2020 Strategy

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					                              Submission to:

                         Agri-Vision 2020 Strategy

               Department of Agriculture Fisheries and Food

                             Submission from:

      School of Food and Nutritional Sciences, University College Cork

Associate School of Food Business and Development, University College Cork

                                April 2010

Executive Summary

A sustainable innovation-driven food sector is key to economic growth. Several factors
including policy at national, EU and global level and a robust regulatory environment
will influence how successful Ireland is in achieving two goals:

1.     An Agri-food sector that has the ability to adapt to new circumstances and
       opportunities, has a responsive supply chain and can engage in a meaningful
       way with all stakeholders;

2.     An innovative, knowledge-based and market-oriented Agri-food sector.

Attainment of these goals is reliant on a sound knowledge base of supply chain
management, understanding consumer behaviour and demands against the perspective
of global shifts in demographics such as an aging population, and congruent trends in
food consumption, i.e., an increasing focus on healthy aging through optimal nutrition.
Innovation which is market focussed, sustainable, clean, and underpinned by science
will best serve the food sector. Provision of continued support for agriculture and food
research through R&D programmes and stimulating an increased expenditure by the
food industry on R&D is of key importance. In addition, developing education, training
and skills enhancement programmes will benefit the Agri-food sector. These will range
from provision of highly-qualified undergraduates and postgraduates with food-related
degrees to up-skilling and tailored continual professional development courses for
employees of the food industry.

1.0 Introduction

This document is a submission to the Department of Agriculture Fisheries and Food’s
Agri-Vision 2020 Strategy from the School of Food and Nutritional Sciences and
Associate School of Food Business and Development, University College Cork1.

The School of Food and Nutritional Sciences within the College of Science,
Engineering and Food Science (SEFS) is internationally recognised for its leadership in
teaching and research. The overall mission of the School of Food and Nutritional
Sciences is to provide undergraduate and taught postgraduate education in Food and
Nutritional Sciences to the highest standards of excellence, and to ensure that these
programmes of education are relevant to regional, national and European needs, and to
perform research in its areas of expertise to the highest possible standard and of
relevance to regional, national and European needs. The School is also committed to
providing high quality postgraduate and postdoctoral research training; supporting
innovation in the food industry and consumer health protection; engaging in the
transfer of new knowledge to end-users and stake-holders, including industry,
regulatory authorities and policy makers.

Overall, the research interests of the academic staff within the School of Food and
Nutritional Sciences broadly relate to one or more of three disciplinary areas: Nutrition,
Food Chemistry, Food Technology as well as, in some cases, an area at the intersect -
Food and Health. The research activities (which range from dairy, meat, cereals and
beverages, packaging to functional foods and human nutrition) of the School have been
independently reviewed and adjudged as excellent.

The Associate School of Food Business and Development is a primary academic
member with significant interdisciplinary activity in SEFS and the College of Business
and Law at University College Cork. The overall mission of the Associate School of
Food Business and Development is to promote, through its educational, research and
outreach activities, the development and continuing effectiveness of Ireland’s food
businesses, the sustainability of rural and local development, the central role of co-
operatives of all kinds (including credit unions) and the sustainability of livelihoods in
the developing world.

The Associate School of Food Business and Development conducts research in four
main areas: Food Business (Food Economics, Food Management and Food Marketing);
Co-operative Business; Rural Development and International Development. It is a
leader in the development of multi-disciplinary approaches to research, including
further development of linkages between business and science disciplines, which have
been recognised and practised at prestigious universities and research institutions world-
wide and have had a significant impact on the disciplines of economics, marketing,
organisational theory and resource management. This research activity has achieved
considerable success in attracting external funding reflecting a high standing, both in
Ireland and internationally.

    This document was discussed at the Inter-schools Board of Studies on the 29th April 2010.

Food Research Institute at UCC

There is a proposal for UCC to establish a Food-related Research Institute in UCC
which will provide the necessary structure to integrate the many established areas of
research expertise in food and cognate disciplines in the University. This will optimise
the food-related research activity of the Colleges and University. The Institute will be
the entity through which UCC will foster existing and develop new links with other
major players in the food research field nationally and internationally.

                              Agri-Vision Strategy 2020

2.0 Comment

One of the main issues impacting on the food supply chain over the next decade is the
food and society nexus and the complex range of evolving situations that will emerge.
These situations will involve the production, marketing and consumption of food, such
as safety, policy, law, the development and use of functional foods, consumer-driven
innovation, food systems, food chain management, organisational structures and the use
of biotechnology in plant and animal production. This will dictate that an
interdisciplinary approach is imperative, linking the business and science disciplines,
particularly in food research, when undertaking complex research. In addition, from a
policy environment perspective the Irish Agri-food sector will undergo major changes
due to changes impacting from CAP and WTO reform.

Goals: Irish Agri-food sector 2020

   1. Development of an agri-food sector that has the ability to adapt to new
      circumstances and opportunities, has a responsive supply chain and can engage
      in a meaningful way with all stakeholders;

   2. Development of an innovative, knowledge-based and market-oriented Agri-food

In the next sections the major trends that will impact on the food industry over the next
decade are outlined.

3.0 Impact of Policy on the Food Sector

Changes in policy at EU level and WTO are likely to see less market intervention in
Ireland’s key agri-food sub-sectors. The overall impact will result in a more market-
driven industry with an emphasis on the need for cost competitiveness for those sectors
of the food industry focusing on commodity markets. Economies of scale will become
more important, therefore policies encouraging and facilitating consolidation in the
dairy and beef sector will be a high priority. Ireland’s scale at producer level lags our
major competitors and with an ageing farm population the need for structural change
will continue. The increasing focus on scale and competitiveness will be further
emphasised with a likely decline in supports for the agricultural sector. Overall scale
will be a key issue for producers and processors focusing on commodity or main stream
markets. Alongside the focus on scale is the need to continue the move for more value-
added by existing processors and for policies supporting innovation and new product
development. Niche and speciality food markets are likely to continue to grow and
provide opportunities for innovative food companies.

4.0 Food Sector Innovation

Successful product innovation remains an important part of the future success of the
Irish Agri-food sector. Market driven innovation will be seen as key to success in the
extremely competitive, rapidly changing, agri-food sector and to positioning the agri-
food sector in light of a changing business environment. The agri-food sector will have

to adopt new product development (NPD) processes and procedures that will ensure the
development of more successful novel foods that meet with consumer acceptance. This
innovation has to be primed by well resourced food research, ranging from fundamental
to applied in nature.

NPD is considered crucial to the long-term survival, viability, and growth of the agri-
food sector. Successive reports have recommended an investment in NPD to increase
competitiveness and to take advantage of market opportunities that arise from changing
consumer trends, such as the market for nutritionally enhanced products. This could
include the development of new technologies for manufacturing specific ingredients for
specific foods and utilising market-oriented market research techniques to target key
consumer groups. The healthy eating sector as a whole looks set to expand rapidly with
ongoing NPD resulting in an increased product offering on the part of manufacturers.
However, a consumer-oriented product design approach is a key success factor for
developing nutritionally enhanced foods that gain consumer acceptance. Consumer-
oriented NPD involves using innovative methodologies to understand consumer
requirements and purchase motivations, particularly at the early stages of the NPD
design process. Notwithstanding the importance of science and technology push to
innovation it can also be driven by superior understanding of consumers’ needs.
Information generated directly from the consumer can then be translated into product
design attributes that encourage the purchase of functionally enhanced products by
targeted consumer groups.

The demand for quality and variety in food products will remain undiminished while
economic circumstances dictate constant vigilance with regard to ingredient, processing
and packaging costs. With regard to both traditional and newer foods, clean labels
(reduced additives and preservatives), brand protection and consumer satisfaction
continue to depend heavily on the delivery of products of consistent quality. All of these
factors constitute a complex and changing operating environment for the food sector.

In terms of competing in an international business arena firms must face, and embrace,
consumers where there is no such thing as a ‘typical’ consumer. Food businesses are
embarking on new levels of value-added downstream products. These products cover a
range of products, from the major firms to small artisanal producers, and these firms
face unrelenting changes in consumer demands and market structures.

Innovation changes can be viewed in the context of changing consumption patterns,
increased business competition and a food industry that is globalised. There is an
opportunity for brands which genuinely embody ‘health’ and ‘wellness’ to build a long-
term competitive advantage which should translate into sustainable sales growth and
margin expansion. Issues such as obesity have become political and social issues;
consequently food businesses are going to be under rising pressure from governments,
health organisations, consumer associations and the media to behave as very good
corporate citizens.

5.0 Sustainable Development of the Agri-food Sector

A key focus for agri-food will be the sustainable development of this sector, first by
adopting an extended food chain perspective on the sustainable supply and usage of our
natural resources to meet the increasing environmental demands of regulators,

customers, and consumers and second by promoting the continued emergence, growth,
and maturation of an internationally competitive SME sector.

Key themes in this area will focus on improved practices (e.g. resource utilisation, and
supply chain practices), the adoption and commercialisation of innovation (existing
product development and new product development) and usage of novel technologies,
and improved market orientation and customer-focused activities.

With increased consumer interest in less intensive farming patterns food businesses will
have to reflect this interest in their business models. Business strategies will have to
focus on increased interest in local food as far as practicable, and in improving labelling
and other information for consumers.

A more market-oriented approach to business in relation to consumer demands is seen
as essential to business success in increasingly competitive markets when differentiated
strategies are required by firms.

6.0 Supply Chain Management

Traditionally food Supply Chain Management (SCM2) in Ireland has focused on the
flow of product related information. While traceability of products will remain an
important function the Irish agri-food industry should also embrace the role of SCM in
supporting both cost reduction and value-add strategies. With some notable exceptions
Irish agri-food companies have not kept pace with SCM best practice. In particular,
greater emphasis and competency building is required in the following areas:

       ‘Product design/development chain’ and ‘supply/delivery chain’ alignment.
       Supply Chain efficiency (lean) and responsiveness (agile).
       Strategic orientation.

Market Responsive (Pull) Supply Chains

“Did you ever try to push a chain?”

There has been much debate as to whether the chain analogy accurately describes the
management of the inter-organisational business processes required to deliver product
and satisfy customer requirements. We find the analogy useful in that it emphasises the
need to respond to consumer demand (pull) and not resort to pushing product through
the chain. In recent decades we have become familiar with marketing and related
concepts, however many supply chains fail to move from the traditional production
orientation (push) to a market orientation (pull). This is most evident in the separation
of product design and development from production and delivery. Notwithstanding the
fact that most of the costs are built into the product at design phase there is often little
consideration of this during the product development stage leading to a costly
proliferation of Stock Keeping Units (SKUs). Research has demonstrated that a clear

  Supply Chain Management (SCM) encompasses all the activities associated with a given product, from
the raw materials stage to the final consumer. Effective SCM requires a detailed understanding of
processing issues, and also of supply chain structures, supply and demand variability, production
scheduling, order processing, inventory management, IT systems, process design and customer services.

understanding of the value of product attributes from the customer’s perspective (VOC
– Voice of the Customer) can lead to better product variety management. Thus
identification and use of both customer facing and process facing (VOP - Voice of the
Process) metrics provides for a more aligned supply chain.

At a more fundamental level, the alignment of the ‘product design and development’
chain and the ‘production and delivery’ chain is required to better disseminate R&D
knowledge. While some progress has been made in recent years in terms of funding
R&D at an institutional level (and we hope that this will continue) it has often proven
difficult to transfer this knowledge to industry. This challenge is not unique to Ireland,
nor is it unique to institutional research as evidence has shown that companies across a
range of industries need to pay more attention to the impact of product design on supply
chain efficiency. Thus the need to create strong interaction between both activities
(design and delivery) has emerged as a key challenge facing many global businesses

Management for Efficient and Responsive Product Supply

“Turnover is vanity, profit is sanity, cash is king!”

The past decade has witnessed an evolution in the structure of the food industry, as food
manufacturers, suppliers and retailers have tried to adjust to consumer demand for a
wide variety of products. As indicated above management of this ever-widening product
portfolio has become essential to both cost control and value creation. Hence managing
variety in the context of both cost reduction and increasing value (i.e. speed of product
development, roll-out and removal) is central to business profitability. Thus food
companies need to establish and manage Key Performance Indicators (KPIs) to ensure
cash flow, control costs, add value and ultimately make profits (VOB – Voice of the
Business). Increasingly both lean and agile approaches are employed to achieve both
process efficiency and responsiveness in today’s food manufacturing environment.

Thus in recent years SCM and the role of continuous improvement approaches (such as
Lean) have emerged as competencies of fundamental importance to Irish agri-food
companies. For example, the Future Skills Requirements of the Food and Beverages
Sector (EGFSN, November 2009) reports that supply chain management is now “widely
seen as a huge skills challenge. The standards facing the supply chain are now more
exacting and the level of financial performance and control is more sophisticated. There
is a focus on reducing inventory levels, managing working capital more effectively and
building the skills required to deliver an efficient supply chain.” The report highlighted
the need to address management development needs and specifically focused on the
importance of lean competencies to future development: “people working in the supply
chain need to apply lean principles and therefore need training in lean. The goal should
be to achieve a lean supply chain and this requires building the lean and six sigma
competency among the supply chain” (p.161). The adoption of best practice along the
food supply chain requires competency development in the following areas:

      Application of best practice approaches and techniques to align strategic and
       operational activities.
      Management of supply chain flows (materials, finance & information) and
       cross-functional KPIs and associated metrics (e.g. customer facing, efficiency,

       asset utilisation).
      Management of supplier and customer relationships.

Supply Strategy – Finding our Place in a Global Market

Total food and packaging waste in the supply chain is estimated to have cost the UK
economy £17 billion in 2009 (IGD, 31 March 2010).

Changing global demographic, socio-economic and environmental forces are expected
to reshape food supply and demand over the coming decades. The impact of these
changes on the Irish Food Sector will focus attention on value-add and cost reduction
opportunities and practices. In this context both sustainability and supply of food (in
particular protein rich food) presents opportunities and challenges. Business
sustainability, in the widest sense, will continue to increase in importance. Thus the
ability of the industry to generate, establish, and promote the growth of internationally
competitive agri-food businesses will depend, at least in part, on the adoption of:
improved practices (e.g. resource utilisation and supply chain practices),
commercialisation of innovation and novel technologies, and market orientation

7.0 Consumer Demands and the Business Environment

In this section the key consumer and business environment trends that will influence the
development of the Irish food industry are considered. Such trends will set the scene for
the required support by state agencies and the direction food companies may take.

Consumer Demands

When making food decisions individuals consider foods in the context of their overall
diet and the macro- and micro-environments within which they reside. This means that
to the casual observer conflicting and contradicting food choice motives and patterns are
evident. These apparent contradictions can be explained by such factors as food
availability in the immediate environment and the underlying context or situation that
frames the food decision. However, for most consumers, congruency and satisfaction at
the overall diet level is a central driver of choice. Consequently we have to anticipate
the impact of internal negotiations in food choice and the formation of food strategies to
cope with the repetitive aspects of food acquisition. In the context of a changing
environment where future income expectations have altered and the sense of stability
has been threatened we have observed many shifting patterns in food behaviour. Greater
price sensitivity, deal seeking and a reassessment of product quality characteristics have
been observed in recent times. Products failing to deliver a particular value to the
consumer are now being ‘delisted’ by them. This re-evaluation is influenced by past
experiences, value prioritisation and personal (including psychological and economical)
and social factors. Consumers are and will continue to seek more for less. However,
what ‘more’ translates into at the product level is a central question. In the following
paragraphs we will consider some of the mega trends for the coming decade and how
they will affect demand taking into account the key value propositions sought by
consumers and citizens. The core value propositions for food include enjoyment
(including variety), managing relationships (familial), health (including performance),
safety, security, convenience and social responsibility. The relative importance of these
values differs across the population and over the life of the individual and thus presents

a dynamic and challenging environment for food firms. This demands constant
innovation and improvement of existing products. The trends presented below are
intertwined and company responses to such trends should reflect the interconnected and
contradicting nature of consumer motives.

Life-stage Foods and Dietary Solutions - “Let food be your medicine”

Over the past decade we have witnessed an increased awareness within the general
population of the link between food and health. This awareness has manifested itself in
a number of ways ranging from increasing demand for traditionally produced foods
through to demanding highly processed functionally enhanced foods. The food industry
has responded to this trend by offering a wide range of alternatives that takes account of
the various meanings that consumers associate with healthy foods. In the longer term
personalised health and nutrigenomics may offer individual health management
solutions (i.e. a more customised solution). However, in the short to medium term these
developments may meet with some citizen resistance on moral and ethical grounds.
Over the coming decade we will witness greater demand for ‘generational food’
designed to align to the general food based health demands of each generation. We may
see, for example, an emphasis on body and mind building among the younger
generation where they and their guardians are concerned with delivering the ‘right set of
nutrients’ to maximise the development and long-term performance of body and mind.
Optimism, with regard to future health and wellbeing, will frame this group’s food
choice decisions. Realism will frame food choice decisions of the middle generation and
consumption decisions will be made based on the need to minimise wear and tear and
provide the body with the nutrients required to prolong a healthy and active lifestyle.
These motivations will be underpinned by a desire to extend youth (appearance and
energy levels). In the older generations demand will centre on food as a solution to
health problems (i.e. body cures). The potential cascading effects of using drugs to deal
with chronic ailments (such as arthritis, digestive health, and coronary disease) will
result in greater demands for alternative food based solutions to resolve such problems.
This will lead to an increased focus on ailment specific food products.

Product and brand credibility regarding the authenticity of the proposed health benefits
will impinge on consumer confidence in the food supply chain. Any questions
surrounding the efficacy of such products will meet with a vocal and outraged
consumer. Furthermore, transparency on the potential trade-offs between the
technologies and health benefits is necessary to allow consumer freedom of choice.
‘Good science’ is a necessary prerequisite to market development.

This trend will provide significant opportunities for the functional food market where
claims and delivery of promised benefits can be substantiated. The relationship between
food, health, and consumer requirements will drive innovation in the food sector but
effective patenting, and protection and licensing of intellectual property rights will be
required to ensure that value added is not appropriated by powerful retailers.

Preparing for their and my future by looking to the past - "You are what you eat”

In line with the observations regarding ‘generational food’ we will continue to observe
demand for ‘traditional type’ foods. The cynical perspective by segments of the
population on ‘processed’ foods has resulted in increasing demand for foods that are

perceived to minimise exposure to ‘artificial’ additives and chemicals. The perceived
‘unknown consequences’ of such ‘artificial’ inputs on long-term health has motivated
some to consider their children’s diet independently of their own and thus purchase
products such as organic food to address this issue. Others are purchasing such products
to enhance their well-being now and into the future. Thus foods produced or processed
using traditional methods and judged as high in natural and fresh ingredients will
remain in demand.

Motivations driving demand for ‘traditional’ foods are also embedded in the underlying
desire for security, which is a very strong driving value during recessions. This desire
for a sense of security has resulted in increasing demand for products that formed part
of yesteryear’s menu. Thus nostalgic foods, locally produced foods as well as food with
a strong national identity have experienced increased demand. Such increasing demand
provides opportunities for food manufacturers to augment their relationship with their
customers. However, as the effects of the recession abate the importance of feeling
secure may also lessen and more individual/lifestyle motives may come to the fore.
Thus local and speciality food producers can use this opportunity to create a concept
that their customers believe in (and feel part of) which extends beyond feelings of
comfort and security. By developing this (i.e. creating a product community), trust and
confidence in the brand is enhanced.

Living for now - “Eat to Live or Live to Eat”

As mentioned earlier a combination of motives influence food choice decisions however
taste is, and will continue to be, of central importance. While health, convenience,
quality and social influences, among other factors, can play an important role, taste will
remain as one of the most important drivers of demand. However, energy dense foods,
many of which are considered to have low nutritional value, are generally perceived as
the most enjoyable and for some are perceived as tempting and addictive. With the
ongoing problem of obesity and associated health care costs the issues around these
perceptions could result in a social backlash against food companies. In response to this,
product reformulation, based on ethical and corporate social responsibility goals, will

Citizenship and Food - “First do no harm”

It is envisaged that food production systems and underlying technologies will become
more politicised. There will be a more transparent relationship between food
consumption and health care costs, direct household costs and long-term environmental
costs facing future generations. Thus, new and novel technologies will be subject to
ongoing evaluations by consumers and citizens. When using novel approaches in the
production and the delivery of food, the meaning and value of these technologies to all
food chain stakeholders needs to evaluated in the context of the perceived risks to
society. Demand for involvement of social actors in the formation of policy will result
in societal norms and values playing a greater role in decisions on risk management.
Delivery of radical food innovations will occur within more transparent and
consumer/citizen orientated regulatory systems.

Consumers will become more aware of the environmental and financial consequences
of wasteful resource usage. At one level this will give rise to positive choices for foods

produced within more natural production systems and delivered via more local and
shorter food supply chains. The financial burden of waste disposal and water usage will
increase, resulting in new food waste minimisation strategies in the household (with
more demand for variable weight products: buy what I need), more recycling of green
waste (composting), and at home food production. While these processes themselves are
unlikely to shape food consumption directly, indirect effects by increasing consumers’
knowledge of, and interest in, food will have a greater impact over time.

The perceived threat to future generations from food production and distribution
systems will continue to concern segments of the population and as a result some will
consider adjustments to their individual lifestyles in efforts to conserve natural
resources. However, the majority of those concerned will seek product alternatives that
demonstrate a respect for environmental limits, actively sustain the natural resources
and minimise the negative emissions associated with food production. In this regard
better natural resource utilisation has the potential to create a convergence of business
through lower costs and corporate social responsibility (CSR) benefits.

Ongoing advancements in information technology and diffusion of these technologies
into the population will provide manufacturers with new means of communicating
consumer relevant product information at the point of purchase (e.g. web-based
applications to make product information available by entering a bar-code). This
information will assist in food risk/benefit assessment at the self, familial, societal and
the environmental (both short-term and long-term) levels.

The Business Environment

The trends outlined above will shape the direction and product related activities of
retailers and suppliers serving a more multiphrenic consumer. The business
environment will be shaped by a series of internal and external forces. These include
input costs, the interplay of branding and technology, increasing concentration levels
and the growing power of global retailers, and the move to a more global consumer
market as developing markets mature. One of the key issues that emerges is the
distinction between Ireland as a supplier of food inputs (commodities) into a global
market characterised by increasing demand and Ireland as a supplier of value added
products (ingredients and consumer foods). The challenge facing the latter will be the
future development of a vibrant and sustainable SME sector that manages to insulate
itself from retail appropriation.

Economic Revisionism and Food Inflation -A budget tells us what we can't afford, but it
doesn't keep us from buying it (Feather, W.)

Financial lessons over the past few years, including the uncertain nature of employment
and pension risks, will inform future consumer decision-making in western markets. It
is likely to result in increased saving and frugality and the emergence of a more price
and promotion focused shopper.

It is inevitable that oil prices will rise and when coupled with increased global demand
for food will lead to rising food prices. As in the past, food prices will become a
political matter with greater calls for profitability transparency particularly of
international retailers trading throughout Europe.

Branding and Pricing – Brand is king, or is it?

Branding will continue to play an important role in establishing and maintaining a
mutually beneficial relationship with the consumer. The recent diffusion of technology
among consumers has facilitated the emergence of new brand communities. These
groups will become more significant within the food channel, both as advocates and
defenders of brands and products. Consumers’ willingness to spend more time engaging
with their preferred brands represents an important opportunity for Irish SMEs and their
brands. It is envisaged that consumers will be more discerning in the prices that they are
willing to pay for brands. Ongoing promotional activity with deep price cuts has
devalued brands and reduced consumers’ perceived reference price. A more store deal
prone shopper, who perceives that deals are always available, has emerged exerting a
downward pressure on brands’ premia.

Retail Issues: The big will just keep getting bigger

Retail concentration will continue both nationally and internationally as the expansion
of best of breed retailers will be facilitated by global sourcing, global pricing, and
continued innovation in efficient business and supply chain processes. It is clear that
geographically diversified retailers will be better positioned to deal with the asymmetric
distribution of global economic growth and debt.

Grocery retailers are of systemic importance to the functioning of the Irish economy in
terms of job creation in the food industry, sustainability of Irish agriculture (through
their pricing) and food distribution to a geographically dispersed market (especially
under severe weather conditions). As a consequence, the large retailers’ activities,
profitability, and impact on the local, national and broader European economy will
come under more scrutiny.

More global sourcing and pricing will continue the polarisation process within retailers’
product assortment with strong own brands co-existing with strong international brands.
This will place greater competitive pressure on SMEs seeking shelf space for their
branded products. Retailers have demonstrated their abilities to develop new and
technologically challenging product categories (e.g. chilled ready meals). This
capability will extend into new and emerging health orientated categories which will be
an attractive market for innovative SMEs who have access to advanced food science.
The challenge facing SMEs will to protect their value added from retail appropriation.

Channels, other than mainstream grocery, will become more important to the SME
sector. Discount shopping has become the norm and discounters’ share of the market
will continue to grow in Ireland. Discounters are an important part of a structurally
developed and competitive retail landscape. The presence of these retailers will help
sustain price competition in the market and they will provide an important alternative
marketing channel for food suppliers.

Retail concentration will result in increased variety within retailers but reduced variety
within markets. Initially this will represent a further constraint on the growth of SMEs
but the lack of variety will ultimately stimulate the emergence of new food channels.
The consumer trend for short food chains and naturalness will promote the re-
emergence of niche local specialist retailers particularly in the areas of meat and fish.

Small and Medium-sized Enterprises (SMEs): Avoiding the Big Squeeze- “A diamond is
a chunk of coal made good under pressure” (Kissinger, 1923)

International retail concentration will be matched by countervailing consolidation in
food manufacturing, particularly among the globally branded food companies.
Deepening relationships between large-scale retailers and manufacturers, particularly as
they both target emerging markets for growth, will represent a significant barrier to the
emergence and growth of the indigenous branded SME sector. In the absence of change
the global consolidation of buying activities (outside Ireland) and retail control of
selling space will act as barriers to entry for new food businesses and constrain the
development of value adding brands and local employment.

It needs to be recognised that market access is becoming more difficult for new food
businesses and that positive efforts are required to establish new food marketing
channels drawing on the emergent demand for short food chains, naturalness, and
sustainability. While farmers’ markets offered opportunities over recent years a more
radical approach, focusing on value for money (rather than premiumisation) and
shopper access is required to establish a channel structure that can sustain food
businesses. The development of these channels will be facilitated by demand for local
food and speciality products and by the growth of brand communities and food

The demand for local food and speciality food will increase over the next few years.
Increased investment will be required for the development of this sector for training,
marketing and also in capital expenditure. Asymmetries in the bargaining power of
producers in the agri-food chain and a disconnection between the price paid to
producers and the price paid by consumers will need to be addressed. The potentially
vital role of food producers’ co-operatives in giving growers increased access to retail
markets through enhanced bargaining power will need greater exploration.

8.0 Harnessing the Irish Food and Nutritional Science Knowledge-base

There is a huge capability within the Island of Ireland to deliver upon foods with health,
nutritional and functional attributes. A sustained co-operation between industry and
academia will help deliver on further growth potential in the various subsectors of the
food industry underpinned by scientific and technological developments in production,
processing, packing and in nutrition. Harnessing the expertise of the critical mass of
food and nutritional science researchers in Ireland will provide benefits for traditional
foods, re-formulated foods and functional foods. This may range from application of
advancements in fundamental food science to conduct of human intervention trials to
lead to innovative, high-quality safe food products which can make validated health

8.1 Food Sector Research

The Irish Agri-food sector is one of the most important and dynamic indigenous
industries and to maintain competitiveness needs to have a food research programme
that is at the forefront of knowledge generation in terms of the world-wide Agri-food
sector. This should include:

       -   Providing research funding for both fundamental and applied research
           focussed on excellence, innovation, development of human capital and
           technology transfer to industry

       -   Providing funding for three thematic areas: Food, nutrition and health; Food
           science and technology; and Food business and the food consumer

       -   Continued and enhanced interaction between the Irish food industry and the
           key food research institutions

       -   Creating critical mass of expertise across the food business and the consumer
           research areas

       -   Providing continued support for agriculture and food research through R&D
           programmes such as FIRM

       -   Stimulating an increased expenditure by the food industry on R&D

       -   Consolidating investment in Irish centres of world-wide excellence in

       -   Encouraging more food firm specific research

       -   Support for the systematic identification of potential and realistic new
           ingredients and technologies

8.2 Food Sector Education and Training
The Expert Group on Future Skills Needs Forfas Report (EGFSN, November 2009)
provided a very comprehensive overview on future skills requirements of the food and
beverage sector. The Schools believe that the following education and training
initiatives are required:

   -   Developing education, training and skills enhancement programmes for the
       Agri-food sector. These will range from provision of highly-qualified
       undergraduates and postgraduates with food-related degrees to up-skilling and
       tailored continual professional development courses for employees of the food

   -   Ensuring that the knowledge and skill base of the Agri-food sector are at the
       cutting edge of the world-wide industry and that generate economic and social

   -   Providing training in knowledge transfer processes from third-level institutions
       to industry.

   -   Supporting on going research to enhance the provision of highly educated
       postgraduates to the industry.

   -   A highly competitive dynamic market requires energised knowledgeable
       employees. This can only be achieved through a well resourced educational

Knowledge transfer to the workplace requires a pedagogical approach that embraces an
iterative learning process between the classroom and the workplace. This approach
encourages participants to apply learning in their workplace and enables them to keep
abreast of changing industry trends in the areas of strategic and operations management.
Thus, consideration should be given to support the design and delivery of knowledge
transfer programmes that encourage life long learning and thus embed a continuous
improvement philosophy in the workplace. This approach supports companies who
endeavour to build human capital though coordinating business process management
and learning management activities.


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