Marketplace International 2015
World Leaders. World Class.
Worldwide.
November 2014
Growing the success of Irish food & horticulture
AIDAN COTTER
BORD BIA
CHIEF EXECUTIVE
28 JANUARY 2009
Agenda
Key Market Facts
Key Irish food and drink exports to the UK
Snapshot of UK Retail market
Retail Market Trends
Why target the UK?
Key Considerations when doing business in the UK?
Pricing and margin expectations
Route to market
Targets for Marketplace 2015
Growing the success of Irish food & horticulture
The UK macro environment
London Contribution to U.K. GDP at
Record High
Growing the success of Irish food & horticulture
2013 Irish food and drink exports to the UK reached €4.1 billion
Seafood €52m
Hort. & Cereals.
€210m
Meat & Livestock
€1,5bn
Beverages €361m
Prepared Foods
€635m
Dairy
€1.1bn
Meat & Dairy Products account for over 64% of total
exports to the UK
Growing the success of Irish food & horticulture
Some of our well known brands
Growing the success of Irish food & horticulture
Suppliers with products launched in 2014
Growing the success of Irish food & horticulture
Snapshot of UK retail market
The UK Grocery Market is worth £174.5 billion and has increased by 2.8% in the last year
Whilst inflation (1.2%) has fallen back to 5 year low households are still feeling the squeeze
and spending less by down trading
The success of the discounters, Aldi and Lidl, is a clear example of shoppers watching their
purses, with both retailers continuing to surge ahead
Highly consolidated market with 4 large retailers, Tesco, Sainsbury's, Asda and Morrisons
accounting for 74% of the UK retail market
53p in every £1 of retail spend is on food
Fresh & Chilled remains the largest sector and is growing ahead of the total market. Fresh &
Chilled and Alcohol have experienced the strongest sector growth
Online will be the fastest growing channel over the next five years, with sales more than
doubling by 2019 to £16.9bn. This represents an increase of over 30% from its current value
of £37bn
Growing the success of Irish food & horticulture
Whilst little big change at the top for past ten years it is certainly
more challenging to be up there
Long-Term Share of Till Roll Grocers
Total Till Roll│ Share of Grocers £%
34
32
30
28
26
22
20
18
16
14
12
10
8
6
4
2
Tesco
Asda
Sainsbury's
Morrisons Total
Waitrose
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0
1993
Share (Expenditure)
24
The Co-operative
Total Till Roll – retailer share of Trade (Grocers) based on Spend
Source: Kantar Worldpanel – to 22 June 2014
Growing the success of Irish food & horticulture
New leadership in the top 2 retailers
Growing the success of Irish food & horticulture
© Kantar Worldpanel
Asda are the only retailer amongst the top four to be holding their share and
showing growth. Discounters and premium retailers showing growth
demonstrating the ‘squeezed middle’
Total Grocery (RST)│ Value Share and Growth £% │ 12 we 14 Sep 2014
27.4
Tesco
Tesco
25.9
Sainsbury's
14.7
15.0
Sainsbury's
Asda
14.5
Asda
14.6
10.5
Morrisons
Morrisons
10.5
5.6
The Co-…
5.4
The Co-Opeartive
4.6
Waitrose
3.2
Aldi
Lidl
2.7
3.1
Lidl
M&S
2.9
M&S
Iceland
4
3
1.8
2.1
1.0
-0.2
-3.1
3.9
26.2
17.4
2.7
13.1
Bargain Stores
2.0
Iceland
2
1.2
-2.4
Waitrose
4.8
Aldi
Bargain Stores
-5.2
Independents
1.2
Independents
Ocado
0.6
0.8
Ocado
Farm Foods
0.7
0.7
Farm Foods
-1.3
1.2
28.2
-0.4
Growing the success of Irish food & horticulture
© Kantar Worldpanel
While Grocery growth and the Big 4 struggle the Discounters
see their long term share accelerate
Long-Term Share of Till Roll Grocers
5
3
2
1
Aldi
Lidl
Netto
Growing the success of Irish food & horticulture
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0
1993
Share (Expenditure)
4
Convenience, discount and online represent the three biggest
growth channels in UK grocery with forecast growth of 110%
over the next 5 years
2014
42.2%
2019
34.9%
20.4%
17.6%
21.4%
24.1%
10.5%
6.2%
Superstores and Small supermarkets
Hypermarkets
Channel
value
change
£bn
20142019:
Convenience
> 25k sq ft
25-3k sq ft
< 3k sq ft
-3.0
+0.1
+11.6
Growing the success of Irish food & horticulture
Source: IGD Research
Discount
4.4%
8.3%
Online
5.4% 4.6%
Other
Total
+10.6
+9.2
-0.1
+28.5
Key trends in UK grocery retail
Value: shoppers remain highly value-focused and keen to make their budgets
stretch further
Multichannel: With typical shoppers making 24 shopping trips and using an using 3.9
channels per month, they are increasingly well informed and willing to switch between
retailers. To secure shopper loyalty, retailers recognise that they need to be present where
their customers want to shop.
Convenience: Small store retailing will remain a key area of investment to meet shoppers’
demand for local and easy-to-shop formats. Expect more tailoring of stores to maximise their
relevance for local shoppers and more exploitation of cross channel connectivity.
Discount: Discounters’ growth will remain rapid as Aldi and Lidl accelerate their store
opening plans and Sainsbury’s brings Netto back to the UK. Initiatives to improve customer
service, the development of compact stores to reach into conurbations and continuing
investments in products and ranges will further drive their growth.
Online: Greater consumer reliance on smartphones and tablets, coupled with low delivery
charges, will drive frequency of use of home delivery services, supported by new dark store
capacity in areas of highest demand. The rollout of grocery click & collect to many more
locations will also drive online channel growth.
Growing the success of Irish food & horticulture
Why target the UK?
The UK has a population of 64.1 million compared to 4.6 million in
Ireland. This is 13 times the size and opportunity of Ireland.
UK Population is projected to increase by 10 million over the next 25
years
UK only produces 62% of its food requirement – it needs reliable
import partners
Irish food & drink has a strong reputation in the UK – Green Clean
environment, quality, heritage…Ireland is seen as part of the British
Isles!
Growing the success of Irish food & horticulture
Key considerations to successfully enter the UK retail
market
Accreditations - BRC certification or in progress
Market knowledge - Have visited target retailers and competitors, completed full gap analysis
– retailers are looking for real innovation & point of difference
Understand the Retailers Corporate objectives & values – Demonstrate sustainability
measures in place in your business that complement the retailer’s
Size of prize - Calculate how your product will add category value
Functional and healthy products Zero VAT, Luxury or Value added products 20% VAT
Familiarise Grocery Supplier Code of Practice (GSCOP) – The basis on which the relationship
with your customer should work
Fully costed product, including distribution and promotional support
Understand your route to market – Which distributors are acceptable to your target retailer?
Have the supply chain solution in place before you meet your customer
Growing the success of Irish food & horticulture
Key considerations when determining your route to
market
How will you manage order day 1 for delivery on day 3?
Can retailers order from you 7 days a week and can you
deliver with no minimum order?
Do you have electronic order & invoice systems?
Do you know where your target customers distribution
centres are located?
UK retailers will expect 75% of the total available shelf life
on delivery
Look for a UK wide solution rather than a specific
customer solution. Time invested now in a robust UK
distribution system will save you time and money in
the long term
Bord Bia publications for reference
Growing the success of Irish food & horticulture
Pricing and Margin Expectations
Check with the buyer how they calculate the margin
How does waste affect the buyers margin?
Margin expectations are similar to that in Ireland
% Margin can vary greatly by category, by retailer and whether brand or own label
- Chilled 42% & Ambient 28% upwards
- Asda, Aldi, Lidl generally lower margin than mainstream multiples (EDLP strategy)
- Own label margin requirements are generally higher than branded ones
Complete full audit of competing brands and products. Demonstrate why your product
should sell for more or less
Products should be costed across a range of currency exchange rates to ensure that your
profit is not in jeopardy when rates fluctuate
Promotions are key to driving consumer awareness of your product and to growing sales.
Plan at least 4 a year & include in your first pricing negotiations
Growing the success of Irish food & horticulture
Bord Bia Office Services
PR
Buyer
Contact
Workshops
Study
Tours
4 Fellows
Strategy &
Planning
Mentoring
Information
&
Research
Supplier
Capability &
Profile
Development
Growing the success of Irish food & horticulture
Route to
Market
Useful Reports & References
Information &
Research
Logistics
checklist
Selecting an
Agent or
Distributor
partner report
Retailer
corporate
websites
Brand View
Pricing and
Promotion
2nd tier retail
report
1st tier retail
report
Kantar
Category
Specific
reports
Supplier
Capability &
Profile
Development
Growing the success of Irish food & horticulture
Other Irish
suppliers!
Buyer targets
Over 500 buyers will be canvassed in UK:
Key retailer decision makers in your categories
Key foodservice players
Manufacturers & Distributors
Specialist food retailers & foodhalls
104 UK buyers will be present on the 26th of March
Growing the success of Irish food & horticulture
Final thoughts on the Meeting with the Buyer
A typical buyer could be buying a 1000 different lines (sometimes across several categories)
They expect you to be the expert. You have to know your particular category, better than
they do
In the meeting, they need to know what’s in it for them quickly - engage them immediately
Keep your presentation simple but impactful. Buyers are time poor
Important points:
Your personality and that of the brand has to be very evident
Your passion for your product is pivotal
Professionalism is a given
Confidence is a must
Knowledge is king
Make them feel that they will lose out, if decide not to list you
Growing the success of Irish food & horticulture
For more information
Please contact our team in London:
Michelle Butler, Manager
michelle.butler@bordbia.ie
Adrian Rivers, Retail
adrian.rivers@bordbia.ie
Micheal Gately, Foodservice
micheal.gately@bordbia.ie
Henry Horkan, Meat
henry.horkan@bordbia.ie
Tel: 00 44 20 7307 3555
Growing the success of Irish food & horticulture