HEINZ is to expand its operations at the Custom Food plant in Dundalk to manufacture a variety of new products for the Irish and British markets, it was announced yesterday at the Horizons International Food Conference.

The news of the expansion, which will increase employment at the plant and will result in the expenditure of £20 million a year on services and ingredients from the region, was contained in a script read on behalf of Dr Tony O'Reilly to the conference.

Dr O'Reilly, who sent his apologies to the conference which heard details of organisational changes at the company, was to have been one of the keynote speakers.

In the script, Dr O'Reilly said Ireland must dramatically increase sales of value added foods service products in overseas markets if it was to remain a significant player in the global food industry in the foreseeable future.

He said the largest part of Heinz's worldwide sales, 20 per cent, comes from food services.

The company, with worldwide sales of over 10 billion dollars annually, expects sales to restaurants, fast food chains and other take out or institutional establishments, would exceed two billion dollars this year.

He said Ireland's objective in the food service industry must be to increase dramatically the sale of value added food products overseas. It was too expensive for Ireland to create new food brands from scratch, he said.

Dr Denis Brosnan, managing director of Kerry Group plc, said that scale of operation would be very important to the survival of the Irish food industry in the next century.

He said the Government and State agencies should encourage amalgamations and ventures which would mean there would be two or three minor food companies in the country by the year 2000.

Asked how this could be accomplished because of the reluctance of co-ops and other bodies to work together, Dr Brosnan suggested that it could be achieved by tax and other incentives.

The keynote speaker, Mr George Bull, chairman of Grand Metropolitan, one of the largest food and drinks companies in the world, said his company was basing its future on branded goods.

"The market for branded goods and services has soared with the addition of literally hundreds of millions of new consumers in Eastern Europe, Latin America and Asia where there is a growing passion for western brands," he said.

Companies like Bailey's, with a world leading brand was a typical example of what could be done, he said.