversify came from a feeling of uncertainty over the future of supplying milk to the commodity market. They had no experience of cheese making before they began, although Ms Grubb had been a chef and her husband had a science background.

"I think our lack of qualifications helped," Mr Grubb says. "We didn't have a strict technological background and this left us freer mentally to cope with the challenges we faced. Of course, we could have fallen flat on our faces but thankfully we didn't and we had pretty good support from the various Government agencies we dealt with."