Bord Bia Calls for Branding, Collaboration & Innovation to Boost Irish Food Sector

Based on a vision that builds on Ireland’s positive image as a food producer and its proximity to the premium European market, the report recommends the setting of specific goals to be achieved by 2016, the creation of an umbrella brand for food and drink and the fostering of a climate of entrepreneurship.

7 May 2010 --- Ireland should adopt a strategy of developing a world-class agricultural industry by 2016 and set itself the goal of becoming the most efficient, most highly innovative food and drink country in the world. This is according to a new report entitled ‘Pathways for Growth’ prepared for Bord Bia by Professor David Bell and Mary Shelman of the Harvard Business School.

The report, which states that Ireland is at an enviable starting point in the race to produce exactly the type of food that a growing number of consumers are demanding, was launched at Bord Bia’s “Food & Drink Summit - Building Ireland’s largest indigenous industry”, which took place at Farmleigh House, Phoenix Park, Dublin.

Based on a vision that builds on Ireland’s positive image as a food producer and its proximity to the premium European market, the report recommends the setting of specific goals to be achieved by 2016, the creation of an umbrella brand for food and drink and the fostering of a climate of entrepreneurship. Using the working title “Come See Us: We’re Open for Inspection”, the vision is based on the promise that “we are natural and we can prove it”.

The report identifies three particular challenges that the authors believe the food industry needs to prioritise, namely fragmentation and a lack of scale, limited consumer orientation in export markets, and low investment in the future of the sector.  To counter these challenges, the report goes on to suggest that Irish exporters should be encouraged to collaborate rather than compete ( a strategy based around “Co-opetition”), while focusing on innovation leading to differentiated market positions and brand building based around customer feedback as a means to capturing greater market value.

Irish prime minister Brian Cowen TD and the Minister for Agriculture, Fisheries and Food, Mr. Brendan Smith TD both addressed the event, which also attracted over one hundred twenty representatives from Ireland’s food and drink sector, including many of the industry’s leading CEOs. 

Speaking at the event Brian Cowen said “Today is about building growth in the medium term for our most important indigenous industry and identifying the best way forward. This is an industry with real growth potential if we aim high and far and make the right decisions – right now.”

The Minister for Agriculture, Fisheries and Food, Mr. Brendan Smith TD added “Given its importance, geographic spread and export reach, Ireland’s food and drink industry clearly has a key role to play in Ireland’s economic recovery. It has also a key role to play internationally in terms of addressing global food security and in meeting the challenges associated with climate change. As an export and market orientated industry with very high standards of food safety and quality, Ireland’s food and drink sector is well placed to contribute to the food needs and demands of millions beyond this island in a competitive and sustainable fashion.”

Today’s summit marked the culmination of a process whereby David Bell and Mary Shelman of the Harvard Business School have engaged, on behalf of Bord Bia, with the leaders of the Irish food and drink industry to develop a plan for the sector. The plan is an integral part of, and will be incorporated into, the AgriVision 2020 strategy being prepared by the Department of Agriculture, Fisheries and Food.

David Bell is Professor of Business Administration and Mary Shelman is Director of the Agribusiness Program at Harvard Business School.  “Their engagement by Bord Bia was designed to bring a fresh perspective and new thinking on the issues around the Irish food and drink industry, drawing on their extensive experience of global markets and the global agribusiness industry” said Dan Browne, Chairman, Bord Bia. 

The process has involved a series of one to one interviews with leading figures in the food processing sector, while harnessing the views of many more from throughout the industry via questionnaire. Mr. Browne added “The participation of all of the CEOs of the leading food and drink companies and the degree of their commitment to the process reflects its timeliness. It is in particular a mark of their willingness to play an active part in leading the development and growth of the industry, and thereby contribute to economic renewal.”

“The report sets out a comprehensive agenda for change, based around the three central themes of collaboration, innovation and branding.  They are also accompanied by a set of detailed specific initiatives that, when implemented, would contribute to the achievement of the vision for a world class food and drink industry”, according to Aidan Cotter, Chief Executive, Bord Bia.  “Simple as the three themes may appear, they have the capability, when executed in full over a three to five year period to be transformational in their effect”, he said.

The concepts and proposals presented at Farmleigh will now go forward for consideration in the AgriVision 2020 strategy.  Bord Bia has, in the meantime, committed to working with industry towards advancing a wide range of proposals with immediate effect, including the preparation of a detailed implementation plan, and has committed to reporting back to the industry on its progress within six months.

Co-opetition not Competition
Ireland is a small player in the world food market. In order to have a presence and sustain margins in global export markets, Irish firms need to work together as partners, not as competitors. A single food chain, like beef, or dairy, seafood, or any other category should work together as if it were one company in export markets. The key benefits of cooperating are improved efficiency through better coordination, higher and more consistent quality, joint problem solving to satisfy customer needs, speed to market, and ultimately a higher margin.
Besides cooperation within and between value chains, the report also suggests there is another kind of cooperation that should be encouraged—cooperation across sectors within the Irish economy. There are natural links between agriculture, food, and tourism, and increasingly between food, pharmaceuticals, and health. The food tourism concept has been the subject of a recent paper prepared by Bord Bia that has been shared with Failte Ireland.

Innovation
Selling goods for a higher price requires firms to deliver higher value to the end user. Customer needs and tastes change over time, and the available solutions to meet those needs change over time. To stay ahead of the curve, companies need to constantly assess whether their products deliver a value to the customer that is superior to competition. Too often, managers believe that strong sales in the past guarantee success in the future. This ignores the reality that thousands of competitors are trying to take your business away every day. There are only two defences to this attack—innovation and branding (branding follows).
Innovation comes from two sources: new ideas based on science, and new ideas based on solving customer problems. Small companies cannot afford the necessary investment in R&D to produce the science, and large companies tend to be blind to new ideas.  Ireland must encourage a climate of risk taking and experimentation in product development. Think Silicon Valley. Our colleague Mike Porter has written of the advantages of regional centres of competition: the knowledge base of a region accelerates as a greater concentration of people become a part of industry, success breeds success. Irish business schools and interested managers and investors can play a significant role in getting this started.

Branding
A brand is an established reputation with a customer. It is an asset in three ways: customers are willing to pay more for a brand compared to an unidentified product, customers are more willing to stick with their favourite brands even in the face of innovative products from competitors, and customers are more willing to try innovative products from a favoured brand. Too few Irish companies benefit from branding in export markets, in part because of the lack of scale to invest in advertising campaigns, but more importantly because they have no contact with the end consumer. Irish beef is sold through 70 retailers in 30 countries. The 30+ Irish beef processors can’t afford to do consumer surveys in each country and if they could, the size of each niche for an individual firm would be too small to warrant investments in new product development or marketing. 

Under co-opetition Irish companies could share brands. The advantages include lower costs, greater market power against sophisticated retailers, and ultimately consumer recognition and “pull.” Margins for branded food products can be double those for commodities. Why not one brand name for Irish dairy (an extension of Kerrygold?), for grass-fed Irish beef (in New York City grass-fed beef sells for $26 a pound, more than three times conventional beef), for Irish seafood, for Irish confectionary and so on? Or even an umbrella name for all Irish products.
Creation of a brand requires three things: a product (or group of products) produced to a consistent level of quality, a differentiated product of superior value to a segment of the market, and investment in a memorable name. Under co-opetition, (high) quality standards would have to be agreed on, product superiority would need to be closely monitored with consumers, and some investment would need to be made. Fortunately the adjective “Irish” already has many positive connotations.

A Vision for the Future – “Come See Us: We Are Open for Inspection”
The report also sets out a vision of how the industry could work together under one umbrella brand to achieve export growth.

The affluent world is demanding locally grown, non-polluting, traceable, transparent food. It rebels against “multinationals” who they think are adulterating the food we eat. Yet, of course, it wants that food at an affordable price.

Ireland is at an enviable starting point in the race to produce exactly the type of food that a growing number of consumers are demanding. Along with being low cost, its grass-based production system wins points for sustainability and enhanced nutrition. Its people are viewed as friendly and open. It is small (not “multinational”) and close to Europe. By its proximity and its friendliness we can say that it is open for inspection. Its competitors for the “green” market cannot deliver on that promise. New Zealand, which otherwise would be comparable, is too far away for most. Argentina is too far away, and too big.

In our vision, Ireland (companies, farmers and farmer groups, government, agencies, universities…) adopts a strategy of developing a world-class agricultural industry by 2016. It gears up to deliver on the promise “Come See Us: We Are Open for Inspection”. The message to the customer—whether a consumer, retailer, or food company—is that it has nothing to hide and indeed a lot to share: a community that has a long history and artisan culture of fine foods. If customers/consumers are concerned about how their food is grown and where it is grown they can come and see. This has the added advantage of being consistent with what the tourism industry wants.

In preparation for living up to the claim of being open for inspection, food and agriculture companies must take to heart the need for sustainability and transparency in food production. The government invests in research to validate the environmental and nutritional benefits of grass-fed production, as well as in research to define the critical consumer aspects of sustainability and to support sustainability improvements such as reducing total GHG emissions from the agriculture and food sectors. Investments are made to ensure that all Irish food is 100% traceable so that a customer can, at least in principle, find out where her meal was grown and go see the very farm. This is the brand promise: we are natural and we can prove it.