Packaged Food in Ireland

Packaged Food in Ireland - Industry Overview

EXECUTIVE SUMMARY

The packaged food market just manages to remain positive in the recession

Consumers decide to eat in more often

Domestic packaged food gains favour

Supermarkets/hypermarkets prosper as private label offers a low cost option

Packaged food looks set to increase slowly but surely

KEY TRENDS AND DEVELOPMENTS

Despite ongoing recession, opportunities exist within packaged food

Consumers look to health and wellness foods to alleviate their problems

Irish consumers stay at home to save money but continue to demand quality

Provenance sells as buying Irish becomes an important trend

Ethnic food remains popular but some old favourites are coming back

MARKET DATA

FOODSERVICE – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• Restaurant and pub closures continued in 2010 reducing their demand for produce, although the continued deflation at least encouraged more consumers to eat out slightly more than the previous year (although nothing like the years of the tiger boom). BordBia’s Periscope 2009 study found just 8% of people said they ate out during the week compared to 18% in 2007. The effects of this can be seen by the 3% decline in frozen processed food that continues to be the most common foodservice item for outside eateries given its longevity.

Competitive Landscape

• Foodservice providers have been facing a range of challenges in such difficult times. The economic downturn has forced operators to look at their business structures to establish where they can save money. High VAT, high rent and high energy costs were all taking their toll on manufacturers looking to cut costs wherever possible as retailers demand ever cheaper food to sell to consumers.

Prospects

• If, as is hoped, the economy does start to recover, foodservice will be able to increase its share again to the levels of the mid noughties period. However, foodservice operators should be aware that consumers who have been staying in to eat more will have developed a taste for home cooking and as such need to continue to focus on value and traditional signs of quality such as freshness. Therefore frozen food will continue to decline by a CAGR of 1% between 2010 and 2015.

CATEGORY DATA

IMPULSE AND INDULGENCE PRODUCTS – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• As the economic downturn continues, the impulse and indulgence products sector nevertheless grows at a slightly higher rate in 2010 than it did in the previous year. Although 2009 had dropped from 2008, nevertheless both years fit in smoothly with growth rates over the 2005-2010 period. The majority of impulse and indulgence products are, perhaps counter-intuitively, proving very robust growth in the face of recession.

Competitive Landscape

• Cadbury leads in terms of company shares in 2009, followed by Masterfoods and Nestlé in second and third respectively. Their lead comes from their presence in confectionery, which is by far the largest sector by value terms in the impulse and indulgence sector in Ireland.

Prospects

• Impulse and indulgence products is expected to grow by a CAGR of 1% between 2010 and 2015 as they become more entwined in consumers’ everyday diets, while at the same time excessive growth is undermined by the continuing effects of the economic slowdown and the long road to recovery.

CATEGORY DATA

NUTRITION/STAPLES – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• Nutrition/staples suffered from the decline of dairy, bread and oils and fats in 2010. This however is not as surprising as it may first sound as the decline was in value, not volume terms.

Competitive Landscape

• Glanbia is the leader in nutrition/staples due to its significant presence in dairy, with its Avonmore and Premier brands leading the way. Glanbia is a good example for packaged food as a whole as it has focused on the Irishness of its products and stressed that it is an Irish product, sourced from Ireland and marketed towards Irish people. This has become a significant trend as consumers look to products they think will help their faltering local economy.

Prospects

• Nutrition/staples is forecast to grow by a CAGR of 1% in constant value terms between 2010 and 2015. Ireland is one of the biggest consumers per capita of dairy and nutrition/staples products and this will not change. However, as brands continue to come under pressure to provide value for money, value will again fail to keep pace with volume growth.

CATEGORY DATA

MEAL SOLUTIONS – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• There were three major trends in meal solutions in 2010. The first, macro trend, is the increasing tendency of consumers to eat in rather than go out to restaurants for a meal. Due to cost cutting they are more likely to buy a bottle of wine and have a meal in the house than spend money on meals in restaurants, which will always be more expensive. This trend is further facilitated by consumers’ increasing adeptness at cooking a wide range of dishes from a variety of cuisines

Competitive Landscape

• Private label led sales in meal solutions in 2009 as consumers looked to save money wherever possible and take advantage of the various offers that supermarkets/hypermarkets give for their products. Clearly brands continue to lead ranges such as frozen processed vegetables but it would be unwise merely to categorise private label as only offering value and little else. The 5% volume increase of fresh cut fruits for example, shows that there are some areas in which private label can lead in innovation, quality as well as cost.

Prospects

• Meal solutions is expected to grow by a CAGR of 2% in constant value terms between 2010 and 2015 to reach EUR2 billion in 2015. The trends that have encouraged the strong performance of meals solutions will continue throughout the forecast period and, given the recent deflationary activity, it is unlikely that Irish consumers will go back to eating out regularly. As such the cascading effects on the full variety of meal solutions will continue.

CATEGORY DATA

DEFINITIONS

• Summary 1 Research Sources

Packaged Food in Ireland - Company Profiles

Batchelors Ltd - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

COMPETITIVE POSITIONING

• Summary 3 Batchelors Ltd: Competitive Position 2009

Brennan Bakeries Ltd, Joseph - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

COMPETITIVE POSITIONING

• Summary 5 Brennan Bakeries Ltd, Joseph: Competitive Position 2009

BWG Foods Ltd - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

Crossgar Foodservice - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

Fegans Foodservice - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

Glanbia Plc - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

• Summary 11 Glanbia Plc: Production Statistics 2009

COMPETITIVE POSITIONING

• Summary 12 Glanbia Plc: Competitive Position 2009

Green Isle Food Group - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

COMPETITIVE POSITIONING

• Summary 14 Green Isle Food Group: Competitive Position 2009

Kerry Foods Ltd - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

• Summary 17 Kerry Foods Ltd: Competitive Position 2009

Masterfoods Ireland Ltd - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

• Summary 19 Masterfoods Ireland Ltd: Competitive Position 2009

Musgrave Foodservices Plc - Packaged Food - Ireland

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

• Summary 21 Musgrave Foodservices Plc: Production Statistics 2009

COMPETITIVE POSITIONING

Baked Goods in Ireland - Category Analysis

HEADLINES

TRENDS

• The lower disposable incomes arising from the economic recession has made Irish consumers return to consumption of more traditional basic food products, including bread. Not only has bread benefited from increased eating at home, but also the fact that many workers have sought to cut down on daily expenditure such as buying lunch every day. Consequently many consumers have resorted to bringing their lunch to work again, often a sandwich, boosting value sales of bread by 1% in 2010 despite already high consumption levels.

COMPETITIVE LANDSCAPE

• The top company in baked goods in 2009 was Joseph Brennan Bakeries with 16% of total value sales. Brennan’s products are the favourite breads in Irish households. They have a wide range of products, from traditional white bread to wholegrain and wholemeal breads, buns and hot dog rolls. Its slogan, ‘Today’s Bread Today’, became the synonym of fresh, high-quality bread. Brennan’s products are widely available across the country in every supermarket and convenience store, and even in small grocery stores, except discounters. This helps to keep the image of the brand high but makes the products easily available to everyone.

PROSPECTS

• The baked goods environment is expected to continue to grow over the forecast period, but with lower growth rates year on year. As the environment is very stable it has not been affected significantly by increased cereal prices, and not even by the economic downturn, and is likely to remain consistent over the forecast period.

CATEGORY DATA

Biscuits in Ireland - Category Analysis

HEADLINES

TRENDS

• Health trends are playing an important role in the biscuits environment, and this trend helps the category to remain dynamic and continue to grow. In a country where obesity is a major issue and per capita consumption of biscuits is 6.6kg per person, biscuits’ manufacturers are likely to try to improve nutritional content or try to reposition themselves as healthier brands. Consequently some mainstream brands are improving their health credentials to satisfy demand. United Biscuits reduced the level of saturated fat content in its McVitie’s Digestives, Hobnobs and Rich Tea brands by 50%. The company spent EUR6.6 million reformulating the products and claims to have made the health savings without detriment to product taste.

COMPETITIVE LANDSCAPE

• The company leading in biscuits in 2009 was once again Irish Biscuits Ltd, with a 31% share of value sales. McVitie’s Ireland Ltd was the second-largest company with a 22% share, and Burton’s Foods Ltd ranked third with almost 9%. To meet the latest health requirements McVitie’s traditional biscuits’ saturated fat content was reduced by 50% in a multi-million euro investment, aiming to keep the same taste and with a huge advertising campaign. The favourite brands such as McVitie’s Digestives, McVitie’s Hob Nobs and McVitie’s Rich Tea were in the middle of interest in 2009.

PROSPECTS

• Biscuits continue to be the best performing category in the bakery products environment with a constant value CAGR of 2% over the forecast period. Value sales are likely to be driven by sandwich biscuits as well as chocolate-coated biscuits. The issue of healthy products and premiumisation will be the key factors over the forecast period, with biscuits containing more fibre, wholegrain, nuts and/or seeds likely to be on the up.

CATEGORY DATA

Breakfast Cereals in Ireland - Category Analysis

HEADLINES

TRENDS

• The 7.7kg per capita consumption in 2010 shows exactly how important is the cereals category is in Ireland. This rate is the highest in the world, even higher than the UK per capita consumption. The breakfast cereals category declined marginally in value but grew by 3% in volume terms in 2010, due to family packs and special offer promotions focusing on volume sales, and the decline of unit price.

COMPETITIVE LANDSCAPE

• Despite the current economic climate Irish consumers are extremely brand loyal when it comes to cereal, so Kellogg remained the leader with 43% of total value sales in 2009. Kellogg’s major brands – Kellogg’s Special K, Kellogg’s Corn Flakes, Coco Pops, Rice Krispies and Crunchy Nut – remained the most popular cereals. Only Weetabix, Flahavan and private label products could get into the top brands next to them regarding share.

PROSPECTS

• Both the penetration and per capita consumption levels are already very high in Ireland, so the breakfast cereals environment has little space to maintain volume and achieve value growth again. This is likely to be an achievable, however, and the cereals environment is forecast to see a constant value CAGR of 2% over 2010-2015. Volume is also likely to continue to grow with a 4% CAGR over the forecast period.

CATEGORY DATA

Canned/Preserved Food in Ireland - Category Analysis

HEADLINES

TRENDS

• After an unimpressive performance during the early years of the review period, canned/preserved food enjoyed something of a renaissance in 2009 and 2010 as the economic downturn drove Irish consumers to try and reduce spending on weekly grocery shopping trips. This was in sharp contrast to the boom years, when rising disposable incomes supported a shift away from cheaper canned/preserved food products to more expensive frozen, chilled and fresh alternatives. Thanks to the reversal of this trend, retail volume and current value growth rates for canned/preserved food in 2010 were significantly stronger than the respective CAGRs recorded for the review period as a whole.

COMPETITIVE LANDSCAPE

• Batchelors continued to lead canned/preserved food in 2009, claiming a sector value share of 23%. While the company offers a broad portfolio, its overall leadership was mainly due to its dominance in canned/preserved beans, the second largest category in current value sales terms. Moreover, it held a commanding lead in the key canned/preserved fruit and vegetables categories. A major factor in the enduring success of Batchelors is its status as a local company; Batchelors is an iconic Irish brand. This became an increasingly valuable competitive advantage for the company from 2008 onwards as economic conditions began to deteriorate. The company was quick to capitalise on this by joining the Love Irish Food campaign, a not for profit initiative that encourages consumers to buy products from Irish brand owners.

PROSPECTS

• Canned/preserved food is expected see retail volume sales grow at a CAGR of 1% and constant value sales grow at a CAGR of 2% over the forecast period. Ireland has experienced a sharp economic contraction, and although recovery is expected to begin in 2011, the outlook is far from certain. Government plans to reduce the budget deficit to 3% of GDP by 2014 could hamper economic growth and lead to further increases in unemployment, which is already in double digits. Given these conditions, many Irish consumers will continue to try and reduce spending on weekly grocery shopping by opting for cheaper foods with long storage lives. This trend will help to ensure a steady level of demand for canned/preserved food products.

CATEGORY DATA

Chilled Processed Food in Ireland - Category Analysis

HEADLINES

TRENDS

• Having experienced a decline in demand in 2009 due to the economic crisis, chilled processed food recovered somewhat in 2010 to record growth of 3% in volume sales and 2% in current value sales. This recovery was fuelled by widespread discounting and promotional price offers, which made chilled processed food products a more attractive proposition for consumers who were trying to save money by reducing expenditure on eating out and cooking at home more often. However, volume and current value growth rates were well down on those recorded at the beginning of the review period, as discount offers were not sufficient to discourage many low and middle income consumers from trading down to cheaper alternatives in canned/preserved food and frozen processed food. Chilled fish/seafood and processed meat were worst affected by this latter trend, with both categories recording declines in retail volume sales as their counterparts in frozen and canned/preserved food expanded and diversified their ranges to capitalise on increased price sensitivity among Irish consumers.

COMPETITIVE LANDSCAPE

• Kerry Foods remained the clear leader in chilled processed food in 2009 with a sector value share of 27%. The company’s leadership was attributable to the strength of its Denny brand, which ranked first in chilled processed meat and second in chilled ready meals. Earlier in the review period, the company’s attempt to acquire competitor Breeo Foods Ltd was blocked by the Competition Authority. In 2009, however, this decision was reversed, and Kerry Foods was able to acquire Breeo Foods for EUR140 million, a lower price than it would have paid had the deal gone ahead earlier in the review period before the economic downturn hit. This acquisition should enable Kerry Foods to shore up and strengthen its leading position in chilled processed food over the forecast period.

PROSPECTS

• Chilled processed food looks set to develop positively over the forecast period, with retail volume and constant value sales both expected to grow at a CAGR of 2%. Demand for chilled process food products will remain steady among middle income consumers and busy young professionals who have had to cut spending on eating out due to the recession but are still willing to pay a little extra for high quality and convenient meal solutions. However, faster growth in sector volume and constant value sales will be prevented as some consumers continue to trade down from chilled processed food products to cheaper alternatives in canned/preserved and frozen processed food.

CATEGORY DATA

Chocolate Confectionery in Ireland - Category Analysis

HEADLINES

TRENDS

• Despite the difficult economic climate and the general aim to reduce family food budgets, chocolate confectionery grew by 3% in 2010 to reach EUR583 million. Irish consumers remained chocolate fans, consuming the highest amount in Europe at around 9kg per person in 2010. Moreover, chocolate confectionery is considered practically a staple product, and many people continue to consume chocolate as a comfort food during uncertain economic times.

COMPETITIVE LANDSCAPE

• In 2009 Cadbury remained the leading player, holding 43% of total chocolate confectionery value. Cadbury consistently has products in every category of the chocolate confectionery environment, with multiple flavours and sizes, with the traditional purple packaging. The ‘Purple goes green’ campaign was launched in 2007 to shrink Cadbury’s environmental footprint, and it is still reducing packaging. For example, instead of cardboard boxes it just has foil wrapping for Easter eggs. Cadbury is synonymous with tradition as well as modern products at the same time as the company constantly conducts high profile TV advertising campaigns. Moreover, the fact that the company launches different variants of its tablets as well as new chocolate bars means that it manages to maintain a fresh image.

PROSPECTS

• Chocolate confectionery is expected to grow year by year over the forecast period and reach EUR631 million by 2015. Even the economic crisis could not encourage Irish consumers to forgo treating themselves with their favourite chocolate products, so this category is likely to continue to perform well. As Irish consumers are already high chocolate consumers, the 9kg per capita rate will not rise significantly, but keeping this level of consumption can be a target for manufacturers.

CATEGORY DATA

Frozen Processed Food in Ireland - Category Analysis

HEADLINES

TRENDS

• Following a relatively poor performance in 2009, frozen processed food picked up in 2010 to record growth of 3% in current value sales and 2% in volume sales. Both growth rates were faster than the respective CAGRs recorded for the review period as a whole, significantly so in the case of volume sales. This improvement was a direct result of the economic downturn, with frozen processed food products being well positioned to benefit from growing consumer demand for cheaper alternatives that can be stored at home for long periods and therefore carry a lower risk of wastage. According to a report by the Irish Independent, the average Irish household throws out a staggering EUR1,300 worth of goods each year because they are past their use-by date. Provided they are correctly stored (ie in the freezer), frozen processed food products are unlikely to go off before they are used. This makes frozen processed food products (particularly multi-buy deals) an attractive proposition for Irish consumers who have become increasingly value conscious in the wake of the global economic downturn.

COMPETITIVE LANDSCAPE

• Green Isle Food Group remained the leading player in frozen processed food in 2009, claiming a sector value share of 25% thanks to the combined strength of its Donegal Catch, Goodfellas and Green Isle ranges. Donegal Catch and Goodfellas held commanding leads in frozen processed fish/seafood and frozen pizza respectively. The Green Isle brand meanwhile led frozen bakery products and held also prominent positions in frozen processed potatoes, poultry, red meat, vegetables and ready meals.

PROSPECTS

• Frozen processed food looks set to show a positive if unremarkable performance over 2010-2015, with retail volume sales expected to grow at a CAGR of 1% and constant value sales at a CAGR of 2%. Volume growth will be strongest during the first half of the forecast period due to the unfavourable economic outlook, which will continue to encourage many Irish consumers to opt for frozen processed food products instead of more expensive fresh and chilled alternatives. Manufacturers will seek to capitalise on this trend by offering regular price discounts and multi-buy deals. The key question is whether manufacturers will be able to retain consumers gained during the recession if economic conditions improve towards 2015. Many young Irish professionals reared during the boom years only started buying frozen packaged food products for the first time when the downturn hit towards the end of the review period. Manufacturers are expected to focus on expanding and improving the quality of their frozen processed food ranges to ensure these consumers do not immediately switch back to chilled processed food if Ireland’s economic outlook brightens.

CATEGORY DATA

Gum in Ireland - Category Analysis

HEADLINES

TRENDS

• With per capita consumption of 0.5kg in 2010, Ireland has one of the highest consumption levels in Western Europe. However, consumption did start to slow down in both value and volume terms in 2010 as there is a perception among consumers that, with the exception of high-profile launches such as Trident in 2007, and more recently Wrigley’s 5 in late 2009, there is little differentiation between varieties. However, the fact that gum is available in almost every store in the country and that consumers still buy gum mostly on impulse meant that consumers maintain their consumption.

COMPETITIVE LANDSCAPE

• Wrigley was the leader in the category in 2009 with an 87% value share. The gum giant holds an absolutely monopolistic position in every category, from functional gum to sugarised gum, with its brands competing with each other. Only Cadbury threatens its position, and even then Cadbury is some way from establishing its position within gum. The leading brands are Extra and Orbit, holding a combined 60% of total value sales.

PROSPECTS

• Gum is likely to underperform compared with chocolate and sugar confectionery over the forecast period, with a constant value CAGR of just 1%. This will be mainly driven by the decline of sugarised and bubble gum, with manufacturers increasingly targeting the adult consumer segment. Sugar-free and functional gum products are expected to continue to grow with constant value CAGRs of 2% and 3% respectively over the forecast period.

CATEGORY DATA

Meal Replacement in Ireland - Category Analysis

HEADLINES

TRENDS

• In Ireland obesity has been a major issue for a couple of years as approximately 20% of the population is categorised as overweight, and a lot of health problems are arising from this factor. It has been medically proven that high blood pressure, the risk of diabetes and other health problems are related to obesity. The overabundance of food and low-exercise lifestyles are the main causes of the overweight nation. Fighting excess weight is one of the most important issues of 2010 in Ireland, but meal replacement products are becoming a slightly outdated method. People are turning to healthier lifestyles and seeking better-for-you products instead of slimming products. This is leading to the decline of the meal replacement products category in both value and volume terms.

COMPETITIVE LANDSCAPE

• Allegro Holdings Ltd is again the number one meal replacement product company with its Slim Fast brand, which commanded a 54% value share in 2009. Complan Foods Ltd held second place with 29%. Private label products and Casilan followed the top brands.

PROSPECTS

• In future slimming products will face increased competition from slimming tablets and appetite inhibitors sold in grocery stores and health retailers. The slimming drug Alli was launched in 2009 in Ireland as the first licensed weight-loss treatment available without a prescription. Sold in pharmacies, Alli targets people with obesity problems. However, women who are not obese are also very likely to take Alli in order to lose weight quickly. As a result, slimming products will appear as a relatively slow and arduous method of achieving the same result. Sales of meal replacement products are thus predicted to continue to decrease over the forecast period. Constant value sales of meal replacement slimming products are expected to decline by an annual average of over 1% over 2010-2015.

CATEGORY DATA

Noodles in Ireland - Category Analysis

HEADLINES

TRENDS

• The Irish are well travelled and, according to a survey conducted in September 2009, 80% of Irish respondents indicated that they had or would travel for leisure in 2009, with over 1-in-5 travelling outside of the EU. However, when queried about their holiday plans in 2010, 38% of respondents said that they would need extra savings in order to be able to afford a holiday; an indication of the toll that the recession has had on consumer confidence. This exposure to different cultures has led to an appetite for foreign cuisines and with travel to far-flung destinations such as Asia becoming less accessible, advertising and marketing efforts have focused on a well rehearsed “travelling through food” campaign.

COMPETITIVE LANDSCAPE

• Unilever Ireland was the leading player with a 27% share of retail value sales in 2009, thanks to its Pot Noodle brand. Tat Hui Foods Pte Ltd remained the second ranked player with a 20% share thanks to its successful Koka brand.

PROSPECTS

• Ethnic cuisines are poised to continue to stimulate demand among Irish consumers, although the competition from ready meals could hinder the growth in noodles. Over the forecast period, noodles is projected to grow by a 1% constant value CAGR. Plain noodles is projected to record the fastest constant value CAGR, followed by pouch instant noodles. Most noodle brands are multinationals, but an increase in mostly indigenous private label offerings is likely to emerge as at-home cooking noodle options become more popular.

CATEGORY DATA

Pasta in Ireland - Category Analysis

HEADLINES

TRENDS

• “Comfort food”, which often refers to inexpensive, nourishing/filling dishes with a familiar taste, has made a small comeback in Ireland. “Comfort food” has always been popular but the media has been encouraging consumers to beat the crunch with homemade simple cooking due to the recession. Pasta provides the versatility required, especially with the array of wet sauces available for all palates, with canned/preserved pasta and chilled/fresh pasta showing moderate volume growth in 2009/2010. A survey, carried out on behalf of Roma Food Products in 2010, claims that over 80% of Irish consumers eat Italian food once a week, which at least points to the importance that pasta plays in the Irish diet.

COMPETITIVE LANDSCAPE

• Private label continued to have a high share of pasta at about 22% in 2009. However, it lost some of the gains it had made to Roma Food Products, which benefited from low unit prices and a more authentic food offering. The recession brought about an increase in demand from consumers who had been used to buying more premium products. As such, these consumers view the additional cost of buying a branded product as fairly minimal.

PROSPECTS

• Pasta is unlikely to lose favour as a leading ingredient for home cooking and demand is expected to be sustained. However, increased competition from private label brands should dampen unit prices for the mass market.

CATEGORY DATA

Ready Meals in Ireland - Category Analysis

HEADLINES

TRENDS

• Demand for ready meals products held up very strongly amidst recessionary conditions in Ireland in 2010. Retail volume and current value growth rates for the sector outpaced those recorded in 2009, and were also stronger than the respective CAGRs for the review period as a whole. This was somewhat surprising, given that the severity of Ireland’s economic downturn has led to reduced spending on all kinds of goods and services by consumers of all income levels. It seems that the convenience factor, historically one of the main drivers of demand for ready meals, became increasingly important over 2009-2010 as fears over job security led many Irish people to work longer hours. At the same time, demand for ready meals also rose as consumers reduced spending on eating out in foodservice outlets. The fact that prices for ready meals products remained largely unchanged on 2009 also underpinned rising demand.

COMPETITIVE LANDSCAPE

• Private label products remained the most popular within ready meals in 2009, claiming a sector value share of 33%. While this was partly due to the dominant role played by supermarkets/hypermarkets in distribution, it also reflected the growing availability of gourmet-style private label products that compare very favourably with branded ready meals in terms of quality. This trend is best exemplified by Tesco’s Finest range of chilled ready meals. So successful has this range been that the launch of another Tesco private label ready meals range with a higher or premium price positioning has been mooted. In 2009, the penetration of private label products was highest in chilled pizza, where they claimed a value share of 78%, and prepared salads, where they claimed a value share of 60%. Private label products were also dominant in chilled ready meals, where they held a value share of 53%.

PROSPECTS

• Ready meals looks set to continue performing well over the forecast period, with retail constant value and volume sales both expected to grow at a CAGR of 4%. As was the case in 2010, the convenience of ready meals for consumers who work long hours and lead busy lifestyles will be one of the main drivers of demand. At the same time, given the uncertain economic outlook for Ireland, demand for ready meals will continue to rise as consumers reduce spending on eating out. New launches and marketing campaigns by leading players will also contribute to growth in volume and constant value sales. However, with Irish consumers becoming increasingly price conscious, branded manufacturers will have to continue focusing on offering good value for money if they are to resist growing competition from private label products. This is particularly true of frozen pizza manufacturers like Green Isle and Dr Oetker.

CATEGORY DATA

Sauces, Dressings and Condiments in Ireland - Category Analysis

HEADLINES

TRENDS

• The competition within sauces, dressings and condiments intensified in 2010, with few products displayed without a promotional slogan/discount. Promotional offers have become the norm as consumers expect value on every item they buy, especially when it comes to home cooking as starkly lower prices justify eating at home rather than dining out. In 2008-2009, cross border shopping (consumers from the Republic of Ireland buying goods in Northern Ireland), due to the weak pound and generally cheaper prices, became such a popular phenomenon that retailers not present in the Republic of Ireland claimed retail shares. Indeed, cross border shoppers purchased groceries from Sainsbury’s and Asda, a move which put a dent in sales of sauces and condiments in Ireland. However in 2010, signs that this phenomenon was easing became increasingly evident as retailers matched pound to euro prices and inflation turned to deflation (rent/commercial rates and unit prices fell).

COMPETITIVE LANDSCAPE

• Unilever Ireland continued to lead sauces, dressings and condiments in 2009 with a 21% share of retail value sales. Its leadership is primarily due to the offer of the leading Knorr and Hellmann’s brands. The advertising campaign for Knorr Stock Pot has proved particularly successful, hitting on two recurring successful trends in recent Irish advertising campaigns: the preference for “real” versus “fake” ingredients; and good-natured humour. Indeed, product authenticity (in terms of origin or ingredients) is becoming a determining factor in the purchasing decisions of Irish consumers, who are choosing to buy less. Furthermore, advertisements with humour always tend to do well in Ireland, especially when the campaign is funny in both content and visual message (often in the form of animation/puppets).

PROSPECTS

• Sales of sauces, dressings and condiments are expected to grow in both retail value and volume terms over the forecast period to reach EUR211 million in 2015. With online shopping becoming increasingly popular, www.tesco.ie revamped its not-so-easy-to-use website in 2009-2010. While the controversy about Dunnes Stores Ltd’s refusal to disclose its market data to the Central Statistics Office raged on, consumers started to demand rather than simply expect price transparency. This situation is likely to continue into the forecast period, especially if the economy does not recover as quickly as the government anticipates. The internet is a primary means of achieving that and the National Consumers Agency has launched the “Economiser”, a tool to help calculate expenditure. Irish consumers are also increasingly aware of UK price comparison websites for groceries, and this should further the cause for more online shopping options and live price comparisons.

CATEGORY DATA

Snack Bars in Ireland - Category Analysis

HEADLINES

TRENDS

• Snack bars is a young category in Ireland as the first products appeared after 2000 and people are just getting used to their presence. Due to their emergence from a relatively low base snack bars saw huge growth rates over the review period and are still in the growth phase, with 6% current value growth in 2010. This is naturally lower than the 9% seen in 2009, reflecting the increasing maturity of the category.

COMPETITIVE LANDSCAPE

• Kellogg Co of Ireland Ltd continued to lead the category in 2009 with a 48% value share, down slightly on the previous year due to the increase of private label products. Kellogg’s Nutri-Grain, Rice Krispies Squares and Special K dominate cereal snacks. As Kellogg is the most popular breakfast cereal it can also use its top brands in the snack bars environment. Nutri-Grain was one of the first products and has continually extended its flavour range to appeal to a wider consumer base. Despite its value share being lower in 2009 than in the previous year, it still dominated with around 20% of value sales. The second most popular brand, Kellogg’s Rice Krispies, held a value share of only 6% in 2009.

PROSPECTS

• As snack bars were relatively new during the review period they saw high current value CAGR figures. That level of growth will not be maintained over the forecast period, however snack bars continue to grow in both value and volume terms. Over the forecast period a constant value CAGR of 3% is higher than the average packaged food growth rate.

CATEGORY DATA

Soup in Ireland - Category Analysis

HEADLINES

TRENDS

• A growing trend towards home cooking and cheap lunch alternatives have led to positive retail volume and value growth in soup. As in 2009, the category continued to benefit from its image as a healthy food and a good alternative to other quick snacks and/or lunches. Soup is also continuing to make its presence felt in the home in the evenings, catering to time-strapped consumers.

COMPETITIVE LANDSCAPE

• Unilever Ireland Ltd’s Knorr continued to lead soup with a retail value share of 25% in 2009, a slight decrease compared to 2008. In an effort to combat share loss, Unilever launched a EUR1 million above-the-line advertising campaign at the end of 2009 to encourage consumers to use Knorr packet dry soup as an ingredient in meals. The company invested in a TV advertising campaign to promote Knorr Stock Pot, featuring the endorsement of celebrity chef Marco Pierre White. While the product was launched in 2008, it started to gain exposure through a dedicated televised advertising campaign and associated website in 2009.

PROSPECTS

• Soup products are increasingly being marketed as base ingredients for home cooking, a trend which should continue to bolster sales over the forecast period. Campbell’s model of offering recipes has caught on and other brands have realised the added value this brings to consumers. Avonmore’s extended range of chilled soup, for instance, offers recipes leaflets to entice consumers leading busy lifestyles.

CATEGORY DATA

Spreads in Ireland - Category Analysis

HEADLINES

TRENDS

• The spreads category reached a value of EUR48 million in 2010, up 4% in current value terms on 2009. In times of recession time Irish consumers are returning to their favourite food and creating sandwiches for lunch at home, so demand for basic breakfast items with fresh bakery products with jams and other spreads has created new opportunities for manufacturers.

COMPETITIVE LANDSCAPE

• Boyne Valley is the leading brand in the spreads category and the absolute leader in honey. It offers 100% pure and natural honey which is very popular in Ireland. Boyne Valley honey is available in different formats, ranging from small, squeezy packs for kids to large 907g jars. Its latest launch is Manuka Active 15+ honey, which helped the brand keep its leading position, as Irish consumers recognise the various health benefits of Manuka honey.

PROSPECTS

• Spreads are likely to continue growing in value, but there are not too many opportunities to grow in volume as per capita consumption in Ireland is already among the highest in Europe, at 2.4kg per person in 2010. By 2015 the spreads environment is forecast to reach a value of EUR56 million.

CATEGORY DATA

Sugar Confectionery in Ireland - Category Analysis

HEADLINES

TRENDS

• In 2010 sugar confectionery became the best performing confectionery type with a 4% current value terms increase and a 3% volume growth rate. Despite chocolate being the most popular indulgence product in Ireland, and health conscious consumers can find healthier snacks, sugar confectionery is still growing and Irish people like to treat their children and themselves with the different products available. Many product developments in this category are moving towards not only sugar-free products but also natural colours and flavours, and a removal of additives regarding the importance of health considerations for consumers.

COMPETITIVE LANDSCAPE

• The sugar confectionery environment is quite concentrated because the top two companies, Cadbury Ireland and Nestlé Ireland, held almost 50% of total value sales in 2009. They both increased sales of their top brands, such as Bassett’s or Polo. These brands were traditionally the best-performing sugar confectionery products and remain favourites among Irish consumers.

PROSPECTS

• Sugar confectionery is likely to slow down in growth but stay positive over the forecast period. With a positive 2% constant value CAGR over the forecast period the category’s value is expected to reach EUR184 million by 2015. The pastilles, gums, jellies and chews niche is likely to remain the best performer and drive sales in sugar confectionery.

CATEGORY DATA

Sweet and Savoury Snacks in Ireland - Category Analysis

HEADLINES

TRENDS

• In line with the growing health trend, chips/crisps manufacturers are addressing not only the fat content of their products but also the method by which they are produced. Industrial processes are losing favour with Irish consumers and ranges boasting “pan fried” or “hand cooked” methods are becoming increasingly popular. Taglines such as “made with real ingredients” suggest a healthy connotation which may sway consumers to choose one product over another.

COMPETITIVE LANDSCAPE

• Tayto Ltd continued to lead sweet and savoury snacks in 2009 thanks to its established brands and product innovation. The company relaunched two key product lines, Tayto LFC’s (lower fat content) crisps and Perri Onion Rings. In 2009, Tayto held a 27% share of retail value sales, a slight decrease compared to 2008, partly due to Irish consumers choosing healthier snack alternatives such as dried fruit and nuts. In chips/crisps, aggressive advertising and marketing campaigns by its competitors resulted in Tayto’s retail value share decreasing by one percentage point in 2008-2009 to reach 45%.

PROSPECTS

• A continuing focus on health will drive growth in fruit snacks and nuts during the forecast period. The Irish health food company Kelkin Ltd, which is known for producing an extensive range of gluten-free products, has been running free classes to teach parents healthy eating habits since 2006.

CATEGORY DATA