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Ireland Food and Drink Report Q4 2009
Business Monitor International, Oct 2009, Pages: 67
Ireland Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Ireland's food and drink industry.
The ongoing recession has had a major impact on Ireland’s food and drink industry, changing the face of the country’s mass grocery retail (MGR) sector. As discussed in the newly published Ireland Food & Drink Report for Q409, a number of the country’s leading retailers have been announcing price cuts and increasing their private-label ranges in an effort to stimulate industry growth and sales.
A deep recession has meant that the Irish grocery retail sector has quickly gone from being one of the most dynamic and attractive in Western Europe to one of the most difficult, with consumers becoming much more price conscious and cutting back on the overall amount they spend on food and drink. In response to rising consumer concerns about prices, in August SuperValu supermarkets announced plans to invest EUR30mn (US$42.6mn) in the slashing of prices of around 1,000 products across a variety of ranges. The company also added that no Irish jobs would be lost in delivering the price cuts. Earlier in May of this year Tesco Ireland, the country’s largest grocery retailer controlling around 25% of the its MGR market, announced plans to reduce prices by up to 25% at its outlets located on the border to prevent shoppers from moving to cheaper-priced stores located in Northern Ireland, and said that it would soon roll out similar reductions in all of its stores.
In response to this move by Tesco, in May German discounter Lild announced that it too had cut prices on a wide range of products across all stores in Ireland. Meanwhile, compatriot discounter Aldi announced its own plans to ramp up its Irish presence by investing EUR350mn in the country over the next three years to open 35 new stores and a new distribution centre. Not to be outdone by the discount stores, in June Spar Ireland, owned by Irish grocery retail group BWG, launched a EUR1mn (US$1.4mn) promotional drive for its range of own-branded goods, with the initiative to extend across all of Spar's 475 stores in Ireland.
The Irish economy contracted by 3.0% in 2008 and this report is currently forecasting that the economy will contract by 8.5% in 2009, compared with growth of 6.0% in 2007. This stems from the end of the Irish housing boom 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 – forecast to contract in 2009. This is compounded by the strength of the euro against sterling which makes Ireland’s exports to the UK – the country’s largest trading partner – less competitive. Given this downturn, we are now forecasting a 1.95% decline in MGR sales between 2008 and 2013 in euro terms, as consumers become far more price conscious, and retailers cut prices on a range of products. In light of these dire forecast figures, all of Ireland’s leading MGR operators can be expected to continue to make great efforts to draw in more shoppers.
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