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Home > Food and Beverage > Beverage > Alcoholic Beverages
Ireland Food and Drink Report Q4 2009
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The ongoing recession has had a major impact on Ireland’s food and drink industry, changing the face ofthe country’s mass grocery retail (MGR) sector. As discussed in BMI’s newly published Ireland Food &Drink Report for Q409, a number of the country’s leading retailers have been announcing price cuts andincreasing 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 themost dynamic and attractive in Western Europe to one of the most difficult, with consumers becomingmuch more price conscious and cutting back on the overall amount they spend on food and drink. Inresponse to rising consumer concerns about prices, in August SuperValu supermarkets announced plansto invest EUR30mn (US$42.6mn) in the slashing of prices of around 1,000 products across a variety ofranges. The company also added that no Irish jobs would be lost in delivering the price cuts. Earlier inMay of this year Tesco Ireland, the country’s largest grocery retailer controlling around 25% of the itsMGR market, announced plans to reduce prices by up to 25% at its outlets located on the border toprevent shoppers from moving to cheaper-priced stores located in Northern Ireland, and said that it wouldsoon 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 priceson a wide range of products across all stores in Ireland. Meanwhile, compatriot discounter Aldiannounced its own plans to ramp up its Irish presence by investing EUR350mn in the country over thenext three years to open 35 new stores and a new distribution centre. Not to be outdone by the discountstores, 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 allof Spar's 475 stores in Ireland.
The Irish economy contracted by 3.0% in 2008 and BMI is currently forecasting that the economy willcontract by 8.5% in 2009, compared with growth of 6.0% in 2007. This stems from the end of the Irishhousing boom and a decline in demand for the country’s exports with the economies of Ireland’s threemain trading partners - the US, the UK and the eurozone - forecast to contract in 2009. This iscompounded by the strength of the euro against sterling which makes Ireland’s exports to the UK - thecountry’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 priceconscious,and retailers cut prices on a range of products. In light of these dire forecast figures, all ofIreland’s leading MGR operators can be expected to continue to make great efforts to draw in moreshoppers.
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