VIEWS: 53 PAGES: 8 POSTED ON: 3/9/2010
11_Food & Drink
Food & Drink 11 111 Introduction Introduction Natural Success Story Michael Bell Northern Ireland’s food and drink drink industry has not progressed as margin is approximately 2_%. Energy Food & Drink sector has a hard-earned reputation well over the past number of years as costs and movements in them are for quality and freshness which sits the sector has in the Republic. therefore a very significant part of this happily with external perceptions of percentage and can have a huge effect Northern Ireland as naturally on manufacturing economics. beautiful and unspoilt. ... the sector is one of the The Government’s announcement largest economic activities on of a £30m rebate last year was a hugely I t’s a charming but rather laid back the island and is certainly the welcome lift for the industry . . . and analogy which shows just one largest area of cross-border the subsequent withdrawal of that is dimension of what is an extremely trade ... disingenuous to say the least. Energy complex and competitive marketplace. costs continue to run approximately Behind the scenes, the food and drink 50% above those of our UK-based sector has been coping with turbulent This is in some measure due to colleagues and this is a significant – times. exchange rates and local government some might even say impossible - Food and drink manufacturing support. Having said that, we have hurdle for the sector to overcome. continues to be the backbone of the many companies that enjoy global The recent requisition of Safeway Northern Ireland economy. Perhaps reputations for excellence and which Northern Ireland by Morrison’s surprisingly, its profile is not are category champions among many presents another challenge for the particularly high among local of the major retailers. supply base. Whether Morrison’s consumers, but its importance to As an industry we enjoy a strong decides to come here or to sell, either Northern Ireland cannot be reputation amongst the best in many scenario will prompt some supplier underestimated. areas. base contraction. Turbulence in the Food and drink manufacturing has The big challenges facing the sector market place is always difficult for a long tradition on the island of include the cost of energy locally. Food suppliers and, with low margins, food Ireland, both North and South, and and drink manufacturing average net is especially sensitive. the sector is one of the largest economic activities on the island and is Michael Bell certainly the largest area of cross- border trade. In Northern Ireland we have 176 food and drink manufacturers whose turnover is greater than £1m. The total turnover of the industry is more than £2,365m and employment today is 19,295. It is interesting to chew over those statistics, if you will forgive the shameless pun. Food and drink manufacturing employment has been relatively constant over the past five years, steady at about 19,000. This hides the fact, that in this period, the industry has made huge strides in manufacturing efficiency gain and added value per employee gain, and indeed has faced employment shortages in Northern Ireland, such that the industry is now using numbers of foreign labour. The future for the industry, while tough, is bright, and with sufficient government help could be brighter, although Northern Ireland’s food and 112 Introduction Introduction Food & Drink The continuing highly competitive market place, with deflation being a regular feature over the past number of years, looks set to continue and, indeed, deflation appears to be spreading into other sectors, notably electronics and automotive. However, in food, deflation cannot continue ad infinitum without some serious effects. The principal of these will be the exporting of most of our food supply chains to third world countries. While this may have major cost advantages for retailers and consumers in the short term, longer- term problems include security of food supply, vulnerability to oil price fluctuations, and bio-security with issues around disease control and traceability. robably the most important issue however is sustainability and the impact of farming activities on the environment. The commercial difficulties facing Northern Ireland’s farmers and the agricultural community generally have been well documented and much work is being done to arrest – even reverse – the decline of this all-important facet of our economy. As farming suffers, so too does the food and drink sector for the two are inextricably linked. As an industry we enjoy a strong reputation amongst the best in many areas essential to survival. looking at ways to add value, pushing Northern Ireland’s food and drink up margins and building new PWhile external factors have sector is learning to be as keen and ‘customer delight’ into our product combined against both, these are also lean as it is green. offers. sectors that are working hard to Costs are kept tight so that change themselves. Traditional at the companies can cope with the low Michael Bell is executive director of the core, each has found change difficult, margins that are commonplace in the Northern Ireland Food & Drink but they recognise that change is industry. But we are increasingly Association 113 Overview Overview At the Heart of the Economy Tim Brannigan A decade ago few would have He instances competence and opportunities by developing new Food & Drink foreseen the extent and rapidity of forward thinking among the industry’s products and understanding the the changes that the province’s leaders as the key components in importance of good marketing. This food sector would undergo during driving the food sector’s fight for has ultimately made our industry the course of ten years. survival. stronger and more sustainable.” “Northern Ireland’s food industry The province’s big food processors T he arrival of the UK multiples in has had to adapt quickly to changing – such as Moy Park, Dale Farm, and the mid-1990s was the first in a circumstances, but its continued Linden Foods – have led the industry’s series of developments that have strength is a tribute to those within the response to new market conditions completely transformed the industry for industry,” he says. with an outward looking producers, processors, and suppliers “Right across the supply chain determination. alike. As the UK’s big supermarkets people have had to seek out new Dale Farm chief executive and CBI quickly embedded themselves into Northern Ireland’s retail landscape, they not only brought fresh Continuing Excellence opportunities, but also new threats. Globalisation and the ever-changing The awards were established in demands of the consumer have created 1970 and are judged by its 22 further turbulence in the sector and members who visit various precipitated major restructuring in an restaurants throughout Northern industry that has long been central to Ireland during the course of the year. the prosperity of Northern Ireland. Paul Rankin is delighted to receive the award for the second time. “All of the staff at Cayenne work hard to ... a very stable and robust offer customers the ultimate dining part of our economy ... experience. This accolade is testament to their dedication and hard work. The fact that we have As Michael Bell of the Northern received the award on two occasions Ireland Food & Drink Association demonstrates our consistently high (NIFDA) states, the food industry, level of service and first class food.” along with its sister sector the drinks Celebrity chefs Paul and Jeanne industry, has always been at the heart Rankin have picked up many other of the province’s economy, employing accolades for their Cayenne around 20,000 people and producing restaurant. For instance, it has been close to 7% of the province’s gross placed in the top 10 restaurants in domestic product (GDP). the UK in the Time Out’s guide to He also notes that whereas the new eating and drinking in Great Britain economy took its toll on other traditional industries, most notably and Ireland - the only Northern Paul Rankin textiles, the food industry has managed Ireland restaurant to make the list. to sustain employment levels and grow Paul and Jeanne Rankin’s award- Other awards include that of ‘Best output. This resilience, the NIFDA winning Cayenne restaurant in Restaurant in Ireland’ from the executive director says, can be Belfast has won yet another prize for Jameson’s Guide and the ‘Bib attributed to a number of factors. its quality cuisine, having been Gourmand’ from Michelin. “The island of Ireland as a whole is acclaimed the ‘Best Restaurant 2004’ Cayenne has also been named as a very strong food and drink by The Grub Club. one of the UK’s best restaurants by manufacturing entity, not least because Cayenne, on Belfast’s Shaftesbury The Observer Food Monthly of some simple fundamentals. We’re Square, is the only restaurant in the magazine, which said that “the blessed with a moderate climate, history of the awards to have atmosphere in Paul and Jeanne there’s no heavy industry or nuclear received the prize on two occasions, Rankin’s restaurant is just as hot and industry, and our products therefore as the Rankins also received the modern as the menu”. have an international reputation for award in 2000. being clean and wholesome.” 114 Overview Overview Northern Ireland chairman David technology and increased industry as a whole can move forward Food & Drink Dobbin sums up the climate succinctly. manufacturing capability, and a further together. “It’s a case of gearing up or clearing £10m on developing a state-of-the-art “We have a cluster of companies in out,” he says. innovation and product development Northern Ireland that I believe helps “Our customers are getting stronger centre to drive its product range us to maintain competitive advantage,” and larger as we see consolidation on forward. he says. the high street and in the food service “We’ve done all that and we still say “As staff migrate from one firm to sector. The enlargement of the we have a lot to do,” he says, “but we the other and share best practice, it European Union, the outcome of the feel we’ve made a good start.” helps to keep the industry on its toes world trade talks, and the review of ‘Innovation’ and ‘adding value’ are and ensures that we remain the EU’s Common Agricultural Policy also the key terms at Wilson’s Country competitive. It also has its advantages will present additional challenges for Vegetables in Portadown, where in creating critical mass.” which we need to be prepared. Either founder and chief executive Angus Mr Bell is adamant, however, that you compete in that environment and Wilson has had to counter low-cost the government must play its part in succeed or you’re going to have to competition from outside the province. augmenting what is already an leave the sector altogether.” inherently strong sector and one that The companies that will survive, Mr has often been neglected. Dobbin says, need to take a global ... the food industry ... “Despite our significant input, we view and play to their strengths. has always been at the heart have been disappointed with the “Any company that’s going to thrive of the province’s economy ... outcome of both the government’s in this environment is going to have to Strategy 2010 document and the be much more competitive, much Department of Agriculture and Rural more market focused, and more “We in Northern Ireland can’t match Development’s Vision report,” he says. inventive and innovative in terms of the scale of our counterparts in Great “We think that this needs to be trying to differentiate what they’re Britain who are often dealing in five to addressed and recently in developing a offering against a crowd,” he says. ten times the quantity,” says Mr Wilson. Food Strategy Group with the The recent performance of Dale “The efficiencies of their larger Department of Enterprise, Trade and Farm, which is wholly owned by operations mean that in many Investment we have raised a number farmers’ co-operative United Dairy instances they can pack product at of criticisms.” Farmers, is a testament to Mr lower cost.” Not least among the industry’s Dobbin’s strategy.The company The Wilson’s Country Vegetables concerns is its failure to receive due anticipated changes in the dairy response to their larger competitors’ recognition, whether it’s from the processing sector and shifted its focus advantage has been to focus on government or from the general public. accordingly from commodities to regional and added-value products. Mr Bell is optimistic, however, that the value-added products. They tailor these products, mainly for perception will soon change. “Dale Farm has doubled the size of the local market, through a strategy “We have between 200 and 300 its sales in the past four years and that to date has proved successful. businesses forming a very stable and decreased its reliance on commodity “We have ways of adding value and robust part of our economy and this sales, which now account for just 40% trying to regionalise our products,” says needs to be reflected in the support we of sales, compared with 80% Mr Wilson. “For example, there is more receive,” he says. previously. demand for our fertiliser-free potatoes “We need a clear and decisive “Consumer product sales have in the home market than in Britain strategy from the government that quadrupled over the same period and I because the Irish like dry potatoes. It is translates into action.” think that growth is a sign that we in areas like these that we have to With this and all the other key must be doing something right.” differentiate and add value.” components in place, Michael Bell Dale Farm’s restructuring, which As the food sector has become insists, the sector once written off as a has been achieved against a more outward-looking, attitudes ‘sunset industry’ can maintain the background of paying the best possible between regional competitors within Northern Ireland food industry’s price for milk to its shareholder the province have also changed. Dale position on the world map. suppliers, has been expensive, Mr Farm chief executive David Dobbin’s Dobbin concedes. assertion that the company two miles Tim Brannigan is a freelance journalist The company has spent £30m on down the road is “no longer regarded acquisitions, £20m on re-equipping as the enemy” is echoed by NIFDA’s itself with better information Michael Bell, who believes that the 115 Overview Overview A Massive Contribution Tim Brannigan In a region that has had more than and the problem of high fuel costs has social as well as economic role. Food & Drink its fair share of bad news, the food been well-documented. Predictably, “Many of the jobs we’re providing and drinks industry stands tall as the issue of the lack of attention from give employment for educational low one of the shining lights of the the government in Northern Ireland is attainers, which is an important part of Northern Ireland economy. also an area of concern to the industry. a mixed economy,” says Mr Bell. He says that his association’s T he figures for the industry are members are passionate about food impressive. Annual turnover is ... demonstrated continuous and drink manufacturing. “It’s a very £2.3bn and, if farming is taken growth ... strong industry here in terms of global into account, the sector produces competitiveness and we’ve got an around 6% to 7% of Northern industry with a superb reputation in Ireland’s gross domestic product “The government has tended to terms of quality and standards.” (GDP). focus on other directions and that has Within the food and drinks industry, However, many people remain had a negative effect on the entire the soft drinks sector – which makes unaware of its true significance, says private sector and not just up around 10% of the industry – is Michael Bell, executive director of the manufacturing,” says Mr Bell. generally considered to be innovative Northern Ireland Food and Drinks The government’s attitude needs to and enjoys high margins. Association. change, he believes. It should focus on The view from one of the leading “The food and drinks sector is a supporting the food and drink industry soft drinks makers in the Northern real success story for Northern Ireland because there are a “huge number of Ireland remains optimistic. but we do not get the recognition we issues to be addressed”. John Barrett, chairman of Coca- deserve despite making a massive Despite the lack of attention, the Cola Bottlers (Ulster), describes the contribution to the economy. industry has demonstrated its soft drinks market as ‘matured’ but “The food and drinks sector is the resourcefulness. The strength and still offering the prospect of strong backbone of the Northern Irish resilience of this sector is perhaps best growth. The soft drinks market is economy – there’s no other way to say underlined by figures which show that healthy at the moment with annual it. in 1996, there were about 26,000 jobs growth of around 3%. “We have a good industry here in textiles and 21,000 in which is rising to the global challenge manufacturing. Now, eight years later, and is meeting that challenge,” says Mr there are 19,500 in food and drink ... one of the shining lights Bell. manufacturing and fewer than 7,000 in of the Northern Ireland He feels that trading in Northern textiles. economy ... Ireland presents unique difficulties. Further, industry leaders are keen to Being on an island on the periphery point out, these are long-term reliable of Europe throws up logistical issues, jobs and often they have a crucial “The key factor in the market is the movement of consumers towards a far more diverse and varied portfolio of non-alcoholic beverages,” says Mr Barrett. “This trend has been prevalent across the entire food and drink industry over the past ten years and soft drinks is no exception. The development of the category in the past decade has been phenomenal, with water, sports, and energy drinks growing quickly to form significant sales volumes.” There is still a lot of potential growth left in the water market, as the per capita consumption in Northern Ireland is still well below the European average. “Consumers want products that will 116 Overview Overview Food & Drink Oldest Whiskey Distillery in the World The Old Bushmills Distillery at in 1885 and undergoing several whiskeys, of which the best-known is Bushmills in Co Antrim claims its changes of ownership. It was acquired the world-renowned Bushmills Irish record status from a seven-year in 1972 by the Irish Distillers Group, Whiskey, as well as the classic licence to distil issued in April 1608. which itself was taken over by the Bushmills Black Bush and, since The distillery has had an eventful Groupe Pernod Ricard. 1996, Bushmills Malt, a 16-year-old history, having been destroyed by fire Bushmills produces many fine rare single Irish malt whiskey. help them to do specific things as well The outlook for the soft drinks Barrett. as taste great,” says Mr Barrett. sector – one of the most exciting areas “Looking across the globe at other “Whether it’s to help them perform of the food and drinks market - markets, we can see that there are better during a match or give them a remains extremely positive. As many more new beverages and drinks boost during the day, these drinks have consumer lifestyles change and which have yet even to show found a place and a role in changing develop, they provide the incentive for themselves within Northern Ireland, so consumer lifestyles.” companies to innovate. there is definitely more opportunity However, Mr Barret maintains that “The category also offers retailers out there for growth.” reports of the death of the carbonated strong margin potential and has drinks market are “tremendously over- demonstrated continuous growth even Tim Brannigan is a freelance journalist stated”. In fact this area of the market when other categories such as alcohol is enjoying a very bouyant time. have experienced declines,” says John 117 Lanyon Building, Queen’s University Belfast
"11_Food & Drink"