Article appeared in issue 4, 2021
Keeping it local
After a tumultuous year, Irish food and drink exports to the UK are on the up. Donal Denvir, UK Manager at Bord Bia (The Irish Food Board), writes about how the Origin Green programme and Brexit preparation have helped to maintain this upward trajectory
Irish food and drinks companies exporting to the UK have faced the combined challenges of Brexit and Covid-19 but resilience and a strong sense of optimism prevail. Donal Denvir, UK Manager at Bord Bia (The Irish Food Board) writes about Irish export performance in 2021, the trends Irish companies should be mindful of, and how Irish manufacturers can prepare for the future.
The Irish food and drink industry has performed remarkably well, showing global export value decline of just 1% from January 2021 to May 2021, when compared to the same period in 2020. In the UK, that value drop was 4% (€70.8m) with much of the impact seen across beef, dairy, and prepared consumer foods (PCF). Brexit stockpiling of cheese, butter and frozen beef in advance of the January 1st deadline, and production difficulties due to Covid-19, meant that trade flow in the first quarter of 2021 was low. Horticulture, however performed well with an increase of 28.1% from January to May 2021, as compared with last year. Total horticulture exports to the UK are over €200m and mushrooms account for over half of those (over €100m).
There are a number of trends Irish exporters should be mindful of, the first of which is ‘gastro-nationalism,’ or buying local. Through our research, we learned that UK consumers' perceptions of what it means to be local extends toward Irish exports. Insights underpin everything we do at Bord Bia and every year we survey over 70,000 consumers about buying Irish food and drink. In this year’s ‘UK Consumer Sentiment Tracker’, it was shown that 88% of UK consumers are still open to buying from Ireland, as opposed to 64% from South America, and 58% from the US.
The UK is experiencing a K-shaped recession, with retailers positioning themselves as price-led or premium offering; the middle is not as prominent as before. Irish companies should consider how they intend to respond to this changing consumer climate: how does their product proposition need to adjust to meet these changes?
Sustainability is another consumer-driven trend and is therefore high on retailers’ agendas. There is a massive focus on the drive to net zero carbon emissions, in particular, scope 3 emissions. This is relevant to our Irish companies as it investigates: carbon emissions back through the supply chain; packaging targets and commitments; and the role of regenerative agriculture including what that means for water quality and scarcity, biodiversity and social sustainability. A decade of gathering data through our Origin Green programme puts Ireland at the forefront of the drive for sustainability, and our Origin Green-verified companies are uniquely positioned to leverage that activity in their conversations with their key customers.
The foodservice channel clearly suffered the most during the pandemic and with it, the Irish companies who serviced it. The recovery has started but it is a slow and long one. On April 12th, the phased reopening of foodservice began in the UK with the removal of all limits on social contacts on July 19th. CGA’s Market Recovery Monitor reported that at the end of May, 76.2% of Britain’s licensed sites were trading by the end of the month. Lumina Intelligence expects that the UK Eating Out Market will grow by 33.4% in 2021 with a 70% recovery level versus 2019, with turnover reaching a value of £63.3bn. Looking forward, Lumina expects the market to make a full recovery and exceed its 2019 value by the end of 2022.
The UK Retail industry adapted rapidly last year to the disruption caused by the pandemic, modernising supply chains to ensure availability of food, prioritising safety and absorbing spend from the closed and/or restricted foodservice sector. Predictions from IGD suggest the UK food and drink market will grow by 1.3% in 2021 versus 2020 to £142.7 billion.
The move to online was also swiftly accelerated, although profitably rolling out this channel has proved a challenge for many operators. Year-on-year sales are only up 0.2% on 2020 suggesting the appetite for the large online shop is approaching a plateau. An interesting development is the rapid growth of fast-track delivery services for smaller top-up shops. Tesco launched its Whoosh platform in May to compete against start-up disruptors such as Gorillas, Getir and Weezy which are moving into the market for smaller trips. Meal subscription kits such as Hello Fresh and Mindful Chef have also seen significant growth.
While the discounters, Aldi and Lidl, struggled to grab market share last year, as shoppers revert to their more typical habits, they are expected to grow going forward.
Irish beef exports
From January to May 2021, value exports have grown marginally (1%, +€3.1m) compared to the same period as last year but volume exports were down 11.2%. This is driven by the closure of foodservice in the first quarter, Brexit stockpiling in late 2020, and higher domestic production at the start of 2021. The second half of 2021, as foodservice reopens and domestic UK supplies tighten, will give Irish beef an opportunity to reclaim ground.
In 2020, we launched our first Irish beef TV advert in the UK. The four-week campaign was shown during popular ITV breakfast morning programmes including Good Morning Britain and Lorraine. It delivered 29 million impressions of our 4.5 million target audience of middle-income families across the UK. It successfully relayed the message that Irish beef is grass-fed, local, and farmed to a high standard. From independent research, one in two of those who watched the advert would look for Irish beef the next time they are grocery shopping.
Over the summer of 2021, Bord Bia will work with influential UK chefs, including John Chantarasak (Anglo Thai), Nick Fitzgerald (Taco Padre) and Adam Bennett (The Cross) to develop barbecue recipes using Irish beef, and promote them in their restaurants or at foodie events such as Tom Kerridge’s Pub in the Park and Meatopia. A social media campaign is expected to deliver a reach of two to three million UK consumers over the summer months.
In addition to this, we’re working with a number of client companies and customers on marketing activation projects to promote premium Irish grass-fed beef at higher end foodservice outlets.
Irish dairy exports
Dairy exports to the UK from April 2020 to April 2021 saw a value decline of 24% (€53m). However, the picture is changing, as May 2021 saw export values jump by 27.6% (€76.2m) with significant gains in cheese (36.2%, €38m) and butter (60.9%, €7.98m) countering ongoing declines in infant food (-54.9%) and SMP (-59.2%).
In the retail sector, over the course of 2020, volumes of cheese grew 15.4% with all categories seeing growth. Cheddar accounted for over half of volumes sold, with mature cheddar driving this growth under private label.
Yellow fats saw volume growth of 15.2%, boosted by home baking, scratch cooking and homemade sandwich consumption. Meanwhile, yoghurts saw a slower volume growth at 6.9% with growth coming from big pots while fat-free saw volumes decline. (Source: AHDB).
This year, one of our strategic projects is with key Irish dairy companies to leverage the Origin Green sustainability programme and the data behind it. Irish consumer dairy will form a core part of the Consumer Food Virtual Sourcing Fair hosted by Bord Bia in September.
Prepared consumer foods
Value exports grew by 0.2% from January to May when compared to the same period last year, with volume exports growing by 9% year-on-year. A standout category was bread which was hit hard in 2020 when in-store bakery was impacted by the growing safety concerns around Covid-19. The value of the category has grown 106%, jumping from €28m last year to €59.6m this year, which is indicative of the adaptations made to ensure continued safe supply of products.
Two challenges facing the prepared consumer foods category are the upcoming introduction of the next stage of import controls from October 1st which will see additional requirements for goods subject to Sanitary and Phytosanitary controls, a requirement for some composite products. We are working closely with the DAFM to ensure the confidence and preparedness of Irish suppliers in dealing with these upcoming changes.
The second challenge facing this sector is the High in Fat, Sugar and Salt (HFSS) legislation announced by the UK Government in late 2020. This restricts the promotion of HFSS products by location and price in retail settings that sell food and drink in-store and online in England. The prepared consumer foods category would be under the scrutiny of the new legislation, but it presents an opportunity for PCF companies to produce products that are healthy, sustainable and affordable. Snacking exports to the UK have grown almost 50% year-on-year to date.
Staying informed about developments in the market is important for delivering success. In the first half of this year, the London PCF team hosted market insight webinars across In-Store Bakery, Chilled Ready Meals, Food-to-Go, Contract Catering and Foodservice Market Update, reaching over 200 clients.
Bord Bia London is hosting a Consumer Foods Virtual Sourcing Fair on September 29th and 30th 2021. The event will see trade from all channels in the UK meeting with potential Irish suppliers for future trading partnerships.
The challenges posed by Brexit are just beginning. On October 1st additional import controls will be introduced in Great Britain, including the need to provide Export Health Certificates for certain products. This date will also see the introduction of the next phase of the Border Operating Model. We are working closely with client companies and the DAFM to ensure that supports are available through our Brexit Action Plan and ‘Always On’ video content on Bord Bia’s Brexit Hub, as well as through one-to-one clinics for client companies. For further details, please email email@example.com.
Irish suppliers producing composite products are now trading within one of the most complicated categories due to pressures on import reliance for raw materials and rules of origin requirements. The supports we provide to our clients have always been, and will always be, led by the needs of the industry. By conducting client surveys and through our strong relationships, we have our finger on the pulse of what is required.
CALLS TO ACTION:
Irish exporters, speak to your Bord Bia representative about Brexit
Speak to your customers about Brexit
Have you mapped your product journey all along the supply chain?
Speak to the DAFM if you think you may need an Export Health Certificate (EHC)