While Ireland has traditionally been a major exporter of meat and dairy it is, in fact, the prepared foods market that Bord Bia, the Irish Food Board, has identified as the sector with the highest long-term growth potential.
The Irish prepared foods export market is worth e1.5bn (£1.02bn), according to Bord Bia, and its Performance and Prospects: Export Review 2005/06 shows that the prepared foods market stabilised in 2005 after a strong performance the previous year. This was despite what it claims was strong downward price pressure, increased promotional activity and growing competition from Continental suppliers in the UK market.
It is in this market that Irish companies face the greatest challenge - overcoming the stereotypical image of Ireland that is promoted to millions of tourists across the world.
One of the most significant developments in the past ten years was the arrival of Tesco. Following its acquisition of the Quinnsworth supermarket chain in 1997, many Irish suppliers were given their first taste of a major multiple. This provided them the discipline and scale to enable them to start thinking seriously about the potential for exporting to the UK.
Both Paddy Callaghan, managing director at prepared salad producer Nature’s Best, and Hugh O’Brien, managing director at Lir Chocolates, cite the arrival of Tesco Ireland as a turning point for their companies. Indeed, for Lir Chocolates, Tesco Ireland acted as a direct conduit for securing its first major UK listing. In 1999, Lir won a Tesco Ireland supplier award and was rewarded with two trial listings in Tesco’s 200 leading UK stores. It now has 12 SKUs with Tesco and additional listings with Asda and Waitrose.
Lir produces hand-decorated premium chocolates and has just won the contract to manufacture Baileys-branded truffles in Europe, which O’Brien hopes will help Lir to secure listings with other leading UK retailers such as Sainsbury, Woolworths and Morrisons.
He says: “Baileys is the eighth-biggest drinks brand in the world, so naturally we are delighted to have this contract and we expect 2006 to be a very big year.
“The Baileys truffles are also clearly branded as coming from Lir, so it should do well both in terms of sales and helping us secure more listings for our own brands.”
The Baileys-branded chocolates give Lir a real point of difference in what is becoming an increasingly competitive confectionery market. A number of UK factories, including Elizabeth Shaw, have announced closures in recent months and O’Brien is under no illusion as to how important it is to continuously innovate.
“The UK market is more price-sensitive than our home market, but the big retailers are always looking for something different. There are plenty of companies making handmade, quality products, so it is absolutely vital to be constantly working on NPD,” he says.
Lir Chocolates are branded in a modern way. O’Brien admits the company’s Irish heritage is important but agrees one should not overdo it. The packaging is complete with an old Irish myth but is ultimately functional and stylish.
Likewise, Celtic Chocolates is another premium confectionery company that refers to its Irishness on-pack with a Celtic design. Joe Callery, MD and founder, says he would always look to avoid the shamrock and shillelaghs image as he says this would lead to the products becoming too niche. Instead, he agrees the best way forward is to innovate.
With this purpose he launched his Celtic Chocolate ‘free from’ range, available in the UK through Budgens. Callery is convinced his formula would do well for a multiple, but a number of bigger retailers have already committed to own label confectionery lines for lactose and gluten-intolerant consumers.
“Our bars taste better because we leave the chocolate in. The ‘free from’ range is made with 35% cocoa solids - a lot more than many of the other products on the market,” he claims.