Food Consumption Per Capita in Ireland Will Decrease by 3.9% in 2009 – Report

The food and drink market of Ireland has changed dramatically over the last 12 months, with a deep recession meaning that the sector has quickly gone from being one of the most dynamic and attractive in Western Europe to one of the most difficult.

13/07/09 Food consumption per capita in Ireland (food and drink, excluding alcoholic drinks) will decrease by 3.9% in 2009 in local currency terms, according to a new report entitled Ireland Food and Drink Report Q3 2009 by Business Monitor International.

The food and drink market of Ireland has changed dramatically over the last 12 months, with a deep recession meaning that the sector has quickly gone from being one of the most dynamic and attractive in Western Europe to one of the most difficult. Consumers have become much more price conscious, and cutting back on the overall amount they spend on food and drink. This has had an impact across all segments and prompted a sustained response from the firm’s operating in the food and drink sector.

Ireland’s economy contracted by 1.3% in 2008 and the report is currently forecasting that the economy will contract by a further 5.1% in 2009. This compares with growth of 5.34% in 2007 and largely stems from the bursting of the Irish housing and construction bubble along with and a decline in demand for the country’s exports with the economies of Ireland’s three main trading partners - the US, the UK and the eurozone - all facing recessions of their own.

As such the report is forecasting that per capita food consumption (food and drink, excluding alcoholic drinks) will decrease by 3.9% in 2009 in local currency terms while total food consumption in local currency terms is also expected to fall. Although growth is expected to return in 2010, total food consumption is not expected to reach 2008 levels until 2013. This will clearly have an impact on companies operating in the food and drink sector and several have already begun adjusting to these changes.

In the retail sector discounters are looking to take advantage of increased price sensitivity by upping their rate of expansion; in May German discounter Aldi announced plans to invest EUR350mn over the next three years to open 35 new stores and a new distribution centre. Meanwhile, conventional supermarket operators are being forced to cut prices to compete; for example Ireland’s largest retailer Tesco Ireland has cut prices by up to 25% at 11 stores close to the Northern Irish border, following a dramatic increase in cross-border shopping with consumers looking to take advantage of the weak pound.

Among food and drink producers there is a new focus on cost savings and efficiency; Diageo has put plans for a new super-brewery on the outskirts of Dublin on hold, while C&C Group, Britvic Ireland, Kerry Foods and Greencore have all announced redundancy programmes.
Ireland Food and Drink Report Q3 2009:http://www.companiesandmarkets.com/r.ashx?id=Q443U39XO144657