an editorial supplement to The Grocer Outward bound Irish eyes have always focused on global markets, but now shrewd identification of growth areas has led to a rush of acquisitions and the means to build overseas, outside traditional commodity areas. Julian Hunt reports The rebirth of the Republic of Ireland's co-operatives as publicly listed food companies has had many ramifications ­ not least the creation of a small band of businesses with the ambition, and in most cases the ability, to become world class operators. Glanbia, Golden Vale, Greencore, IAWS and Kerry are now familiar names on this side of the Irish Sea, thanks to a string of acquisitions that have seen them build a strong presence in almost every sector of this country's grocery industry. The Irish have always had their eyes on the world's food markets. But whereas the past was all about how best to export surplus agricultural produce, the future is about adding value and following customers into new, more lucrative sectors. Analyst Liam Igoe, of Goodbody Stockbrokers in Dublin, says there is one compelling reason why companies have been so keen to diversify and expand overseas. "Ireland's history is as a supplier of commodity products. There's nothing wrong in that; it's a solid business," he says. "But there's no point in coming to the stock market if that's all you have. "You need a growth story of some sort, therefore you need to diversify into those segments of the food industry which have the best prospects for developing sustainable earnings growth." The trick, of course, is identifying the new growth segments and then fully exploiting them, while simultaneously recognising that the search can be a costly business. Igoe reckons Ireland's publicly quoted food companies have spent a whopping £2.14bn on acquisitions since 1988, and this has been funded either through debt or by issuing new shares. For some, the acquisitions have not always paid off. Glanbia came a cropper partly through its unsuccessful involvement in the UK liquid milk sector, and partly through its heavy exposure to commodity markets such as cooked meats. The group is now busily reinventing itself as an international supplier of cheese and nutrition products. Others have a fantastic track record when it comes to acquisitions ­ notably Kerry Group. In the 15 years since it went public, Kerry has grown rapidly to become the leader in the global food ingredients market. It has also built up a large food products operation with brands such as Mattessons, Richmond, Wall's and Millers. Managing director Denis Brosnan likes to describe Kerry as a "food technology company" with two distinct operations. "The mission statement which we have had for the last 15 years hasn't changed very much," he says. "On the one hand we aim to become a major international specialist food ingredient corporation. "And secondly, we'll become a significant supplier of branded and private label foods to British and Irish supermarkets." In comparison to Kerry, the overseas expansion plans of rival Irish food companies are still very much in their infancy. But they are impressive nonetheless. David Dilger, chief executive of Greencore, which recently clinched a £258m bid for Hazlewood, its eighth deal in four years, agrees with Igoe's analysis of why such expansion is so vital. "We not only want to expand our business, we also want to change our growth profile in a significant way," he says. "We are competing for investment dollars and pounds and if we can't show a pattern for growth our owners will not want anything to do with us." He believes that when Hazlewood has been fully integrated it will give the group an entirely different growth platform, as well as the scale it will need to compete in the future. "This is imperative for our success going forward," he adds, "because it is the bigger players that are winning more and more, and the smaller players that are falling out ­ particularly in retailer branded goods, where lowest cost producer status is one of the central competitive tools." Dilger doesn't rule out making a strong drive into the main European markets once Hazlewood has been fully digested. Jim Murphy, group managing director of Golden Vale, is another executive who makes no secret of his desire to continue building overseas as part of a plan to focus on areas, outside of commodity markets, where it can add value. That strategy took a quantum leap forward in 1998 with the acquisition of Northern Ireland ready meals producer Rye Valley Foods, which took Golden Vale into a completely new sector. Murphy says Golden Vale will continue acquiring businesses and expanding organically. "We are carrying it on in a focused manner to build a strong and reputable position in the European food market. We don't want to be biggest but we do want to be recognised as a good quality supplier and innovator." He adds: "One of the things we have done over the past four years is to focus totally on consumers and markets. "That's another factor in the development of the food market in Ireland. It was primarily production driven, but has now been turned on its head. We start with the market, spot the opportunity and then go about servicing it." {{SUPPLEMENTS }}