todays grocery magazine may 2009

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sfasfddfs M.D/Editor: Frank MaddenDeputy Editor: Ruth TimminsBsn. Dev. Managers: Niall P. Madden

Sarah GriffinContributors: Emma Maguire

Tomas O’BrianCirculation: Margaret CorryDesign: 90% Proof

Small PrintTodays Grocery Magazine is circulated to all proprietors, directors and managers of allrelevant manufacturers and distributors, to every cash and carry, every multiple supermarket,group head office and wholesaler, all group affiliated shops and Londis outlets in addition toover 6,300 unaffiliated independent retailers and the country’s leading off-licence outlets. Allarticles are copyright of Todays Grocery Magazine and cannot be reprinted without the writtenpermission of the editor. All letters to the editor of this magazine will be treated as havingbeen submitted for publication. The magazine reserves the right to edit and abridge them.Disclaimer While every effort has been taken to ensure that all information is accurate at thetime of going to press, neither TGM Ltd or Todays Grocery Magazine accept responsibility forany inaccuracies or omissions. Please note that the opinions expressed in the articles arestrictly those of the authors.

IN THIS MONTHS ISSUE.......

MAY 2009MAY 2009

4 OWN LABEL ON THE RISE

With the increase in the price of cigarettes fears are growingfor the increase in cross border shopping.

Not long ago wholesalers were opening innumerable symbolswithin close proiximity but often against the advice of theirown retailers. However, once challenging economic timesarrived consumers would pull right back.

Pressure is coming down hard on several of our leadingretailers.

Todays Grocery Magazine, The Mews,Eden Road Upper, Dun Laoghaire, Co. Dublin

Tel 2809466 (6 lines)web: www.todaysgrocery.comemail: [email protected]@todaysgrocery.com

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22

2 NEWS

40 BOTTLING IT

22 THE COST OF TRADING

44 GUARANTEED IRISH

48 THE EVOLUTION OF AN ICON

52 THE ECOLUTION OF BIC

56 FIRING LINE

16 TOBACCO LAND

28 SHARP TALONS

18

26 40

44

4

32 CONFECTIONERY MARKET

36 SNACK MARKET

The Guaranteed Irish logo once associated with the 1980’s ismaking a triumphant come back.

There are not many products out there that would beconsidered icons.

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Parking 10 cent an hour!

Food firm seek confidentiality order

Thrifty consumers

Retailer & developer settle row

A city centre is offeringmetered car parking for just10 cent an hour onSaturdays in a bid to wooshoppers back from out-of-town shopping centres.

Limerick city businesseshave lost thousands of euroas consumers are opting tospend their money atsuburban shopping centres.

In a bid to attractshoppers to the city centre,50 retailers have cometogether and launched a‘Buy up the City’ campaign.

As part of the campaign,Limerick City Council isoffering motorists parkingspaces in all of the city’s

streets for just 10c an houron Saturdays.

A prize fund of€100,000 has also beenput together by the tradersto entice shoppers into thecity centre.

To prevent further lossesin the city centre, LimerickCity Council has objected toa proposed €72mexpansion of the CrescentShopping Centre in theDooradoyle suburb. Thedevelopment companyhoped to construct a 52,00sq ft, three storey retail unitwith Marks & Spencer asthe main anchor tenant.

Cash-consciousconsumers have helpedpush sales of organic foodto new heights as theychoose to dine at homemore often.

While organic food isoften considered moreexpensive, bargain huntersare seeking out good valueproduce in farmers’markets.

And an increased trendfor dining-in instead ofsplashing out at expensiverestaurants has furtherboosted the sector.

Bord Bia analyst LorcanBurke said that the Irish

organic market was nowworth €120m a year,nearly double its value in2006.

A Teagasc conference inAthlone heard that morefarmers than ever beforehave gone organic becauseof higher profits.

Recent data comparedsales of organic food inshops and supermarkets forthe 12-week period to theend of January 2009 withthe same period in 2008. Itfound an 11pc increase yearon year, compared with a2.7pc growth forconventional food.

A leading foodmanufacturer has asked theHigh Court to order anumber of its staff tomaintain the confidentialityof information which theyallegedly accessed on itscomputers.

Green Isle Foods inNaas suspended four staffon full pay recently after itwas alleged they accessedconfidential companyinformation on thecompany’s computersystem.

The information, whichincluded commerciallysensitive data on companyprofitability andemployment plans, wasallegedly transferred to amemory stick.

The staff concerned arerefusing to sign theundertakings sought by the

company, arguing that theywould be used as the basisof disciplinary proceedingsagainst them.

Staff sources say theinformation, which was notpassword protected, wasaccessed accidentally andthen downloaded. Staffbrought their concerns overthe content, which includedplans for a small number ofredundancies, tomanagement, whichresponded by runningcomputer checks toestablish the source of theleak.

The company recentlyagreed a number ofvoluntary redundancies asproduction was moved fromthree shifts a day to two.Green Isle is owned by thegiant British manufacturerNorthern Foods.

A dispute over thealleged failure of DunnesStores to complete anagreement to becomeanchor tenant at the PointVillage in Dublin’sdocklands has been settled.

Businessman HarryCrosbie had claimedDunnes alleged failure wasjeopardising the project’sfinancing, and he soughtorders requiring Dunnes topay €23m.

Point Village Develop -ment Ltd (PVD) claimedDunnes entered into anagreement whereby theretail chain would pay€46m to become the€85m scheme’s anchortenant. The scheme wouldinclude a shopping centre,cineplex, offices, an hotel,apartments and a publicsquare.

Dunnes were to makestage payments but failedto make the first payment

last August, Crosbie said.Meetings took place

between the parties. Crosiesaid that Irwin Druker andNoel Fox accompaniedMargaret Heffernan to onesuch meeting. Druker saidDunnes wanted a 20-30pcdiscount on the project and10 years to pay it.


Like a lot of Irishcompanies right now, C&Chas taken the decision tofocus on the domesticmarket instead of investinga lot of time and money inEurope.

C&C, for example, hastemporarily deserted itsplans for rolling out itsMagners brand morebroadly across Europe and isshifting more relevant focuson retrieving lost ground oncore home markets in bothIreland and the UK.

In the words of thegroup, ‘there are otherthings to do‘, and mostwould say, wisely so.

Since 2006, the grouphas spent in the region of€12m trialling and rollingout Magners cider in bothMunich and Barcelona, tomixed results. The companystated in March;

“We are on hold inBarcelona and Munich withour cider launch. Thatdoesn’t mean we don’t thinkthere is a massiveopportunity there in thefuture. It’s just that thereare other things to do.”

“We intend to go back toit at some stage but now isnot the time. We’redetermined to focus on theUK. Once we’ve guaranteedsome growth back in ourcore markets, we’ll gointernational.”

Magners cider hadsuffered somewhat ascompetitors such as Scottish& Newcastle upped theante with its Bulmer’s brandin the UK.

The company stated thatmuch of this loss to rivalswas as a result of ‘18months of sitting in thesame place’, somethingwhich the group is clearlyreluctant to repeat;

“We’ve since brought araft of new launches into theUK and Irish markets, led byMagners Draught and Lightand now Pear. We seem tohave stabilised ourposition.”

At the start of March ,C&C forecast its revenueswould fall by 13% this year.To date, the group has cut120 jobs at its Clonmelplant.

C&C Focus On UKmarket Connact Goldinvests in retail site

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Co-op group ConnachtGold has invested€3 millionto redevelop a retail site inSligo, as part of a wider planto revamp 29 stores in amultimillion investmentdrive.

The co-op’s chiefexecutive, Aaron Forde, saidthe initiative wouldmaximise the commercialpotential of its agri-businessdivision, which has outlets inseven counties in thenorthwest.

“We have beenupgrading one to two storeseach year since 2005, whenwe initiated a new strategicplan,” said Forde.

The redvevelopment ofthe Sligo outlet, onDeepwater Quay in Sligotown, has more thandoubled existing floor spaceto 24,000 sq. ft, creatingeight new jobs.

Investment in the store,which is a flagship site forthe co-op brought to €10million total spend to dateunder the initiative.

May 2009 3


To say that consumers are choosingcheaper own label foods is rather anunderstatement given the fieryeconomic cards we’ve been dealtlately. Despite the alleged myriad ofsupermarket price reductions,consumers are still being asked to paymore for certain fresh produce.Innumerable fresh food items such assalad vegetables, meat and dairyproducts are actually higher than ayear ago. Is it any wonder then, thattwo in five people have admitted toswitching to own label produce inrecent months.

A collection of salad vegetables areon the increase. For example, acucumber is up by 88%, a pack oftomatoes by 76%, and iceberg lettuceby 45%. Cheaper own label versionsare being chosen increasingly asshoppers wish to cut back of spendingbut not on their needs.

According to economics resource,Tutor2u, the days of supermarket ownlabel brands being deemed the cheap‘me-too’ alternatives to establishedbrands, are well and truly over. As if weneeded reminding of this but perhapsit’s the more established

manufacturers who need reminding ofit.

Leading supermarkets haveexpanded their own label productranges and now offer a high qualityand diverse range of own label subbrands from premium right through toclothing and homeware. For instance,Tesco’s ‘Finest’ own label rangeexpanded its Finest range to includecrockery, cutlery, bed linen, towels andglassware.

The recent consumer preferencefor own label has not always been thecase. Several years ago, customerswere complaining that supermarketswere showing preference to their ownlabels over branded goods and that asa result there was not enough choiceon offer.

Research from IDG forecast growthin supermarket own label anyway,despite the current economic outlook,particularly in the fresh foodcategories which it believes is aparticularly strong area for own label.This is obviously good news for themultiple sector which earns a highermargin on own label products.

There is no doubt that own label

has become more sophisticated.Multiples have progressed fromcreating imitation brands todeveloping own label sub brands thatcan stand as brands in their own right. These brands have become aneveryday feature of consumers livesand as a result have earned loyalty.

In the food market, the onecategory that own label sub brandsdominate is chilled foods. However, thefood category has become saturatedand so many multiples have explorednon-food sectors as an area in whichthey can develop own label. HenceTesco, and Dunnes’ forays into non-food areas of own label.

The question for the future of ownlabel is how to innovate. The market isessentially limited to certain categoriesand has perhaps expanded as far as itcan already. For instance it isn’t easyfor the multiple sectors to break everymarket they enter. Sectors such asluxury segments or up-market clothingand cosmetic ranges which containmany well established, premiumbrands are one area in which ownlabels are rare.

O W N L A B E L O N T H E R I S E

Own Label On The Rise

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Other product areas that couldprove restrictive for own label includethose that require a lot of innovationand research and development such asfunctional foods, or anti-wrinkle care.

Despite this, such hurdles areunlikely to perturb the multiples intheir development of own label brandsparticularly now when consumers areeager to cut costs. With increasinglysophisticated marketing methods androom for increased expansion into non-food categories, own label branding islikely to augment. Whether theysucceed or not is largely dependent on

how far they can persuade consumersof their credentials.

In terms of sales alone, own labelin Ireland grew two percentage pointsfaster than branded goods last year.While this may seem like a paltryamount, perspective is required in amulti-billion industry, where even atenth of a percentage point representshuge value.

As one analysts put it;“As we all continue to face rising

food prices and tighter budgets, manypeople are becoming more savvy andlooking for ways to save money without

reducing their shopping list. In somecases this has led to shoppersswapping to cheaper own brandalternatives, giving up their brandloyalty to battle the price increases.

By down shifting like this oneveryday products, and taking fulladvantage of supermarket offers, weknow it’s possible to save up to 20%on a typical weekly shop whichcounteracts the price increases we areseeing.”

[Source:Tutor2u]

O W N L A B E L O N T H E R I S E

May 2009 5

“...By down shifting like this on everyday products, and taking full advantage of supermarket ofers, weknow it’s possible to save u to 20% on a typical weekly shop which counteracts the price

increases we are seeing.”


Patrick Duffy, Director at KozyShack’s Irish manufacturing plant,comments; “Whole grain breakfastcereals and porridge products haveseen significant growth in the lastyear thanks to their health benefits.Kozy Shack® is committed toproducing wholesome foods free fromartificial ingredients and we’reconfident the launch of ReadyGrains™, with its combination of greattaste, convenience and naturalingredients, is ideal for today’s morehealth conscious consumer.” Thelaunch of Ready Grains™ is being

supported by a programme oftargeted advertising and PR.

Family owned business KozyShack® has been manufacturing freshpuddings made with naturalingredients for over 40 years. Thecompany, which was founded when itstarted to supply its flagship product,rice pudding, to local shops, is now amajor dessert manufacturer withinternational distribution and sites inNew York, California and Ireland.

New Ready Grains™ is available in150g single serve pots.

For more information call KozyShack Europe on 04297 45412.

Kozy Shack launches Ready GrainsIrish food producer Kozy Shack® Europe is launching Ready Grains™, a healthy and convenient

multigrain breakfast cereal. Produced in its factory in Castleblayney, the cereal is chilled, ready-to-eatand combines nutritious grains, whole oats, barley and rice, with fresh Irish milk. Available in fourvariants, Original, Strawberry, Apple & Cinnamon and Peach, Ready Grains™ can be warmed in a

microwave or eaten cold as a dessert.

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May 2009 7

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Hundreds more retailerswill go out of business andthousands of jobs will belost because of thegovernment’s failure to cutthe rate of Vat, according toa retail representativegroup.

Retail Excellence Irelandhad lobbied for a cut in theVat rate.

David Fitzsimons, ceo ofRetail Excellence Ireland,said that a 6.5 per centdecrease in Vat, coupledwith an intervention in rentand wage costs, would haveresulted in a 20 per centdrop in consumer prices.

“That would havestimulated spending inIreland, reduced the cross-border price difference,improved national compet -itiveness and maintainedemployment withinIreland’s largestemployment indus-try,” said Fitzsimons.

Fitzsimons said that theminimum wage - which isthe second-highest inEurope - and employer’sPRSI were a “prohibitivecost” to business in Ireland.

According to Fitzsimons,

a “further €1 billion in Irishretail sales” will shift to theNorth, where Vat is 6.5 percent lower than in theRepublic.

Pallas Foods, a Co.Limerick-based fooddistributor, has been soldfor an undisclosed fee tointernational food groupSysco.

Pallas is owned and runby the Geary family andhad annual revenues of€155m last year. Thecompany supplies anddistributes cooked,uncooked, chilled andfrozen food to cateringoutlets in the Republic andNorthern Ireland. It haseight operating depotsacross Ireland.

Tim Geary foundedPallas in the 1980s and heand three of of his sons arecompany directors and onthe management team. Afourth son also works forthe company. The companyemploys 500 people.

Pallas was Sysco’s firstacquisition outside NorthAmerica and was madeafter considering more than120 companies.

The US group, based inTexas, has been listed onthe New York Stock

Exchange since 1970. Inthat period, turnover hasgrown from $115m to$37.5 billion.

Pallas has enjoyedstrong growth over recentyears. For the year endingSeptember 30th, 2007, itearned pretax profits of€20.8m on a turnover of€116m. Revenues havegrown strongly in recentyears, rising from €83.4min 2006 and €61.2m in2005.

The workforce has alsogrown over the period.Pallas now employs 500people, up from the 386employed at the end of2007.

Commercial directorTadhg Geary attributes thisto organic growth and says,despite a tighteningmarket, the company is oncourse to grow this year.

Geary said the takeoverwould have no impact onstaff. All senior executivesof Pallas have signed long-term employment contractswith Sysco.

Sysco buys Pallas Foods

Holberry leaves C & CClonmel-based cider maker C&C has announced that

John Holberry, the managing director of its British business,will leave in August, just 17 months after joining thetroubled listed drinks group.

Holberry joined C&C in March 18th 2008 when thedrinks group was led by Maurice Pratt. He was hired toreinvigorate the Magners cider brand, which has seen itssales decline sharply in the past two years from acombination of bad summer weather and strong pricecompetition from rival brewer Scottish & Newcastle.

Pratt left C&C late last year and the company is now runby three former Scottish & Newcastle executives, led bychief executive John Dunsmore.

Holberry said their appointments left little room in thebusiness for him. “I have enjoyed working in C&C andbuilding the Magners GB team over the last year,” Holberrysaid in a statement. “However, the appointment of the newmanagement team, headed by John Dunsmore, reduces theopportunities for me to develop my career.”

Holberry joined C&C from Coors Brewers Ltd, where hehad been managing director of its sales operations since2001. Holberry is credited with launching Magners ondraught in the UK. He also introduced a pear cider to themarket at the beginning of this month.

Vat hits home


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isleading the customer isan age old practice.However it is increasinglydifficult to get one overthe wily public brought upon a diet of ingenious

advertising and instant access toinnumerable media outlets. TheAdvertising Standards Authority ofIreland (ASAI) recently rapped theknuckles of both Tesco and Galtee fordeliberate misleading. Most wouldprobably agree, no matter how cleverthe pitch of an advert, disingenuousclaims are never a good idea. Whenthey are eventually weeded out, theexcuses companies use tend to beanaemic to say the least.

The meat firm Galtee was criticisedby an advertising agency for selling‘Irish Breakfasts’ by mail order thatcontain no actual Irish ingredients. TheASAI sustained a complaint after itemerged that Galtee Irish breakfastssold to customers in the US were madewith meat from different countries.

The Galtee brand, owned by BreeoFoods, has stated that it was notmisleading consumers claiming itsproduct is based on Irish ingredients.The origin of its sausage meat wasrevealed during the dioxin scare whena customer who contacted sellers tocancel her order was told that sheneed not worry as the pig meat wasnot of Irish origin.

The customer subsequentlyclaimed the ad was falsely claiming‘the sizzle of Irish sausages’ eventhough the pork used was not Irish.Breeo Foods said it did not considerthe statement misleading as theproduct was based on Irish recipes andmanufacturing techniques. Moreover,the company’s website stated it wasmade from US and European pork.

Despite this the ASAI ComplaintsCommittee ruled that the advert gavethe impression that the sausages weremade from Irish meat which wouldonly mislead the viewer. TheCommittee ordered that Galtee andBreeo Foods refrain from using thephrase ‘sizzle of Irish sausages’ infuture advertisements and offer clarityas to the source of its meat.

Tesco was similarly cautioned overa press advert containing a

comparison with Aldi cleaningproducts which claimed, ‘save 40c onyour weekly shop’. The petitioneralleged the difference was not 40c asadvertised. However Tesco counteredthat the comparison was not between

the cleaning products in question butrelated to Tesco own brand productsversus a basket of branded products.The ASAI maintained it was bothmisleading and unclear.

Who’s Misleading Whom?M

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Irish companies thatbreach environmentalregulations could be hauledin front of a special eco-courtif proposals by Repak, therecycling body, areimplemented by ministers.

Andrew Hetherington,the chief executive of Repak,an industry-funded bodythat oversees recycling byhouseholds and businesses,wants the government to setup a fast-track division of theHigh Court, similar to theCommercial Court, forcompanies that do not meettheir green obligations.

“It takes so long to takesomeone to court forenvironmental breachesthese days that it is almost awaste of time,” he said. “Wehave suggested the settingup of an environmental courtto John Gormley, theMinister for theEnvironment.”

Hetherington also wantsa green policy force to gowith the green courts.Repak, whose 2,300members include Tesco and

Dunnes stores, says councilsare creating a recycling“crisis” by failing to properlyenforce rules compellingbusinesses to recycle theirpackaging waste.

Hetherington saysMinisters should strip themof these powers and set upa body to ensure companiesfollow the rules.

“We have fantasticlegislation, but it isn’tenforced correctly. “The localauthorities are effectivelybeing asked to watch overtheir own clients, because allthese companies whoserecycling they have tooversee actually pay rates tothe councils.”

All companies that havea turnover of more than€1m and dump more than10 tonnes of recyclablepackaging on to the Irishmarket are obliged under EUlaws, to either join Repak,which oversees the recycling,or arrange to have all theircustomers’ packagingreturned to the companyand recycled from there.

Irish businesses’ recordon meeting their obligationsis unlikely to impress ourEuropean neighbours,though.

On average in Europeancountries, more than 90% ofpackaging waste fromeligible companies isrecycled throughindependently auditedschemes similar to Repak.

In Ireland, the figure is60%. Repak claims it isbeing deprived of muchneeded funding, in the formof fees, and that uncertifiedrecyclables in effect end upon a black market.

Hetherington clams thatif the “free riders -companies that operateoutside Repak on a self-certification basis - wereforced to sign up, it wouldgenerate a further €25m infees for the organisationwhich is legally obliged tosend its cash on greeninitiatives for households,such as the establishment of“bring banks”.

“Our greatest challenge

is to get to levels of EU normfor compliance,” saidHetherington. “Italy, whichwouldn’t normally beassociated with greenbusiness initiatives, has100% compliance becausethey made it mandatory tojoin a scheme.”

Some of the best knownretailers in the country self-certify when it comes to theirrecycling obligations,

Hetherington saysnobody checks properly tosee if they are fulfilling theirobligations. However, thereis no real evidence tosuggest they have brokenthe rules.

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Wigs On The Green!

Analysts say Ireland

is too small and does

not produce enough

waste to feed

large-scale

recyclingn plants for

many types of

materials.


May 2009 11

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“Effectively in Ireland,60% of businesses pay forthe recycling costs of theoverwhelming majority,” hesaid.

Hetherington also claimsthe excess packaging fromself-certified companies thatis recycled by consumersoften ends up in centres runby Repak, which then has topick up the cost of recycling.

It is not just Repak thatis feeling the pinch, however:the Irish recycling industry ingeneral is facing a fundingcrisis. Before the slowdown

hit the west’s demand forAsian exports, much of thepackaging that was collectedfor recycling here ended up

in China, where it was madeback into raw materials formanufacturing.

Analysts say Ireland istoo small and does notproduce enough waste tofeed large-scale recyclingplants for many types ofmaterials.

But now that the Chineseexport manufacturing sectorhas almost shuddered to ahalt, demand for recyclablematerials has dropped andthe prices Irish companiescan get for waste hasdropped by 50%.

“Until last July, even thelow-grade stuff could beshipped t China - they werethat desperate for

materials,”“Now, they return it

because it isn’t up to scratch.Even the high-grade

materials don’t always getaccepted.”

Repak estimates thisdrop in achievable prices willcost the Irish waste industryup to €40m, one that couldhave been spent on recyclinginfrastructure here.

“It almost makes landfillfinancially more attractive,although there are certainmaterials that are bannedfrom landfill it if comesdirectly from businesses,”said Hetherington. He saysthe solution is for thegovernment to fund thebuilding of world-classrecycling facilities for certainmaterials in Ireland, endingthe need to send our rubbishabroad.

“Many foreign firms havelooked at Ireland to buildrecycling plants, butwouldn’t enter because oflack of state fundingavailable,” he said. “Weshould never be whollydependent on others. Weneed to stump up the cash.”

Even in these straitenedtimes, it might not be awaste of money

“Many foreign firms have looked at Ireland to build recycling lants, but wouildn’t enter because of lack

of state funding available. We should never be wholly dependent on others.

We need to stump up the cash.


There are not many Irish companies run by a mother and daughter team but MileevenFine Foods is one of them. However, this is not the only unique quality about thecompany, as it has just become the first Irish honey producer to be awarded the

British Retail Consortium (BRC) Global Food Standard, an internationally recognisedfood quality accreditation.

A Unique Family Affair

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Already producing over 100 tonnesof honey a year, equating to over half amillion jars, Mileeven Fine Foodsbelieves this award will increase itsmarket share as key UK, Europeanand global retailers will only considersuppliers who are BRC approved.

Mileeven Fine Foods currentlysupplies its honey, organic preservesand fine foods products to the US,Japan and major European marketsincluding the UK, Germany, Franceand Denmark as well as all the majormultiples in Ireland. The company alsosupplies a number of gourmet and finefood retailers, including Harrod’s in theUK. According to Sarah Gough,General Manager Mileeven FineFoods;

“Even though we are a smallcompany, we wanted to go for thisaccreditation to formally recognise ourhigh standards in food production,quality and traceability. We believe thisaward will improve ourcompetitiveness in the global andhighly competitive fine foods market.”

“Food manufacturing in Ireland isextremely highly regulated and theBRC accreditation certifies ouradherence to all of the requiredcriteria. While we already supply themajor multiples in Ireland and exportto Europe, the US and Japan, the BRCstandard will give new markets faith inour products and represents a realasset to our business, particularlygiven the increased competitiveness ofthe current climate.”

The British Retail Consortium isone of the world’s leading tradeassociations representing retailers.The BRC Global Food Standardawarded to Mileeven Fine Foods isregarded as a benchmark for bestpractice in the food industry.

Mileeven Fine Foods was awardedthe BRC Global Food Standardfollowing a rigorous administrative andon-site inspection which included anaudit of the company’s productionfacilities, food quality and traceability.

Founded by owner Eilis Gough in1988, Mileeven Fine Foods firststarted producing Irish honey and hasnow diversified into a range ofspeciality honeys, organic preservesand other fine food products, all madein Ireland. Sarah Gough, Eilis’sdaughter joined the business in 2007as General Manager. The company isbased in Kilkenny and employs eightpeople

Mileeven Fine Foods will be wellaware that the notion of health andnutrition is still a draw for manyconsumers and one which honey fitsinto perfectly. The Irish preservesmarket is no exception, and hasincreased in popularity over the lastdecade. Low fat, sugar and no-preservative varieties continue to bepopular in conjunction with theopposite luxury, treat end of themarket. The latter benefits from NPDfocusing on various concepts such as‘value-added’ and ‘luxury’.

The total spreads market is worthand estimated €300m and is growingat 7.6% annually. The marketcomprises chocolate and nut basedspreads, honey, fruit jams andmarmalades. Top varieties for the Irishpalette include strawberry jam andcoarse-cut marmalade. Low-fat andhigh fruit content brands. In addition,diabetic brands are proving popular aswell as spreads like honey which isfavoured for its health and versatileconnotations.

May 2009 13

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Kellogg’s Away From Home, part ofEurope’s largest and growing cerealmanufacturers, will launch an excitingnew product to appeal to busy out ofhome consumers in Ireland who arelooking for a tasty breakfast option onthe move.

The launch of Kellogg’s Cereal ToGo, an innovative ready-to-serveformat, is in direct response to today’s‘desk-dining’ phenomenon and busyconsumers’ hectic lifestyles. Recentresearch revealed that 1 in 3 of us skipbreakfast at home, meaning that moreand more people in Ireland are lookingfor a convenient and substantialbreakfast alternative which they caneat in the office or whilst on the go inthe morning, when time is of theessence.

The cereal market in the away fromhome arena is growing rapidly, so toensure a sales boost in thisincreasingly popular sector, Kellogg’sCereal to Go is perfectly placed to offerimpulse establishments convenient

alternatives for customers to buy andenjoy whilst on the go. The product willhelp satisfy consumer demand forconvenience and portability, togetherwith an increasing desire to eatnutritionally balanced food.

Cereal to Go will be available in30g quantities, an ideal portion sizefor a nutritious and balanced breakfastsolution, in five top selling brands:Special K, Special K Red Berries,Crunchy Nut, Coco Pops ChocoKrispies and Kellogg’s Cornflakes.Perfect for cafes without a sit downbreakfast offering and for sandwichshops looking to cash in onconvenience, the Cereal To Go potincludes a serving of cereal containedin an eye-catching, ready to use bowlto maximise impact and encourageimpulse purchase. All consumers needto do is add milk.

All varieties will be a must-stockproduct for impulse and foodserviceoutlets such as offices, coffee bars andforecourts and present an ideal

opportunity for AFH customers togrow incremental sales.

Andy Phillips, European CustomerMarketing Controller, comments:“Kellogg’s is committed to providingthe right products to its Away FromHome customers. As a market leaderin breakfast and snacking acrossEurope, our brand names are verypopular and desired by consumers ofall ages, so caterers really can makethe most of stocking these firmfavourites - offering the right productsthat they would enjoy at home forbreakfast, will fulfil their needs out ofthe home. This product improves ouroverall offering in Ireland, to thebenefit of our customers and theirconsumers.”

The product lines are closelyaligned to the recommended guidelineintake for breakfast, consideringcalorie, fat, sugar and salt content – inorder to help consumers maintain ahealthier lifestyle.

Kelloggs cereal on-the-go


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Young people spend highproportions of their disposable incomeon cigarettes. For example, teenagersbetween the ages of 12-17 combinedspend €22 on cigarettes a week. Thedisposable income of the average 16-17 year old age group is €200; 12-15

year olds have an average of €100 attheir disposal. The most popularcigarette brands of choice forteenagers are Benson & Hedges andJohn Player Blue, with 80% of youngsmokers preferring either brand.

As many as 500 million cigarettes

are thought to be sold on the blackmarket. This is equivalent to 25 millionpacks of twenty per year. In terms ofloss of sales to retailers, this isequivalent to 68,000 lost customersevery day in the convenience sector.

A dozen newsagents and convenience stores are closing down across Ireland every week. With suchnumbers even the slightest change can impact negatively on a grand scale. There are a number ofexisting or incoming regulations including the tobacco display bans which will cost shop owners largeamounts of money. Newsagents are the strongest channel through which cigarettes are sold. As theApril budget saw a pack of twenty cigarettes increase in price by 25c, fears are growing for theincrease in cross border shopping as well as purchasing tobacco products on the black market.

T O B A C C O L A N D

Tobacco Land


May 2009 17

This equates to a loss in sales tothese retailers of €800,000 per day.

A survey has indicated that themost impact response to impulsepurchase of tobacco products waspoint of sale and that almost nine outten stores it surveyed had some formof tobacco advertising on display. Asstruggling shop owners count the costof this recession, they come undermore pressure to remove tobaccodisplay units which can cost as muchas €5k-€6k. Tobacco has been tabooever since the smoking ban a few yearsago but has it now become a non-runner for retailer as well?

In 2001 it became an offence to

sell tobacco products in Ireland tothose under 18 years. For such apolicy to be effective it was crucial thatthe vast majority of retailers compliedwith the legislation and enforcementmeasures were employed where non

compliance occurred.More recently, in March of 2008,

the Office of Tobacco Control (OTC)published findings of a national retailaudit evaluating how retailers werehandling the issue of selling tobaccoproducts to minors. The survey alsomeasures, in advance of its removal,from the retail environment in July2009, the extent of tobaccoadvertising at point of sale. The surveythrew up some very interestingfindings, not least some insights intohow retailers have been operating interms of how much the sale of tobaccomeans to the profits of a store. Thedynamics and indeed demographics oftobacco purchase make for interestingreading.

Nationally, the percentage ofretailers who refused to sell cigarettesto minors was 60%. This compared toa compliance level of 52% in 2007.Boys were more likely to be refusedthan girls (65% v 56%). As in 2007,retailers’ willingness to sell to minorswas greatest among 16 and 17 yearolds. While the vast majority of 14year olds were refused (83%), almosttwo in ten could have purchasedcigarettes. Likewise, and in a similarfindings to previous years, anestimated one in three fifteen yearolds could have completed a purchase.

Refusal rates ranged across storetype from 55% among independentgrocers to 70% among multiples.These rates were similar amonggarage forecourts, IndependentTobacco, Sweets and Newsagents(TSNs) and other chains (57%-60%).Groups were found to have a refusalrate of 68%. Overall when comparedto previous years findings, all storetypes reported higher compliancelevels (although not all these increaseswere statistically significant).

Similarly to previous years’findings, age again appeared to be amore discriminating characteristicthan gender or nationality of staffmember in refusing to sell cigarettes tominors. Staff aged between 26 and 60were more likely to refuse a sale thanthose under-25 and those over 60. Ayear on, although not all changes arestatistically significant, compliancerates have increased across all agecategories.

On a regional basis, compliancelevels were again the highest in HSEWest (70%). HSE Dublin/North Eastwitnessed the largest increase incompliance levels monitoring by 21

percentage points during the past 12months.

In licensed premises, the surveyaudit tested whether minors wereprevented from purchasing cigarettesfrom a vending machine by a staffmember. Refusal rates increased by 1percentage point to 37%. 17 year oldswere the least likely to be prevented asale at 27%, whereas 42% of 16 yearolds and 44% of 15 year olds wereprevented a sale. As in 2007, girlswere morel likely to fail in theirpurchase attempts than boys (42%versus 32%).

With regard to the type of vendingmachine operated by licensedpremises, minors are far less likely tobe sold cigarettes from token operatedmachines than coin operatedmachines. The sale of cigarettes wasprevented in an estimated three out ofevery four of the premises with tokenoperated machines - 79% against24% of premises with coin operatedmachines. Clearly, the use of tokensresults in increased vigilance amongstaff members.

Looking at coin operated machinesonly, one out of every four minors wasprevented a sale by a staff member.This 24% compliance level has fallenfrom 32% in 2007. The visibility of thevending machine to the staff memberreduces the likelihood of a minor beingable to purchase cigarettes. Where thevending machine was visible to thestaff member, 35% prevented the saleof cigarettes to the minor. Thisprevention level fell to 9% where themachine was not visible to the staffmember.

Just over half of minors (54%) wereasked for ID when they attempted topurchase cigarettes in retail stores(47% in 2007). Boys were somewhatmore likely to be asked for IDcompared to girls (58% boys versus50% girls). As regards age, and in asimilar finding to 2007, the youngerthe minor, the more likely they were tobe asked for ID. Some 60% of 14 and15 year olds were asked for IDcompared to 58% for 16 year olds and45% for 17 year olds.

Interestingly, in 96% of caseswhere the minor was asked for ID, thesale was refused. In contrast, where norequest for ID was made, only 18%were refused sale. These findingsmirrors previous years’ results - 91%were refused when ID was requested,only 17% were refused when no IDwas sought.



18 TGm


Similarly, where the minor wasasked their age only, they were morelikely to be refused sale. In 67% ofcases where the minor was asked theirage only, they were refused the sale.This is despite the approachundertaken for the purposes of theaudit for the minor to say that theywere 18 if asked their age. This figureis again similar to previous years.

Therefore, the correlation betweenthe willingness of retailers to ask for IDor age and their refusal to sell is directand clear. Up to 96% of minors whowere asked for ID were refused

cigarettes. 67% of those who wereasked aged only were refused.

It also appears, according to thesurvey, that retailers who displaysignage stating that it’s illegal to selltobacco products to under 18s, and/orsignage stating that ID may berequired to purchase tobaccoproducts, are more likely to refuse tosell to a minor than those who do not.Of those stores that had signage ondisplay, 67% refused to sell cigarettesto the minor. In contrast, where shopsdid not have signage on display, 42%refused to sell to the minor.

In licensed premises, minors wereless likely to be asked for ID than inretail environments. Less than one inthree minors (31%) who attempted topurchase cigarettes in licensedpremises were asked for ID. Thisoverall finding shows no realimprovement when compared to2007. However, there is a distinctcorrelation between the type ofvending machine and the likelihood tobe asked for ID and this appears nowthe be even more pronounced thanprevious yearsIn the case of tokenoperated cigarette vending machines,70% of minors were asked for ID. Inthe case of coin operated machines,only 19% of minors were asked for ID.

According to the survey, almostnine out of ten retail outlets visitedhad some form of tobacco advertisingon display. Some 88% of stores had agantry which displayed tobaccobranded signage. This high level ofbranding was visible across all storetypes. Up to 62% of stores hadtobacco advertising placed above thetobacco display only, the remainderhad tobacco advertising extendedabove non-tobacco products.

Where there was tobaccoadvertising extended above non-tobacco products, confectionery waspresent in over half (57%) of the cases.This has increased from 49% in 2007.Across store types, independentgrocers and TSNs were more likely tohave confectionery displayed belowtobacco advertising (70% and 71%).Multiples were least likely (26%).

The reality is that even ifthe current rate of store

closures is onlymaintained, and doesnot accelerate, in excessof 600 shops will closetheir doors this yearwith the loss of almost7,000 jobs, according to

CSNA.


May 2009 19

Confectionery was also displayedbeside tobacco products in 40% of allstores. This was down from 45% in2007. Once again, multiples were farless likely to have confectionery storedbeside tobacco products (15%). Thedisplay of tobacco products next toconfectionery in other store typesranged from 35% of garage forecourtsto 48% of TSNs.

As regards cigarette displays, 68%of stores displayed cigarettes in adispenser and 31% on open shelving.In previous years, a dispenser waspresent in 59% of stores. In relation tostore type, almost nine out of tengroups, displayed tobacco in adispenser. This compares toindependent retailers where almosthalf displayed tobacco on openshelves.

As in previous years, the two mostheavily advertised brands in storeswere John Player and Benson &Hedges accounting for 29% and 27%respectively of all advertising. Theseare the two biggest selling brands inIreland and are most frequentlypurchased among young people (2006OTC report Children, Youth andTobacco).

Few will argue that comprehensivelegislation underpins affective tobaccocontrol policy. Advertising bans areuniversally recognised as one of themost effective measures available togovernments in addressing thetobacco epidemic. In many countries,including Ireland, there are alreadybans on tobacco advertising innational press and on TV and radio.Tobacco sponsorship of cultural andsporting events is also no longerallowed.

This has resulted in significantinvestment by the tobacco industry indeveloping point of sale advertisingand display as heretofore legislativemeasures did not impact the retailenvironment. The amounts invested bythe industry globally are testament tothe effectiveness of such advertisingand product display.

A number of Canadian provinces,along with Iceland and Thailand havealready implemented bans on retailadvertising and this measure iscurrently under consideration in manyother countries. In Ireland, the relevantprovisions contained in the PublicHealth (Tobacco) Acts, 2002 and2004, will be commenced from July2009. No doubt the removal oftobacco advertising from the retail

environment will be an important stepin helping to reduce the impact ofsmoking on society. That said theretailer is bearing the brunt of suchlegislation in terms of having toremove such advertising from theirshops at a time when they are barelyable to meet their costs and keep shopdoors open.

The reality is that even if thecurrent rate of store closures is onlymaintained, and does not accelerate,in excess of 600 shops will close theirdoors this year with the loss of almost7,000 jobs, according to the CSNA

(convenience Stores & NewsagentsAssociation). This is equivalent to morethan three times the number of jobslost as a result of the closure of thecomputer manufacturing aspect ofDell’s business in Limerick. Accordingto Vincent Jennings, chief executiveCSNA;

“Because these jobs are being losta handful at a time many people don’trealise the scale of the disaster, butthis is a virulent cancer eating away atcommunities all over the country.”


“The speed at which small enterprises are being drivenout of business is unprecedented. It it truly a national

wipe-out .......”

VincentJennings


20 TGm

Cigarettes are a lucrative businessfor the average convenience/garageforecourt store. For example, the onemillion smokers in Ireland represent555,000 shopping visits per day.These shoppers spend an average of€12 per visit. Of these shopping visits,3.5 more were made toconvenience/garage forecourtscompared with one visit a week tosupermarkets. In all, the convenience/garage forecourt sector captures 65%of the smokers market.

The spend of the average smoker isworth noting. Up to 68% of smokersbuy other items when they visit theshop. For instance of shoppers whosmoke, 17% buy newspapers; 15%buy bread/cakes/or pastries; 14% softdrinks; 13% chocolate orconfectionery; 12% grocery; 11%food to go/deli; 9% milk; 7% crisps;6% lotto; 5% tea/coffee; 4%wines/spirits; 4% petrol/diesel; 3%phone top-ups; 8% other items.

Cigarettes are worth an average of€65,000 per month to aconvenience/garage forecourt. Softdrinks are worth €32k per month;confectionery (including ice cream)€16k; Food to go/deli €15k; Top-upmobile €12k; Newspapers/magazines€13k; Grocery €8k; Fuel €4k;wine/spirits €4k.

The reality for many of theseoutlets is that they are operating on anaverage margin of just 25% and thefranchisor takes 35-50% of sales.Furthermore, it is worth noting that inthe case of many garage forecourts asmany as 30% are owned by thefranchisor. The only really visiblesymbol on the garage forecourt thesedays is the Mace franchise. In the case

of Topaz run stores, many franchisors,seeing the lucrative spoils of thissector, simply did not renew contractswith franchisees.

Local newsagents and conveniencestores, many of which house vitalservices such as post offices, began tosee above average closures in Augustbut the trend has accelerated rapidlysince the new year.

“The speed at which smallenterprises are being driven out ofbusiness is unprecedented. It is truly anational wipe-out but approximately60% of the closures are north of theline between Dublin and Galway. Asthe government considers its economicframework it must do everything

possible to sustain jobs and smallbusinesses. Failure to do so willeviscerate the lifeblood of Ireland’sdomestic policy.”

“In the UK they have designated anentire government department asbeing charge of regulatory reform tomake businesses of all sizes operatemore smoothly. We desperately need asimilar approach here. There are nowso many regulations either existing orincoming, from new litter bye-laws totobacco display bans and othercompliance issues which will cost ship-owners large amounts of money thatthey neither have nor are capable ofborrowing in this climate.”


In the UK they havedesignated an entire

government departmentas being charge ofregulatory reform tomake businesses of allsizes operate more

smoothly.We desperately need asimilar approach here.”


22 TGm

T H E C O S T O F T R A D I N G

It doesn’t seem that long ago thatwholesalers were opening innumerablesymbols within close proximity butoften against the advice and wishes oftheir own retailers. This advice wasoften ignored in a haze of denial thatthe boom would sustain at all costs aslong as consumers got convenience.Little did they suspect that oncechallenging economic times arrivedconsumers would pull right back.

Retailers had always rejectedclaims of profiteering using highertrading costs, higher VAT and sterlingexchange rates as factors forjustification of high prices. In the caseof the independent retailer, forexample, between 35-50% of theturnover is absorbed back to thefranchisor in fees which leaves themwith a 26% margin on the balance ofsales after costs.

However, the reality was starkerthan this. The country has beencarried on a wave. A mirage of a wave.The wave was high and frothy and notmany, except the killjoys, werequestioning the viability of this wave.At the height of boom time projectedstore openings were as high ashundreds per year. And we marvelledat how they would sustain business butassumed they knew what they weredoing.

Ireland has never been a cheapplace to do business. For the lastdecade, they told us, this was why ourprices were so steep. Operationalcosts were over the top expensive inIreland so the retailer had to pass onthe price somewhere.

Now that the reality has beenexposed and many retailers areshutting shop the extent of how

stretched they were is mind boggling.We all acknowledge that the speed atwhich enterprises are being driven outof business is unprecedented. While itis a national epidemic, almost 60% ofthe shop closures are on bordercounties.

In comparing Dublin and Belfast, astudy carried out by Forfas found thatwhile operating costs in Dublin wereon average 25% higher than Belfast,given that operating costs accountedfor only 20 to 25% of the total cost ofa retail good, such costs could onlyjustify a 5 to 6 per cent differential inthe retail price of the same goodbetween Dublin and Belfast. However,the reality is more stark, for instance,sales are down 25% at Tesco stores onborder towns.

Cost competitiveness remains vitalto ensuring that companies based in

The Cost of Trading


this country have the ability tocompete successfully in internationalmarkets. High costs can be seen bothas a symptom of and as a threat tosuccess. The retail sector is one withwhich every Irish person has an almostdaily interaction and accounts for closeto a quarter of consumer expenditure.There has been much discussionrecently regarding the cost differentialin retail outlets between Ireland,Northern Ireland and the rest ofEurope.

A survey by the National ConsumerAgency in June last year found thatcomparing prices for a range of goodsin the Republic and northern Irelandshowed selected branded grocerygoods were up to 30%more expensivein the South than the North. Selectedown-branded goods were between 11-17%more expensive in the South thanthe North.

This debate has been magnified inthe public consciousness overconcerns that the benefits of thestronger Euro against Sterling (which

should reduce the cost of imports fromthe UK) have not been passed onpreviously and the suggestion ofprofiteering by retailers, particularmultiple chains. The counter argumentadvanced by the retailer sectorsuggests that the cost of doingbusiness in Ireland is more expensivethan other locations.

Tesco and Dunnes togetheraccount for an estimated 50% of the€12bn grocery sector, with marketshares of approximately 26% and24% respectively, followed byMusgrave with 22%, Superquinn 7%and discounters Aldi and Lidl with 7%(4.5% and Lidl 2.6%). TheCompetition Authority estimates thatthe number of grocery stores operatedby these retailers increased by 63%between 2001 and 2007 and thattheir floor space has increased by77%. Over the same period, thepopulation of Ireland increased by13%. Other key segments of themarket (clothes, electronics, homefurnishings etc) are serviced by avariety of Irish and foreign ownedfirms.

Irish based retailers areundoubtedly experiencing a difficulttrading period at present. The averagevolume of retail sales in Ireland hasdeclined by more than 5% yoy withsome retailers finding it difficult toobtain funding to support expansionwhile others are putting plans on holdas they gear up for what immenselychallenging times lie ahead. Theseproblems have been compounded bythe rising incidences of people crossingthe border to shop. Retailers havenoted the differential in VAT rateswhich has contributed to thisphenomenon by making Ireland lesscompetitive in comparison to ournearest neighbour. Some say thegovernment has missed anopportunity to help ailing retailers byintroducing a 6.5% cut in VAT whichcould result in a 20% drop in retailprices. Predictions are that a further€1bn will shift to the North where VATis 6.5% lower than in the Republic.

The level of costs will vary from oneretailer to another, depending on theirtype (convenience, multiple, discounteretc) and on their size and location.However a number of cost types areconstant amongst retailers, namely;cost of merchandise from suppliers;rental mortgage per square metre;labour; distribution.

The retail sector is a labour

intensive sector. The sector employed198,000 people in 2008. It comprisesa large body of relatively low skilledworkers, a similar contingent ofmanagerial workers and an evensmaller group of professionals withskills in purchasing or non sectorspecific areas such as accounting,information technology and humanresources.

Regional salary differentials areevident across all countries and allsectors and are influenced by a myriadof factors including the regional costsof living and regional skills availability.Regional salary differences are evidentin the retail sector. For instance,although store manager roles inDublin are broadly comparable toLondon, the applicable rate in thesecities tends to be far in excess of thesalaries paid in the other selectedlocations. Store manager salaries inCork are more than €10,000 perannum lower than in Dublin and€8,500 per annum lower in Galwaythan in Dublin. Moreover, storemanager salaries are significantlyhigher in Dublin than in Belfast orManchester (by 33% and 28%respectively). Sales assistant salariesfollow broadly similar patterns to storemanager salaries, with Dublin andLondon the most expensive areasalthough salaries in Dublin are higherthan in the other Irish cities andalmost 50% higher than theequivalent salary either in Belfast orManchester.


May 2009 23

The level of costs willvary from one retailerto another, depending

on their type(convenience, multiple,discouner etc.) and ontheir size and location.However, a number ofcost types are constantamongst retailers,namey; cost of

merchandise fromsuppliers; rental

mortgage per squaremetre; distribution.


24 TGm


Property costs generally accountfor the second largest component oftotal operating costs, particularly fordepartment stores, which are centrallylocated, and retail parks stores whichhave significant store sizes. Thelocation and type of premises used isdependent on the business model ofthe retailers and their business modelsdiffer substantially from corner shopsto prime street retailers to out of townwarehouse retailers. To the greatestextent possible, the retail locationschosen within each city are comparedwith their equivalents in other cities.

In terms of city centre annualrentals only London’s Oxford Streetand Belfast’s new flagship VictoriaSquare charge higher rental rates thanDublin. In terms of high street annualrental rates Dublin was the mostexpensive of all locations examined inthe Forfas survey, exceeding theaverage cost charged on London’sBond Street by €54.

In terms of electricity, theNetherlands is the most expensive ofthe surveyed locations, with a price of19cent per Kwh. In Ireland and theUK, the cost is 15 cent and 13 centrespectively. Gas prices are higher inIreland than in the UK, although theyare lower than in the Netherlands.Irish retailers pay up to 18% morethan their British counterparts, at €2higher than in the UK.

In all categories relating to fixedline telecoms recorded, Ireland wasthe most expensive of the countriesbenchmarked. Ireland was also themost expensive location comparingEuropean calls, but only marginally socompared to the UK (33 cent and 31cent respectively). In the Netherlands,calls were substantially cheaper. Callsto the US from Ireland were also themost expensive, while the cost perminute of a call to the US from the UKwas 90% cheaper at 2 cent perminute. For mobile phone costs,Ireland is the most expensive of thelocations surveyed , with theexceptions of international calls toEurope.

Amongst the four Irish citiessurveyed, refuse charges were thehighest in Dublin, €185 per tonne. InCork, the rate of €150 and the rate islowest in Galway at €115. With regardto landfill fees, Ireland is lessexpensive than the Netherlands,where the fees are €127, and €135respectively. Finally, water charges arebroadly comparable across the

comparator regions with the exceptionof Maastricht and Belfast - the mostexpensive at €1.27 and €1.19respectively - and Galway where wateris cheapest at just €0.71.

In terms of inbound freight costs,two of the four Irish cities face thelowest cost of all eight cities surveyed.For instance, Cork is the cheapest of allthe cities at a cost of €756.15 whilstcosts in Dublin are also relatively lowat €865.15. By contrast, Maastricht’srate was the highest at €1801.

Indeed, Dublin, Belfast and Limerick’srates were favourable in comparison toLondon, Galway and Manchester.

The cost of transport anddistribution is a function of manyfactors, including fuel and labour costs.Whilst labour has been shown to begenerally more expensive in Irelandthan in the UK , the cost of both petroland diesel (excluding VAT but includingother taxes) is actually lowest inIreland.

Maastricht’s accountancy fee cost


is the highest of the cities examined forthe survey with a charge-out rate of€124.24 per hour. The accountancyfee costs are second highest for thefour Irish cities surveyed at €115.79per hour. Belfast’s charge-out rate issignificantly lower at €64.81, whileLondon’s and Manchester’s cost perhour are €106.81 and €90.79respectively.

Dublin’s legal fee cost is the highestat €302.25, followed by Maastricht,where the average cost per hour is

€248.29. The city with the lowest feesis Belfast, followed by Manchester,while the typical charge in London is€204.

Courier and postage costs have thelowest charges in Belfast, Cork andDublin at €6.41, €7.32 and €8.42;Maastricht, Manchester and limerickhave the highest costs of €48.42,€26.39 and €26.32.

London and Dublin charge thehighest IT service costs at €169.49and €165.88, respectively.Maastricht, Manchester and Belfastoffer substantially lower costs withcharges of €31.67, €54.23 and€59.46 respectively.

Finally, and perhaps mostrelevantly, given the presentcircumstances, there is a wide range ofbanking charges that a retailer couldface here, including overdraft chargesand loan charges. In terms of the costof finance, Ireland is the mostexpensive location for overdrafts andterms loans. For example, an overdraftof €500,000 in Ireland would cost abusiness in Ireland an additional

€14,800 per annum compared with asimilar facility in the Netherlands.

In relation to credit and debit cardsmanagement and processing costs,there are two main card types aretailer is likely to accept. These aretraditionally priced in two differentways. Credit card transactions arepriced on a percentage of the totalvalue or ad valorem basis. This is apercentage of the value of the cardtransaction basis. This is usuallyexpressed as peens per transaction.

The pricing for transactions or cardacceptance that a retailer willnegotiate with their bank is known astheir merchant service charge (MSC).It is not possible to provide facts andfigures on pricing as this will dependon the nature of a merchants businessand how it operates; pricing will bedecided by negotiation between themerchant and their prospective bank.However, research conducted in 2005by Payment and Systems Europelimited, which assessed the MSC levelsacross Europe, found that Ireland’saverage MSC was less than 1.5%; oneof the lowest in Europe. Switzerland forexample, had an average percentageof closer to 3%.

The Forfas survey offers interestingobservations which broadly supportthe claims that Dublin is a particularlyexpensive place to do business. Incommon with other businesses, theretail sector faces higher retailproperty visits in Ireland than otherbenchmarked locations, particularlyDublin. Other Northern EuropeanEuro zone locations generally facemuch lower retail property costs thanIrish locations across the range of sitecategories. Planning policy incontinental Europe is better developedand restrictions on planning in Irelandcontinue to impede the developmentof competitive retail markets.

There is an entire culture ofexpense in Ireland that we have comeaccustomed to in recent years. Nowthat the supplementary budget is fastbecoming a reality, it is going to beharder than ever to run a cost effectivebusiness in Ireland. Trading out ofrecession is a solution that manyretailers would favour and it can bedone. In the UK, the government isattacking regulatory reform with relishin order to make trading conditions alittle more bearable for all business.Unfortunately, similar leadership stillevades the Irish scene and panicseems to be only response in town.

May 2009 25

There is an entire cultureof expense in Irelandthat we have comeaccustomed to inrecent years.Now that the

supplementary budget isfast becoming a reality, itis going to be harderthan ever to run a costeffective business

in Ireland.Trading out of recessionis a solution that manyretailers would favourand it can be done.



26 TGm

The firm - which onlystarted operations on Fridaynight - offers drink fordelivery to households allacross Dublin from 10pm to6am. Dublin drinklink.comclaims it can by as Ireland’sstrict alcohol legislationbecause it is basedoverseas, and merelydistributes a product inIreland.

“The Dublin Drink Link isa Spanish-based company,with a distribution centrebased in Dublin. Our ordersare processed through ourSpanish offices and thendistributed from our Dublinbase allowing you thecustomer to purchasealcohol whenever it suitesyou.

“The Dublin Drink Linkonly operates outside ofnormal off-licence hours tofill the gap in service (which)exists as a result of Irishalcohol laws.”

The company, which islikely to attract significantbusiness despite its highprices, says it has a strictpolicy to avoid minorsobtaining drink.

It said: “ID is required ondelivery for all purchases.Only driver’s licence,passport or Garda Age Card

is an acceptable form of ID.”The company is offering

delivery t anybody withina15-mile radius of Dublinbut its prices may put off all

but the most hardened ofdrinkers in theserecessionary times.

Dublin Drink Link offerssix-pack cans of Budweiserand Heineken at a cost of€20 while six cans ofBulmers cider will set thecustomer back €25. Abottle of a red Cabernetsauvignon or a whiteChardonnay also retail at€20, according to a pricelist provided on thecompany’s website.

The mark-ups on the

alcohol are extremely high;in some cases almost treblethe price one would expectto pay in a supermarket.

The department of

Justice said it is keeping acose eye on alcohol deliverycompanies and the new all-night service will now comeunder scrutiny.

d r i n k s n e w s

All-night drink delivery serviceAn Irish

company hascome up witha way to floutthe licensinglaws and sellalcoholdirect to

householdersat any hourof the night.

“The Dublin Drink Link is a Spanish-based company with a distributioncentre based in Dublin. ....only operates outside of the normal off-licence

hours to fill the gap in services as a result of Irish alcohol laws.”


d r i n k s n e w s

The move will call time on loss-leading alcohol promotionsand cut-price deals which have been widely blamed for fuellingbinge drinking and anti-social problems.

A government spokesman confirmed that the regulationswere being prepared and will come into force in the nearfuture. The cost of alcohol has fallen significantly in recentyears due mainly to the abolition of the Groceries Order andthe liberalisation of liquor licensing, which allows retailers toobtain beer and wine licences from the RevenueCommissioners.

Between 2001 and 2007 there has been an increase ofalmost 70 per cent in the number of off-licences and shopsselling alcohol, while the price of alcohol in supermarkets hasbeen falling. A bottle of beernow retails for as little as €0.75in many outlets, cheaper thansome brands of bottled water.

While supermarkets havebeen using cheap alcohol toattract shoppers, this aggressivemarketing has causedcontroversy. Tesco,, for example,was widely criticised for its StPatrick’s Day promotion of 48cans of beer for €24 in recentyears.

The regulations will allow forthe prohibition of promotionsaimed at selling alcohol at areduced price, or free of charge,on the purchase of any quantityof alcohol or other product.They also allow for theprohibition of events oractivities which are “intended orlikely to encourage excessiveconsumption of alcohol”.

Measures to prohibit below-cost selling of alcohol wereflagged last year, but it hastaken several months for theEuropean Commission to ensurethey comply with the EU’sinternal market rules.

While the new measures willhelp curtail the supply of cheapalcohol, they fall short ofdemands by some groups whichwant even stricter controls onalcohol pricing.

The era of cheap alcohol may be drawing to a

close. As drinkers braced themselves over the

recent hikes in excise duties in the budget,

government officials are finalising plans to tackle

below-cost selling of alcohol in shops and

supermarkets.

Government calls timeoncheapalcohol

May 2009 27


28 TGm

Pressure is coming down hard onseveral of our leading retailers. Not tobe outdone by doom and gloom a feware opting to solve and not wallow Torelieve the tension some arerenegotiating with banks, unions andinvestors. For example, Select RetailHoldings was believed to be indiscussions with Bank of Ireland, AIBand Danske Bank to reschedulerepayments over a longer period. Ithas also negotiated a highly innovativeand constructive survival plan for itsworkers with trade union Mandate.

Select Retail Holdings is seeking topostpone debt repayments after plansto redevelop some of its stores wereput on ice. Select Retail Holdings is theconsortium which is led by propertyDavid Courtney, Simon Cantrell andJerry O’Reilly paid €450m for the

Superquinn business four years ago.The group sold six supermarkets

for €142.5m to a Friends Firstproperty fund on a sale lease backdeal. It subsequently bought theMontrose Hotel site and several otherdevelopments to develop for themultiple.

Clearly the downturn on theeconomy has put paid to many ofthese redevelopment plans as well asaffecting debt repayment plans formany businesses. According tosources, Select Retail Holdings debtlevels are in the region of €300m.Accounts filed for a companysubsidiary indicated that the parentcompany’s loan facilities are beingrenegotiated. “Due to the long-termnature of the redevelopment plans, thecompany is seeking to have its plans

renewed on a similar basis.”In late March, the trade union

Mandate announced they have agreeda deal with Superquinn concerning thelong-term survival and futureprosperity of the company. The plan,‘The Programme for Competitivenessand Change 2009/2010’ wasnegotiated with Mandate, SIPTU, andBAFWU trade unions in recent weeksand in a ballot of their 3,000 membersemployed in the company has resultedin acceptance of the deal by asignificant majority. Mandate has alsobeen in discussions with Tesco andDunnes Stores. The former has had itsown challenges particularly in borderregions where the multiple isexperiencing sales losses of up to25%.

Staff members say that this is a

S H A R P T A L O N S

SHARP TALONS



May 2009 29

highly innovative and progressive dealfor both the employer and workers.While it sees workers take some painin the short term, they will experiencebenefits when the company returns toprofitability. Mandate AssistantGeneral Secretary, Gerry Light said;

“A lot of credit for this deal shouldgo the workers in Superquinn whohave recognised that the company isgoing through challenging times andconsequently they have behaved in avery mature and responsible mannerby balloting for acceptance of theProgramme for Competitiveness &Change.” Light added;

“This deal shows how trade unionsemployers and workers can throughpartnership and responsible actions,reach acceptable and meaningful

outcomes for all interested parties.The unique arrangement betweenSuperquinn and the group of unionsshould be seen as a potential blueprintby any company suffering similardifficulties in the current economicenvironment.”

The Programme forCompetitiveness & Change will seeworkers share in the future prosperityof the company. Some of the majoraspects of the deal include; a voluntaryredundancy package with four weekswages for every year of employmentwith no cap. Superquinn workers willnow own 1.5% of the retail businessthrough the establishment of a formalgain sharing scheme. Superquinn andthe trade unions will set a budgetednet profit annually. When the company

exceeds this profit, one third of thedifference will be shared directlyamongst Superquinn workers.

In an unusual move in the retailsector, Mandate and Superquinn haveagreed to a banded hour’s contractwhich will ensure some kind level ofsecurity of earnings for workers. Mr.Light said;

“Under previous arrangements,workers could be scheduled to workanything between 18-29 hours aweek. With the banded hour contract,workers will either work in an 18-29hour contract or a 25-39 hourcontract. This gives some stability ofearnings, which is a majorachievement for staff in the Irish retailsector where workers hours are beingcut across the board.”


“We have also established a majorwork life balance procedure whichgives workers the option of annualisedhours. What his essentially means isthat workers can spend their payacross periods of time such as schoolholidays where they would havepreviously had to take unpaid leave.”

“Contrary to some people beliefs,trade unions are not in the business ofmaking companies unviable. It’s not inour interest that workers should losetheir jobs and that can be seen by ourinvolvement n this unique deal. Whereit is deemed necessary, we will workwith troubled companies in order tomaintain a competitive environmentand we should be seen as part of thesolution and not the problem.”

Meanwhile, it’s also been up anddown for M&S. In Ireland the multipleappears to be sustaining its successhowever, across the water, M&S in theUK is up against investor upheaval fora second year as accusations that itschief executive, Sir Stuart Rose has toomuch autonomy in the board room.According to reports, concerns wereexpressed to one independent non-executive director at M&S, Jan DuPlessis, by leading shareholders at thegroup.

Concerned investors want Sir Roseto divide his twin role of executivechairman and ceo - which is contraryto corporate governance best practice- and assign a new senior independent

director to check his authority, duringthis time of intense profits and salespressure.

This latest meeting follows a similarencounter last year when M&S faced ashareholder revolt at its 2008 annualmeeting which witnessed 22% of itsinvestors withdraw or vote against SirRose’s appointment of executivechairman.

An investor conciliation was set upby M&S at the time, whereby Sir Rosewould be put up for re-electionannually and that it would hire a newnon-executive director with thepotential to become the seniorindependent director in the future.

Last November the groupappointed Jan Du Plessis with a viewto his becoming the new seniorindependent director. However, thesedesires were uprooted in late Marchwhen he was appointed as the newchairman of mining firm Rio Tinto.

Mr. Du Plessis will stay on the M&Sboard but is unlikely to have enoughtime to fulfil the role investors hadhoped for him. At present, the deputychairman of M&S Sir David Michels,currently holds that role . However thisis also a bone of contention with someinvestors who believe he is too close toSir Rose, which the former denies.

In Ireland the story is far morefavourable. Large crowds attended theopening of M&S’ first store in Navan,Co. Meath in April. As well as afoodhall and a café, the store carries awide range of fashion and accessoriesfor men, women and children. The

multiple is thought to be payingcolossal rent which is expected to riseto €480,000, according to reports,for the two storey store which has afloor space of 2,600 sq m. There is nodoubt that M&S makes an impactwhen it opens a new store. SherryFitzgerald which handled the lettingsaid that M&S executives wereoverwhelmed by the level of businessin the opening days. Moreover,competition in Navan is now expectedto heat up in light of M&S’ arrival,particularly for Dunnes and Tesco. Thiswill be further emphasised later thisyear as the two German discountersAldi and Lidl open new stores in thetown.

The multiples are battlingeconomic challenges just like otherareas of the retail trade. However, asproven by Superquinn and M&S someappear to be better at it than others.


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32 TGm

Confectionery

Snack food and confectioneryare two sectors which are ofteninextricably linked in the mindsof consumers. After a myriad ofbad press through the years asobesity levels soared bothsectors have set aboutsuccessfully re-introducing eachmarket as less aboutsugary/salty indulgence andmore about practical nutrition.These days snack food can beviewed as a stronger and morenutritious opportunity to fuel thebody on the go andconfectionery can be viewedeither as an indulgent/luxurytreat or a healthy functionalhunger stop-gap. The choice isours.Contrary to many sweet and

savoury snacks, certain elementsof both sectors can lendthemselves to healthypositioning. Snack bars, forexample, make ideal carriers ofhealthy and functionalingredients.It is worth bearing in mind

that we have already shifted agear culturally since the levels ofobesity and slimming seemedtop of the agenda. The weight ofeconomic repression has sentmany recession wearyconsumers in the direction of theconfectionery counter. As manyof us reach for a handy, costeffective piece of escapism,there is little as suited to eitheras a bar of chocolate.As many people curb their

enthusiasm for spending onlifestyle, we are seeing a returnto cocooning as an alternativestyle of entertaining. Cocooningessentially involves entertainingat home be it cooking dinner forfriends, takeouts and snack foodor confectionery and a DVD.Bliss!

The Irish are renowned for havingan extremely sweet tooth and we areamong the highest consumers ofchocolates and sweets in the EU. Onlythe UK and Germany are ahead interms of consumption, which in Irelandis a rather hefty 8.2kg per head everyyear.

The Irish confectionery market hasan estimated value of €600m and thismarket has grown by 12% over thelast decade. There are two distinctsector within the market; chocolatewhich accounts for the largest at 69%and sugar which racks up 31% of themarket. One of the reasons that thismarket continues to grow is due theportability of brands which are aconvenient accompaniment to ourhectic lifestyle. There is no doubt thatincreasing health concerns about dietand which foods we should be eatinghave been a challenge tomanufacturers. However, there isalways an innovative way out for mostmarkets and there is a strong linkbetween effort (healthy diet) andreward (treat) as well as seeingconfectionery as a lifestyleenhancement and a sensoryexperience. If chocolate and sweets aremarketed as a stress-busting aid to

sharing pleasure and nostalgia asopposed to a health wrecker,manufacturers can face up to thechallenges it faces.


Confectionery

May 2009 33

Since the early part of thenoughties consumers have beenwarned about the effects of food anddiet on overall health. During this time,research indicated that there wasevidence of consumers cutting back onchocolate but trading up into premiumpriced sectors in order to maximisetheir enjoyment of chocolate. In otherwords consumers stopped casuallyeating chocolate everyday and savedup their chocolate experience bybuying more expensive luxurychocolate brands less causally.Manufacturers at the time experienceddeclines in volume sales, and someresponded by downsizing productionwhile others formed ‘mega-brands’ tobring economies of scale in marketingand create brand blocking at thefixture.

Aside from economic changes,manufacturers have implemented anumber of measures to avoid poorpublicity in the health debate such aslimiting advertising to children andimproving pack labelling.

The obvious market leader in theIrish confectionery market is Cadbury’swhich has a host of yummy favouritesincluding Cadbury Dairy Milk, Flake,Crunchie, Wispa, Heroes, DoubleDecker and Milk Tray to name but afew.

Among its top selling brands isFlake whose delicious unique texture was inspired by a Cadbury employee

back in 1920. His job was to pourchocolate into chocolate moulds. Oneday he noticed that excess chocolatespilled over the tops of the moulds andfolded down into a stream ofchocolate. The new Flake product wascreated as the texture had many thinlayers of chocolate with an irresistiblycrumbly and flaky texture. These daysFlake comes in many shapes and formsincluding Flake Classic, Flake Praline,Flake Dark and Flake Dipped.

Crunchie is another firm favourite.The bar was originally launched in1929 and was initially launched byFry’s – a separate business which laterjoined with Cadbury. Crunchie isavailable is a range of sizes ofmultipacks, including treatsize andsnacksize bars.

Another favourite is Heroes whichwas first launched in September 1999.A mix of Cadbury bars packed in a tubformat that is ideal for sharing;consumers love to rummage in the tubto find their favourites. These includeamong others; Cadbury Dairy Milk,Cadbury Dairy Milk with Caramel,

Cadbury Dairy Milk Whole Nut, Twirl,Timeout.

Some of the world’s best knownchocolate bars and confectionery canbe found in the Mars portfolio. Amongthem are of course, Mars, Starburst,Snickers, Twix, M&Ms and Skittles.

Originally made in Britain but nowsold all over the world, the Mars Baris one of the confectionery industry’sgreatest success stories. As many asthree million Mars bars a day aremade at the company’s Slough plant inthe UK.

Twix is another big player in thismarket. The chocolate bar has twinfingers of biscuit, caramel andchocolate. Snickers is crammed withpeanuts, caramel and nougat thencoated with milk chocolate. Snickersquickly became one of the world’sfavourite treats after it was firstintroduced in 1930.

Nestle’s family of confectionerybrands include KitKat, Aero, Smarties,Milkybar, Rowantrees, Quality Streetand After Eight, Lion Bar and Yorkie toname but a few.


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Confectionery

KitKat was developed as a fourfinger wafer crisp, initially launched inLondon in 1935. Over the years KitKathas appeared in Orange and Mintversions. A Caramac variant waslaunched in 2005 and has proved themost successful version to date. Othervariants include KitKat 4 Finger FineDark, its 2 finger range Kit Kat Chunkyand KitKat Chunky with Peanut Butter.

Yorkie was first launched in 1976to take on brands such as Cadbury’sDairy Milk. Names which wereoriginally being considered at the timewere ‘O’Hara’, ‘Trek’ and ‘Rations’. Ithas become firmly established as asolid chunky eat with a cleveradvertising campaign aiming it‘uniquely for men’.

Aero is another brand with a longhistory. Launched in 1935, it wasoriginally to be named Airways. AeroChunky was launched in 1982 forconsumers looking for a snack on themove. It has appeared in a number ofvariants including orange, andcappuccino. Its peppermint variant hasbeen a success since its launch in the1970s. Since then we have seen Aeroexpand its range to include AeroCaramel, Aero Truffle, and AeroBubbles.

The Green & Black’s Brand hasenjoyed huge success in the Irishmarket. The brand was launched in1991, and is now the UK’s fastestgrowing confectionery brand. Green &Black’s Maya Gold chocolate was thefirst product to be awarded theFairtrade Mark in 1994. The Green &Black’s product range now includes150g, 100g and 20g chocolate barsas well as premium organic ice cream,biscuits, drinking chocolate, cookingproducts, gift boxes and Easter Eggs.

Clarendon Confectionery is part ofthe Jacob Fruitfield food groupmanufactures popular brandsSilvermints, Scots Clan, Double Centreand Yorkshire Toffee. This year,Clarendon Confectionery introducedan extension to the Scots Clan brandwith the launch of Scots Clan bar. Thisenabled the brand to move into thefast moving counter unit for the firsttime consisting of six individual bitesize Scots Clan sweets.

The Silvermints brand continues togrow from strength to strength . In afurther departure for the classic brand, it is now available in a ‘mini’ format.The Mini Silvermints are packed in 12eye-catching, compact tin with a

resealable flip top tin. This year seesthe launch of Mini Silvermints ExtraStrong , also in a sleek flip top tin.

Silvermint Softies are a relativelynew member to the Clarendonportfolio , offering the consumer agreat mint in a chew ! All Silvermintsare also available in pre filled countertop display units

Robt. Roberts’s range ofconfectionery brands includesLemon’s, Chewits, Topp’s, ElizabethShaw, Fisherman’s Friend, McGowan’sand Zed Candy. Lemon’s is an Irishbrand which is well established in theconfectionery market. Earlier this year,Robt. Roberts launched a new range ofLemon’s ‘Better for You’ bags that haveproven to be a huge success, accordingto the company.

Lemon’s range carry’s a newproposition of being 99% fat free, withno artificial colours or flavours and aremade with natural fruit flavours. Therange includes 5 varieties in 200gpacks plus the leading varieties of fruitjellies and orchard jellies also in 100gpacks.

The Irish chewing gum market hasa value of €45.5m and is growing 4%year on year (YoY), with bubblegumaccounting for €2.9m. Wrigley’s has87% of the sugar free market. Themints market is worth €26.3m andhas a YoY growth of 5%; whileWrigley’s extra is the country’s number

one countline and enjoys a value of€26m.

It would not be an overstatementto suggest that chewing gum wouldscarcely exist if not for Wrigley’s. It isthe name leaping out from shopsacross Irish towns and villages. TheWrigley’s company is the recognisedleader in the confectionery field andthe world’s largest manufacturer ofchewing gum with sales of more than$4.0bn. The company markets itsarray of brands to over 180 countries.

With an eclectic portfolio of brands,there are a few favourites in this partof the world among them, Extra Sugar-free gum, Orbit, Juicy Fruit and HubbaBubba. The Extra range of sugar-freegum, which comes in seven flavoursincluding Spearmint and Peppermint,was the first sugar free gum launchedby Wrigley’s in the US and was firstintroduced in 1984.

Juicy Fruit is another familiarbrand with Irish gum chewers. It is thenumber one fruit gum brand and is thenumber one gum brand with kids.Orbit, available in seven flavours firstlaunched on shop shelves in 2001 torapid success and is among the topfive gum brands, enjoyed by millionsacross Europe and the Middle-East.The Hubba Bubba family of productshas also become well-recognisedbrand across the globe.


36 TGm

Snacks

Snacking frequently throughout theday between meals, often replacingmain meals may be an anathema tohealthy eaters but it has fast becomethe norm for many people in Irelandtoday. Lifestyle changes like longerworking hours and commuter timesalongside an overall reduction incooking abilities and skills have all ledto demand for food on the go andincreased snacking. In 2008, sweetand savoury snacks reached €360m,an increase of 7% in current valueterms.

Children hold an important placewith Snackfood at present and willcontinue to do so into the future iflegislation does not hindermanufacturers too much. The reality ofincidences of obesity levels has placedan emphasis on the significance ofnutrition and marketing to children.

Snackfood manufacturers havecome in for severe slack in recent yearsand often held accountable formarketing tactics that target children.Parents are increasingly aware of theimportance of nutrition and its impacton their children but still have tocontend with the ‘pester factor’.However, more and more schools havea ‘no-junk’ policy which bans certainsnackfoods and soft drinks duringschool hours. Snackfoodmanufacturers have fought back byoffering more healthy ranges andreducing fat, salt and sugar in existingproducts

Snacking has emerged from yearsof being stigmatised as unhealthy andfattening as cultural norms continue tofavour the concept of snacking.Contrary to many sweet and savourysnacks, some elements of this sectorsuch as snack bars, lend themselveswell to health positioning. Snack barsmake ideal carriers for practically alltypes of healthy and functionalingredients such as omega-3, vitamins,minerals and fibre as well assophisticated weight managementingredients.

Research shows that 38% ofconsumers snack when they arerelaxing at home in the evening. Adultsnacking has emerged as an occasionin its own right representing ‘me-time’during the busy working day.According to a snacking report, 2% ofthose surveyed admitted snackingduring or after playing sport; 5% whenwith friends; 9% when at work or attheir desk; 13% at specific times in the

day; 15% when they had missed ameal and 21% when they are on thego.

This shows that snacking is not justconcentrated in one particular timeframe but also that snacking is in-home, and therefore consumers arepurchasing products for these snackingoccasions when they are completingtheir weekly shop.


Snacks

May 2009 37

As many as 57% of consumersclaim to snack on fruit regularly and22% claim to snack on vegetables andsalads. Consumers divide snacks intocategories based on ‘good’ and ‘bad’.While taste in all food consumption isimportant, there is often a trade-offbetween indulgence and health whichmeans that the snacks people perceiveas healthy are consumed for theirhealth benefit rather than theenjoyment of the product.

A quote from a typical older familyof mixed gender in the C2 socioeconomic group states;

“I think you associate fruit as justsome health food. You don’t think, ‘Ifancy an apple’, you just look at it andeat it because it’s healthy and youwant to be healthy for a while.”

This is a typical opinion to thenotion of snacking and its division intoindulgent ‘for me’ and healthy ‘must I’eating.

Snacking has been on a learningcurve for the last few years and hasemerged as a changed market in itscurrent state. According to marketers,two drivers of snacking behaviour areemerging – functional and emotional.The functional elements of snacking

seek to satisfy the physical need ofhunger and emotional snacking isabout deriving comfort and pleasurefrom the act.

The challenge is to position healthysnacks on an emotional level thatdelivers on taste as well as nutritionalvalue. Healthy snacks may need to bepositioned in a traditional convenient‘snackfood’ way. The upshot is thathealthy snacks need to take on theappearance of more ‘indulgence’packaging such as colour, convenienceand size in order to compete astraditional snackfood, as likely to bechosen as a bag of crisps or a bar ofchocolate.

A tall order perhaps, but it hasbeen done. Observe granola bars, nutssuch as pistachios and smoothies,which have been positioned alongsidetraditional snackfood. They are closeto point of sale and can be found onthe same shelf as crisps, muffins orchocolate bars yet are ultimatelyperceived as healthy snackfood. Asconsumers take more interest in healthand diet, the ability to offer productsthat provide both taste and nutrition isclearly the source for exploiting thepotential of heath snacking.

Although the outlook for snackinghas been less than optimistic in recentyears, the market has started torecover after successive downturnsand developing a demand for premiumproducts such as hand cooked crispsand certain snacks give cause forgreater optimism, according tomarketers.

Equally, in reaction to the obesitylevels, manufacturers arereformulating old and creating newsegments. However, the challengesthat lay ahead include demographicchange as it becomes more difficult topin down individual socio economicgroups, as well as firmer governmentcontrol over advertising to children.

Crisps remain an integral part ofthe snackfood market and the Irishconsumption of crisps is twice the EUaverage. Although the C1 socioeconomic demographic is identified asthe core market for crisps, everyoneelse under 55 eats almost as many ofthem; nine out of ten people under 24eat crisps regularly. Pringles, Tayto,Walkers and Hunky Dory’s are by farthe favourites on the Irish market.


38 TGm

Snacks

2008 saw continued growth both invalue (+5.5%) and volume (+1.4%)versus 2007. Crisps and snackscontinue to go from strength tostrength thanks to strongperformances from leadingmanufacturers and development of keymarket sector.Total crisps are ahead 6.3% and

snacks up 4.7% on previous year, withthe majority of this growth continuingto come from the vibrant grocery(+8%) and symbols (+7%) sector.Within the category Sharing andBetter for You continue to prove strongengine for growth. Sharing sector is invalue growth by 1.2% with Better forYou +20.7%. Indeed Better for Younow represents 8% of the total.Walkers Snack A Jacks is +20%

growth and is now worth €2m to thecategory, with baked contributing€2.4m in 2008.The Sharing sector is also a huge

area of growth for crisp and snacksand the sector is being shopped and ingrowth across all channels. The twoSharing bag brands are Doritos(+13%) which is now worth €9.7m tothe category, and Walkers Sensationswhich is now worth €5.2m and lastyear grew it’s cash rate of sales by1.4%.With General crisp and snacks

there are also some strong growthperformances; with Walkers core crisps+4% in 2008 and now worth€16.1m, Walkers Max +65 (€1.7m)and Wotsits which had a great growthof 15.3% in 2008 and continues to bea strong snack brand in growth.In July 2008 Walkers launched its

‘Do Us A Flavour” with the backing ofa €1.5m media campaign. The sixflavours entered by the members ofthe public will face the public vote todecide which one stays on sale

permanently. The winning packs hitthe shelves in January 2009 with thefinal winner announced in May. Thewinner will receive 1% of net revenuesaes each month for the duration ofthe period that their flavour is on sale.A prominent player in the snack

food market is Largo Foods who inDecember last sold 15% stake toCologne-based snack food companyIntersnack for €15m. The Ashbourne,Co. Meath based company boastsIrish favourites Tayto, King and HunkyDory in its portfolio.The company anticipate growth in

the market in 2009 with sales upabout 6% this year for the company.With more people sitting in at homeand not out and about as much crispsare a relatively inexpensive item.The company will invest €9m in

marketing this year and he hopes tobring the business into the UK wherethe group owns a small operatingplant in Barnsley. Other plans includebrining Tayto to Libya where he hassigned a 50-50 joint venture with alocal company.Kelkin offer a range of delicious

Micro Popcorns and the range includestwo low fat variants. It is available in amultitude of formats including a newlylaunched single sachet (100g) packinginto convenient SRP, designed to setnext to cash points. Kelkin MicroPopcorn is a convenient, tasty snackwhich can be prepared effortlessly inminutes. Kelkin supported their MicroPopcorn range during 2008 using BTL

activity and ran a three monthcompetition with Pigsback.com givingaway over €1,500 worth of prizes.However Ireland’s attraction to

snacking does not end with crisps, upto €€00m was spent on confectionery,over €240m on bars and boxes ofchocolates, as well as the consumptionof 31,700 tonnes of chocolate, 2,900tonnes of chewing gum and 9,500tonnes of sweets.The eating habits of Irish

consumers have changed for good withsnacking and grazing an everydayreality for most. One in four adults inIreland skip breakfast every morning;one in five regularly skip lunch and13% of 1,000 surveyed regularly eatsa fast food meal.Overall our culture has become

accustomed to eating on the movecontributing to the majority of adultsadmitting to eating on the go at leastonce a day. Travel and lack of time tosit and eat are the principal reasonsfor snacking on the go even as one inseven admit they do so as a result ofwork commitments. Interestingly asimilar proportion is seeking relieffrom boredom – rising to a quarter ofall 15-24 year olds.In the main manufacturers have

responded well to the trend towardshealthier eating by reformulatingexisting snack products to reducelevels of salt, sugar and fat as well asintroducing new lines which containingredients such as dried fruits andnuts.

The eating habits of Irishconsumers have changed for

good with snacking andgrazing an everyday realityfor most. One in four adultsin Ireland skip brekfast everymorning; one in five regularlyskip lunch and 13% of 1,000surveyed regularly eats a fast

food meal.

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B O T T L I N G I T

BOTTLING ITHas the bottled water bubble burst? Perhaps not quite yet, but according to a recent survey, some

global water trends are showing a shift from expensive bottled water in favour of, believe it or not, tapwater. Yes indeed, it seems tap water is making a come back on the restaurant and household diningtables. Is this recession talking, a back to basics shift in thinking perhaps, or has tap water alwayshappily co-existed alongside bottled water, neither particularly bothering the other? TGm reports.


B O T T L I N G I T

The ‘celebrity chef‘, AnthonyBourdain was allegedly booted out of aparticularly salubrious New Yorkrestaurant for chuckling at the expenseof the water waiter who rolled up to histable with a trolley of bottled waterand described the flavours, qualitiesand derivation of the various waterbrands. There is little doubt thatbottled water is a serious business.Sales figures aside, a large proportionof the dining population take theirwater very seriously, clearly Mr.Bourdain does not, but this has notstopped the market from goingconnoisseur to a lot of people. For allthe celebrity associations and wildanecdotes (Madonna’s blessed Kabalawater, anyone?), the average consumerstill stashes bottled water.

At the other end of the spectrumtap water can be purely undrinkable,metallic in taste and over-treated withchemicals which can be, in a rare fewIrish incidences, simply not drinkable.Somewhere in the middle ground,however, is what a recent survey hashighlighted. As credit crunching timesgobble on, analysts have predicted therise of own label brands which are soldat a mere fraction of the price of manybranded bottled water varieties.Equally many homes have introducedthe filtered water and jug system fortap water to eliminate the bad tasteand chemicals from their tap water.

A survey carried out by WaterAidclaims that 38% of respondents alwaysask for tap water in a restaurant.Although it is a UK based survey thereis little doubt that similar trends arebeing replicated by Irish consumersacross the country. As many as aquarter of those surveyed prefer to askfor tap water but sometimes feelpressure to order bottled water in arestaurant.

Up to 37% of respondents of thesurvey always ask for bottled water ina restaurant. Interestingly, it alsoreveals that tap water is more likely tobe chosen by females (39%) comparedto (36%) males. Females are morelikely to prefer to order tap water butfeel pressure to order bottled water.Men are significantly more likely toorder bottled water in a restaurantthan women.

There is a steady upwards trend,according to the survey of inclinationto order tap water, i.e. from 34% of the25-34 age group, to 49% of thoseaged 55-64, falling steadily to 30% forthe 55-64 year old age group.

The genesis of the bottled water

industry is an intriguing rise fromobscure notion to everyday shoppingmainstay. A number of social andeconomic factors drove the bottledwater market even through therecession of 1989 to 1993. Theseincluded the acceptance of ‘buyingwater’, with drinking bottled waterbecoming a core activity in the late1980’s through to the 1990’s andbeyond, compared to being viewedmore as exclusive or trendy prior tothat time.

Moreover, changes in work andlifestyles benefited the market. Theturn away from family mealtimes andtowards individuals eating whenconvenient to them, in part as a resultof the increasing numbers of workingwomen, led to significant growth in thevalue of ‘convenience’.

In addition, recession in the early1990’s ushered in sweepingredundancies to leaner resourcedcompanies and fewer employeeshaving to cover more work. Thisresulted in the emergence of the‘working lunch’, initially featuring justtake-out food and beverages, mainlybottled water. The ‘working lunch’ ofboom times was a far contrastinvolving longer hours and moremoney being spent.

However, arguably the main driverhas been the continuing interest inhealth and wellness, as well asconcerns about obesity levels, aided byprogrammes and the media which ledto younger females, particularly buyingand drinking bottled water.

This health focus has beensupported through the years byoccasional drinking water pollutionincidences (most frequently thecryptosporidium parasite detected intap water in the West of the country).

Attracting younger and femalepurchasers in particular, has been afocus for many marketers who seethem as a target audience. Hence, anysurvey claiming that more women thanmen would prefer to drink tap water ina restaurant is not a trend drinksmanufacturers will welcome.

A recent Evening Standardnewspaper campaign encouragedrestaurants in London to supply tapwater freely to patrons. The reality isthat bottled water sells for up to onethousand times the price of tap waterand people are increasingly interestedin sustainability issues even when itcomes to buying water. Many youngerconsumers, in particular, arequestioning the necessity of buying a

bottled water brand that has beenimported from abroad leaving a giantcarbon footprint in its wake.

One super savvy entrepreneur hastaken this idea and run with it. Hecame up with the idea of bottling tapwater and selling it back to NewYorkers at a premium and is nowlapping up the rewards. Craig Zukerconceived the idea to sell New York tapwater for $1.50 (€1.70) a bottle onesummer’s evening back in 2007.According to the 27 year old;

“It was created in response tobottled water coming to the US fromvery far away…Fiji, India. New York hasthis taste-test winning water on tap.”

We are obviously experiencingexigent economic times on anexceptional level. Penny pinching andcutting price corners takes on a wholenew reality for ordinary consumersgiving rise to own label shopping.However as the origins of the watermarket has previously shown, bottledwater still has a place even inrecession. What will change, and whatis changing, is how people chose todrink their water. The solution formanufacturers is to perhaps payattention and get innovating.

May 2009 41


The Irish Market:This may all seem a far cry from

our little patch of Europe but theIrish market is no less impervious toglobal trends than any other culture.However, for now, bottled water isone of those categories thatmaintains a huge potential forfurther growth according to marketanalysts. Despite the ups and downsof the overall soft drinks market, theIrish bottled water sector leads thecategory in volume sales. In factbottled water is outgrowing thecarbonated soft drinks sectorparticularly with valued-addedwaters that claim to offer cosmeticor health benefits. In addition,convenience still manages to be amotivator for bottled waterconsumption.

This perception for future growthis consistently linked with risingconsumer health awareness andinterest in choosing ‘good for you’products. Increasing our waterintake taps into this notion perfectlyand is a great motivation for newcustomers to get into drinking water.We have all read the health expertsand accepted that we should bedrinking more water - 2-litres a day,

according to research.Global consumption of bottled

water continues to grow and will bea staggering 251billion litres by theyear 2011. In Western Europefunctional water consumptionincreased to an estimated 280mlitres. The latter continues to bedriven by NPD.

Ballygowan has been Ireland’snumber one bottled water brand forover 27 years. Bottled at source inNewcastlewest, it continues to beone of the most dynamic companiesin the overall drinks category,producing 60 million litres of bottledwater annually.

Continued commitment to thebrand’s investment, innovation andmarketing has driven Ballygowan’ssuccess through the years.Sponsorship is also a key part ofBallygowan and its involvement withThe Ryder Cup, Munster Rugby, TheDublin City Marathon and the FAIhas strengthened its position andpromoted impressive brandawareness.

Recent innovations include newpacks and product variants such asthe fruit flavoured range ofBallygowan waters - introduced in

line with consumer demand forBallygowan ‘With a Twist’.Ballygowan Flavoured Waterscontain no-added-sugar, no artificialcolours, sweeteners or flavouringsand are available in 500ml packs orlarger 1.5-litre family packs.

Ballygowan bottles are 100%recyclable and over the past tenyears the company has takensignificant steps to reduce theweight of its bottles, managing a38% reduction, which is animportant contribution towardsenvironmental conservation.

Ballygowan is committed to theongoing development of the brandand is looking forward to makingsome exciting announcements overthe coming months with a strongfocus on the health and impulsemarkets.

Volvic brands play a key role inthe development of the bottledwater category with a market shareof 22.7%. Volvic Touch of Fruit,which is available in three sugar-freeflavours including Strawberry, Lemon& Lime and Orange & Peach, is thenumber one flavoured water on themarket with an impressive 34%value share.

B O T T L I N G I T


Volvic Revive is a delicious andstimulating fruit flavoured waterdrink that is designed to give aninvigorating lift. Volvic is alsoavailable in ‘Berry Blast’ flavour in a50 cl format with a sports cap.

Volvic’s 12-for10-L campaign, inpartnership with World VisionIreland was launched in April 2008and is on target to deliver over 1.7billion litres of water to Africa. Forevery litre of Volvic and Volvic Touchof Fruit sold in Ireland and the UK,Volvic and World Vision generated10-litres of safe drinking wateracross Africa through the provisionof merchandised wells.

Tipperary Natural Mineral Wateris a significant player in the Irishbottled water market. Bottled by theGleeson Group in Co. Tipperary, therange is available in 2L, 1.5L, 1L,750ml, 500ml and 250ml PETbottles as well as 25cl and 75clglass bottles. The range alsoincludes 500ml and 2L bottles ofClearly Tipperary, a sparklingflavoured water.

A re-brand of Tipperary Kidz wascompleted in late 2008. The newbottle contains 20% less plastic,making it more environmentally

friendly. It now has a one piece flipso it is child safe and easier to use.Another interesting feature is thebottle’s ambidextrous grooves whichprovide an ‘ezi-grip’ for either hand.

These product innovations willensure that Tipperary Kidzcontinues to lead the way in thechildren’s water category. With thesere-brands and significant activityplanned, 2009 promises to be agreat year for the Irish brand, whichfeatures the successful strapline‘Tipperary - Part of You’.

Deep River Rock continues todrive the water category both interms of value and volume throughinnovation and satisfying consumerdemands. The brand’s 1.5-litre hassurpassed the 2-litre to become thesecond biggest pack size segmentwith grocery.

Proof of its unique innovation isDeep River Rock’s approach tofestival fans with its Summer FestivalCampaign. As part of the campaignit offered festival kits with anestimated retail value of €300 to bewon by festival goers.

Evian is the number one waterbrand in the world. It is purifiedthrough a natural filtration process

that spans over 15 years, deepwithin the French Alps. Evian isavailable in many different formatssuch as 50cl, 75cl and 1-litre sothere is a bottle size to suit everyconsumer and every occasionwhether they are drinking Evian onthe go or at home as part of a healthconscious lifestyle.

Vittel has been undergoing anationwide relaunch as part of apan-European ‘ReVITTELLisez Vous’programme and is now establishedas one of the country’s premiummineral water brands, appealing tothe discerning consumer who desiresa sophisticated high-quality water.

H20H! Was launched two yearsago and rose up the market tocapture a number three position amere six months after its launch.The brand is now the number twoflavoured water bought on impulse.H2OH!’s sugar-free and no-caloriefeatures make it a popular choiceamong health conscious consumers.

A H2OH! 1.5-litre bottle isavailable to enjoy at home. With itsmodern, colourful and ergonomicallydesigned bottle this lightly sparklingfruit flavoured water will look goodin the hands of any fashionista!

B O T T L I N G I T

May 2009 43


44 TGm

G U A R A N T E E D I R I S H

PunchingThroughRecessionSomeone once said that problems are not stop signs they are road signs. Sanguinely

cheesy perhaps, naively passé maybe, but like all good clichés it contains a grain of truth.Irish culture has traditionally, and rather too roundly courted its status as ‘martyr’ -the sacrificial victim of times hard. Cosseted self-pity and seeking out more reasons tobury our heads under a damp pillow each morning has an all to familiar routine to it. No-one could ever have accused our western corner of the hemisphere of adopting aPollyanna attitude. However, if the last ten years of prosperity have taught us one thingit is how a ‘can-do’ focus makes a difference. Cynics may smirk at the Obama-esquerhetoric of it all, preferring the soft curves of a sacked pillow, but action worships thedeed.In a new monthly column called Punching Through Recession, TGm will look at what

businesses, retailers and individuals are doing to punch out of trouble, we will examinethose who are actively innovating new ideas, whilst also analysing idiosyncratic displaysof leadership, direction, credibility and hope. As the spectacularly successful Henry Fordonce remarked; “obstacles are those frightful things you see when you take your eyes offyour goal.”

In this first instalment we revisit that old chestnut the Guaranteed Irish Logo onceassociated with the 1980’s, the GI logo is making a triumphant come back. However,this time it is for a belligerent Irish consumers seeking ways to help their own economy.



nce upon a time Irishproducts sought theprestige of theGuaranteed Irish sign.During the 1980srecession, the GI logo

was born out of the former IrishGoods Council and became anon-profit organisation. Duringthe economic boom years,interest in use of the logo fellaway. Perhaps this hadsomething to do with the factthat buying Irish had becomeassociated with being savagelyripped off. Moreover, Irishmanufacturing has shrivelled inthe last twenty years to such anextent that many wondered howit was even possible toguarantee anything Irish.

However, recession is barely hereand already there has been aresurgence in interest for use of thelogo. Many an Irish consumer hasbecome precious about where theyspend their euro and renewedexpression for supporting Irish hasemerged as a result.

Finding new ways to sell orpromote a product in thesechallenging economic times is a plus.Where in the 1980s the GuaranteedIrish logo was a mark for sale abroad;this time it is the depleted domesticmarket that has interested businesses.

At present the Guaranteed Irishlogo is featured on over 1,000 brandsand that number is growing. It featureson some of the country’s leading foodbrands including Breeo Foods with itsDairygold spread, and Largo Foods toname a few. According to Tom Rea,director of Guaranteed Irish, factorswhich influenced its originalestablishment have come aroundagain;

“The reasons behind the setting upof Guaranteed Irish originally were: thestate of the economy; the need tosupport Irish jobs and the need toprovide consumers with an easy way toidentify Irish products. “

He explains how the desire for theGI sign waned in the last decade.

However, calls to the GI office are up50% on this time last year;

“The past ten years have been astruggle to survive for us. But now wefind ourselves back in a similareconomic environment. Consumers areonce again looking to buy Irish goods,and manufacturers, realising this, aremore interested than ever in carryingour logo.”

The cost of adopting the GI logovaries from business to business andis dependent on factors such as staffnumbers and the variety of media onwhich the logo will appear includingeverything from websites andpackaging.

Guaranteed Irish research showsthat 60% of all adults recognise thatbuying products and services with theGI logo assists employment in Ireland.In addition, 74% of the affluent AB1consumers claim they are more likelyto buy a product or service with theGuaranteed Irish symbol. According toRea;

“I think consumers are aware thatlocal enterprises are particularlyvulnerable in a credit crunch. However,people will not buy Irish regardless.Being Irish isn’t enough on its own.The item must also be priced correctly,be of high quality and fit for purpose,in order for consumers to chose anIrish made item over an import.”

Many companies have approachedtroubled times with ‘cutting back’formula. However, others wiselychoose to do the opposite and investnow. One such company is BryanLynch Salads which is expanding itsbusiness having increased itsemployees in the last two years from13 to 22.

The company sells packaged saladswhich is worth an annual €2m. BryanLynch, founder of the companybelieves that quality is all important tosuccess particularly in these times.Moreover, his products have theGuaranteed Irish logo printed on themwhich he believes makes a significantdifference. He says;

“There’s nobody that can beat us interms of the quality of what weproduce. But, if a consumer is lookingat our product and that of a rival onthe supermarket shelf, the Guaranteed

Irish logo will swing it for us.”Bryan Lynch Salads signed up the

GI logo in 2005 and it costs thebusiness €700 a year to use it which ismoney wisely spent, according toLynch;

“We put it on everything from ourpackaging to our website to our vansand letterheads. More than ever,people want to buy Irish because thatway they feel they are supporting Irishjobs.”

Stamping an GI sign on a brand,however, is not without somebureaucracy, so points out Greg Swift,ceo of Dublin City Enterprise. Asmembers of the EU there is a certainamount of protocol for public bodiesto ensure that their procurement andselling practices are open and offerparity to all businesses across Europe.He comments;

“What is key now, more than ever,is competitiveness and adjusting theiroffering to meet the environment - thedays of silly pricing, for example, aregone. Once all that is addressed,however, I think there is an extraopportunity out there for firms tocommunicate their Irishness toconsumers because there is a sensethat is the way consumers are feelingright now.”

“They want to support Irish goods,as long as they are competitivelypriced and of sufficient quality.”

Back in the mid-seventies,Guaranteed Irish was a State-backedorganisation when it first establishedwith help from the government-fundedIrish Goods Council

May 2009 45

GUARANTEED IRISH

OBack in themid-seventies,

Guaranteed Irish was aState-backed

organisation when it firstestablished with helpfrom the government-funded Irish Goods

Council......Today, a morecompact organisation

exists



46 TGm

. The campaign was pioneered bythe late Vivien Murray, father of RTEpresenter John Murray, and employedmore than 60 people by the time theEuropean Court ruled nine years laterthat countries were not allowed topromote one country above othermember states.

Vivian Murray, who recently passedaway was the former chief executive ofthe Irish Goods Council and the manbehind the launch of the GuaranteedIrish campaign. He launched thecampaign with the view that moneyspent on the Buy Irish initiative shouldbe more consumer led, highlightingthe quality of Irish goods and moving

away from the idea that Irish peopleshould buy Irish out of a sense ofpatriotism.

Murray was ahead of his time inmany ways. He favoured free tradeover protectionism. As far back as1980 he said;

“What the Irish Goods Council doesis to create the selling environment,develop new patterns of consumerdesire, build up good will andfavourable attitudes. These attitudesmust be exploited by themanufacturer.”

Shortly afterward governmentbacking for the Guaranteed Irishpromotion was discovered to be inbreach of the Treaty of Rome and statefunding was cut. Murray retired fromthe council in 1989. Following theruling, the campaign became a not-for-profit organisation supported by smallfees from businesses that wanted todisplay the logo on their products.

Today, a more compactorganisation exists and functions froma Georgian house near Dublin'sFitzwilliam Square. This home is thebase from which Tom Rae and hiscolleagues examine companies thatwant to use the logo to ensure thattheir products really are guaranteedIrish.

How effective the Guaranteed Irishlabel depends on a number of factorsbut research indicates that aboutthree-quarters of Irish consumers wantto buy locally made goods if they areas good as foreign equivalents.

Communicating Irishness mayactually seem quirky to some people.Given the evolution of the notion of‘Irishness’ in recent years, there issome work to be done to convinceIrish consumers that it is worthchoosing Irish brands over others.However, even a small stirring ofwillingness is an opportunity forcompanies and Thomas Edison oncenoted that opportunity was missed bymost people because it is dressed inoveralls and looks like hard work.

How effective theGuaranteed Irishlabel depends on anumber of factorsbut research

indicates that aboutthree-quarters of

Irish consumers wantto buy locally madegoods if they are asgood as foreignequivalents.


48 TGm

There are not many products outthere that would be considered icons.Perhaps Coca-Cola, Guinness, or aFord car. However they have alteredtheir image so often through thedecades that they have assimilated tothe everyday as opposed to iconic.Some brands can still manage toespouse their original intention,arouse nostalgia whilst maintaining aplace alongside any other products.One such brand is Fisherman’s Friendlozenge.

Lofthouse of Fleetwood’sFisherman’s Friend lozenge is a worldrenowned and truly iconic product. Thecompany decided the time was rightfor some innovation of the brand. Tore-invigorate the packaging, Lofthouseof Fleetwood approached AmcorFlexibles to develop a packagingconcept that would refresh andmodernise its brand.

It’s standalone status is furtherinstilled by the pursuit of change at atime when every marketer seems to bethinking the same. Innovating now isthe real indication of its iconicpositioning. Investing in a brand is nowmore important than perhaps anyother time in the last decade of boomtimes. In a recent report, one brandmarket expert explained;

“There is an opportunity for allbrand strategists and marketers tolead and grade by example brandingcarries these companies and productsthrough even the bad times.”

Another expert added;“Beyond quality and sheer market

weight, brands must be ever morerelevant, trustworthy and flexible. Theymust constantly be in tune withconsumers’ values, evolving needs andlifestyles.”

Despite this sensible advice,ironically marketing budgets are oftenthe first to get the chop during tougheconomic times. As a consequence,brands risk becoming less visible at atime when they need to stand out.Consumers’ are on the warpath whenit comes to shopping. Post budget, andfaced with even less to spend a brandreally needs to stand alone from thebunch. According to Harvard BusinessSchool Professor John Quelch;

“Instead of cutting back the marketresearch budget, you need to knowmore than ever about how consumersare redefining value and responding torecession. It is well documented thatbrands that increase advertisingduring a recession, when competitorsare cutting back, can improve marketshare and return on investment at alower cost than during good economictimes.”

Most companies are on a panic ofcutting costs and that includes themarketing budget. Yet some are wellaware that the show must go on andFisherman‘s Friend‘s approach couldbe described as a lesson to all. Themarket in which this brand operates isa dynamic one that not only enjoys,but demands, innovation. The Irishmarket is no exception. Over the lasttwo years, the cold and flu market hasenjoyed strong growth, driven byvalue-added products, favourableweather conditions and strongdemand for decongestants. The flu andcold season, starting in November andending in February, is often referred toas the ‘fifth season’. It is worth notingthat research conducted has foundthat consumers who regularlypurchase cold and flu remedies areusually ill when they make theirpurchases and this is referred to as the‘distress factor’.

Naturally, this is of clear benefit tomanufacturers as someone with a colddoesn’t think, they just want relief as

soon as possible. They don’t care howit works and they don’t often care howmuch it costs. The distress factor, alongwith the culture for self-medicationwherever possible, means thatcommercial flu and cold remedies areenjoying increased sales not just inchemists but in supermarkets,convenience stores, petrol stations andany 24-hour convenience outlet.

Sick leave has come under pressurein recent years as employersencourage staff to reduce time off forsick days. As a result many workerstake shorter periods to recover fromflu and colds and this can sometimesresult in a longer lasting cough or cold,which would be better remedied bylonger time out.

T H E E V O L U T I O N O F A N I C O N

The Evolution of an Icon


Obviously, this trend has boostedsales of cough and cold remedies andanalgesics as consumers believe theseproducts are the most appropriate tocontinue working while sick. Equally inthe vitamins and dietary supplementssector, the sale of Echinacea orcombination products which containVitamin C have also benefited from thischanging social trend.

According to Euromonitor, Irishspending habits are highly influencedby trends in advertising. The OTCproducts that are most heavilyadvertised on TV are generally theproducts which consumers tend topurchase. Highlighting this assertion isthe fact that many of the televisionchannels viewed in Ireland arebroadcast in the UK, and as suchcontain ads aimed at the Britishconsumer demographic. Irishconsumers watch these ads and oftenseek OTC products that are notavailable in Ireland due to licensingrestrictions. Pharmacists havefrequently commented that theyregularly inform consumers thatcertain products are not available inIreland and when asked, ‘where didyou hear about these products’, theyreply, ‘I saw it on TV’.

Fisherman’s Friend lozenges aresold in more than 100 countries.Printed with the familiar fishingtrawler, the pack has been establishedfor many years and is instantlyrecognisable around the world.Changing the packaging of such aniconic brand presented a considerablechallenge. Following their previoussuccess in introducing Amcor EasyPackfor a range of chewing gum, Lofthouseof Fleetwood turned once again toAmcor Flexibles.

With annual net sales of €1.8billion and manufacturing operationsin 22 countries across Europe and theAmericas, Amcor Flexibles, a divisionof Amcor, is a market leader and oneof the world’s largest suppliers offlexible and tobacco packing. Itdelivers a wide range of products tothe food, beverage, tobacco andhealthcare markets. Its award winningapproach towards sustainability makesAmcor Flexibles the preferred partnerfor customers looking for responsiblepackaging solutions.

The traditional paper based packsare easily creased. The packs are notsufficiently robust to withstand thestresses they are exposed to in someharsh environments.

May 2009 49




To address these issues, Lofthouseof Fleetwood wanted a solution witheasy open and reclose as well asimproved gas and moisture barrier toreduce product spoilage. Finally, thenew pack had to improve the overallshelf impact whilst maintaining andfurther enhancing the brand image.

The pack was initially to belaunched in Asia, an important growtharea for Lofthouse of Fleetwood. Dueto the high temperatures and humidityin this region, coupled with thehygroscopic nature of the lozenge,there was a high potential for productspoilage, if the pack’s barrier wascompromised. The launch was to serveas a ‘test bed’ for the new pack format.If successful, it could be introduced toother markets.

The greatest care, respect andclose contact with the customer duringevery stage of the development werecrucial to finding the ideal solution. Itwas an essential requirement forLofthouse of Fleetwood that theirAsian distributors were in completeagreement with any planned changes.They were to be instrumental in thedecision making process.

“We presented three differentsolutions at a specially convenedmeeting in Bangkok in October 2007,”explains Amcor Flexibles Key AccountManager Wayne Hallsworth.

“We needed printed and fullyfunctioning samples so that Lofthouseof Fleetwood and their distributorscould see and feel how each optioncould be tailored to their specificrequirements. There was no time to

produce production samples, so weemployed the services of a companyspecialising in production qualitymock-ups. These were produced in arange of shapes and sizes,incorporating different print effects.Being able to present such highquality, fully functioning samples madethe decision making process far easierfor our customer." Wayne Hallsworth,Key Account Manager, AmcorFlexibles

Lofthouse of Fleetwood wanted apack with improved productprotection, a re-close mechanism andoutstanding shelf-presence that wouldclearly differentiate the product fromthe locally produced competition inAsia.

A key consideration was thematerial specification. Fisherman’sFriend lozenges require a high barrierto gas, moisture and aroma since theyare hygroscopic and contain menthol.Due to the extreme climatic conditionsin Asia, the lozenges need to beadequately protected. APET/Alufoil/PE was identified to meet theseneeds. Paul Blackman, the then AmcorFlexibles UK Development TeamManager, takes up the story;

“We chose to make the sachet froma polyester, aluminium foil andpolyethylene laminate as this helpedto address all the customer, consumerand product technical requirements.Polyester because of its suitability forlaser etching and high temperatureresistance; aluminium foil for itsexcellent barrier properties tomoisture, gas and aroma and finally aspecial polyethylene to providehermetic seals around the integral zip,at the packing speeds demanded byLofthouse of Fleetwood.

Reverse printing the PET allows theink to be sandwiched which eliminatesscuffing. It also provides a glossyappearance which both modernisesthe image and allows the packs to bewiped clean -unlike the existing paperbased pack -which was a keyrequirement of the brief”.

Lofthouse of Fleetwood and theirdistributors opted for a sachet pack,incorporating a contour laser for easyopening and an integral zip for re-close. This option resembled theexisting pack and fulfilled the brief of‘evolution, not revolution’.

The final structure would have ahygienic and modern appearance withgreater resistance to tearing, scuffingand puncturing (reducing product

push through) than the existing paperbased pack. The next step in thedevelopment process was to ensurethat the proposed solution could bemanufactured to the standardsdemanded by Lofthouse of Fleetwood.The Amcor Flexibles Schüpbach plantin Switzerland was chosen as the leadmanufacturing site and produced thefirst trial material. Following extensiveand successful packing machine trials,Lofthouse of Fleetwood placed productsamples on stability testing tomeasure the performance of thelaminate in prolonging the shelf life ofthe lozenges.

To complete their evaluation,Lofthouse of Fleetwood conductedqualitative and quantitative marketresearch in Malaysia, Singapore andThailand. This was considered vital tounderstand consumer’s attitudestowards the new pack format andensure that they compared favourablywith the existing pack.

The stability tests confirmed thatthe material provided exceptionalbarrier compared to the existingmaterial. The feedback from theconsumer research was extremelypositive and overwhelmingly in favourof the proposed new pack. With theseresults, Lofthouse of Fleetwooddecided to accelerate the Singaporelaunch to October 2008 and AmcorFlexibles received the first order inMay 2008 for a range of eight 25gpacks.

Since the launch, Fisherman’sFriend sales in Singapore have enjoyeddouble digit growth in what iscurrently a declining market due to theglobal economic downturn. “The newpack format meets our brief preciselyand we are very pleased with theresults”, said Lofthouse of FleetwoodTechnical & Planning Executive RobertWoodhouse.

“The pack appears to have beenreadily accepted by our customers andthe presentation on shelf is muchimproved. Early sales figures are veryencouraging.”

The product is now being rolled outin Malaysia with other markets inSouth East Asia to follow. Investment,creativity and vision to win over thecurrently belligerent consumer mind.,a brand needs to begin and remaincredible, competitive, current, andrelevant to customer wants, needs andinterests.

Fisherman’s Friend has just given amaster class.

50 TGm

With annual net sales of€1.8 billion and

manufacturing operationsin 22 countries across

Europe and the Americas,Amcor Flexibles, a division

of Amcor, is a marketleader and one of the

world’s largest suppliers offlexible and tobacco

packing. It delivers a widerange of products to thefood, beverage, tobaccoand healthcare markets


After five years research Bic haslaunched the first ever branded bioplastic shaver in Ireland and the UK -Bic Solutions. A real technologyinnovation, Bic has succeeded indeveloping a manufacturing processthat converts com, a renewableresource, into a resistant plastic.Designed for sensitive skin BicEcolutions delivers a close and preciseshave, while its lubricating strip withaloe vera and vitamin E providesoptional comfort.

As part of Bic’s eco design process,its packaging has been reduced to aminimum and is made from 100%recycled bleach free cardboard,coloured with inks made fromvegetable based pigments. Vegetableorigin pigments also give the shaver itsdistinctive green colour.

The revolutionary Ecolutions Tripleblade shaver will be available at theaffordable price of €3.79 which makesit available for mass marketdistribution. Bic Evolutions will notonly prove popular with increasinglyeco conscious consumers it will alsohelp retailers improve their greencredentials within the shaver category.Yolande de Torgoff, marketingmanager for shavers at Bic discussesthe recent development;

“Now more than ever, consumersexpect large companies to becommitted to making a positive impacton the environment and to begin tothink about the reducing our Co2footprint without compromisingproduct quality. We have also formeda partnership with carbon offsettingspecialist, Climate Mundi, whoseprogramme will help us to offset thereduced Co2 emissions of the BicEcolutions shaver.”

Taking into account raw materials,production, distribution, end of life andpackaging, the Bic Ecolutions shaverwill equal on emission which is 16gCo2 less than an equivalent 3 bladeshaver made of regular oil based

plastic.An international survey by Boston

Consultancy Group indicates thatbuying green remains a prioritydespite economic downturn. Moreconsumers purchased green productsin 2008 than in 2007, the surveyfound. Nearly half the respondents(consumers worldwide) indicated abelief that green products are of ahigher quality, particularly in the

category of ingestible products.A majority of respondents in all

countries surveyed also expressed awillingness to pay a premium of 5% ormore for green products especiallythose in the food and electronics andappliances categories. The report,entitled, Capturing the GreenAdvantage for Consumer Companies,surveyed 9,00 18-35 year old adultsacross nine countries.

The Ecolution of BicT H E E C O L U T I O N O F B I C

52 TGm

Statistics show that 75% of consumers are ready to buy environmentally friendly products. Despite thisimpressive percentage, a less promising 64% feel prevented from doing so because they perceive‘green’as ‘too expensive’ as well as not widely available. However, other major surveys are finding that despitethe current economic downturn consumers are still keen to buy green. Bic hopes to revolutionise this

market by introducing Bic Ecolutions, the first branded plastic shaver on themarket in this country.


May 2009 53

Closer to home, a UK surveycarried out by YouGov, reveals that twothirds of all consumers claimenvironmental factors influencepurchasing decisions as much as theydid a year ago. The vast majority ofconsumers still believe it is importantto buy green products and services,despite the recession.

In Ireland, a 2009 survey ofConsumer Attitudes towardsCorporate Responsibility shows thatwhen making a judgement about anorganisation environmental practicesand impact was considered 33%important behind customer service(81%); being honest and open (69%),product quality (66%), health & safety(54%) respect for human rights (51%)and product reputation 33%).

When asked if they had made adecision not to buy from a particularcompany 2% claimed it was becausethe organisation was ‘notenvironmentally friendly‘. The mainreasons cited were poor customerservice and /or after sales service(22%) followed by high prices (17%).

In a similar way that greencredentials should not be dismissed,the male grooming sector of healthand beauty should not beunderestimated. One of the maindrivers is the growing number of menwho are interested and concerned withtheir appearance. Men are now beingadvised about how best to dress andalso how to take care of their hair andskin. This has been in part led by men’smagazines and prominent male Sportscelebrities from Tiger Woods to DavidBeckham.

A decade ago, men could not haveas easily availed of information that isaround today. Aside from magazines,men are readily receiving informationabout grooming products on theinternet which have long removed anydoubts about the importance oflooking after one’s appearance.

As women are likely to be the mainpurchasers of male grooming products,the industry needs to appeal beyondthe male audience and into the femalemarket. Some ways to attract attentionwould be to use male models at beautycounters in the larger departmentstores, free samples of male groomingproducts in women’s magazines with acoupon for repeat purchasing andmore advertising in the femaleorientated media.

According to Mintel, the malegrooming market on all Ireland basis,

is valued at €103.1m, increasing by24%. The market in the Republic isworth €62m rising by 26%. Themultinationals dominate the malegrooming market with own labelbrands from retailers holding amarginal proportion of retail sales.

Deodorants account for the largestsector of the market, valued at€18.2m, representing 29% of themarket share. Shaving preparationsare the second-largest segment of themale grooming market accounting for25% of the total market value andworth €15.6m. Personal wash andbathroom products, including showergels and bath oils currently hold anestimated 20% of the male groomingmarket, worth an estimated €12.2m.Skincare products are worth €6.8mrepresenting 11.0% of the market.

Older men’s routines consist oftaking a shower or a bath, washinghair and cleaning and flossing teeth.Men in the younger sections of thepopulation, notably those aged 15-34

are more engaged in the market andinclined to use products that falloutside the realm of personal hygienesuch as hair styling and skincareproducts.

Younger men no longer considerconcern over their appearance as acompromise on masculinity. Thesemen are most likely to adopt newforms of male grooming such asskincare routines. Whilst men in theolder sections of the population arenot as easily convinced and have a verytraditional method of grooming whichinvolves primarily washing andshaving.

Older men will have takengrooming habits from their youngeryears into a different life stage and areleast likely to experiment with differentbrands/products. These men mightwelcome products such as haircolorants or skin treatments thatenhance the texture or colour of theskin by providing a healthy glow.

There are very few shampoos onthe market to treat hair thinning orbaldness, which affects a considerableproportion of the male population overa certain age. Manufacturers shouldembrace this trend by offering a widerselection of products to address thisneed. Other types of skincare productssuch as facial scrubs and under-eyetreatments are less likely to be used bymen in the greying years and it mightbe impossible for manufacturers toever turn this around.

Male grooming products such asanti-ageing skincare, anti-cellulite andbody firming treatments and hairremoval creams are still very muchniche products and it is difficult topredict if these will move intomainstream or not.

Manufacturers need to be carefulin terms of the language they use totarget men by not over using scientificterminology, as with the women’scosmetics market, and communicatingthe functional benefits of the productwithout bogging down with too muchfact.

Usage of anti-ageing treatmentssuch as under eye creams orgels/creams to reduce bags, collagenfillers and anti-wrinkle moisturisers arenot strictly confined to the femaleconsumer base. There are a few malespecific anti-ageing treatments on theskincare market for men to treatwrinkles under-eye

T H E E C O L U T I O N O F B I C

Male groominghas reached wellbeyond shaving,combing and

showering. As wecan see, it is in aready state ofinnovation and

evolution. It is nota good idea towrite off theimpact of thecarbon footprinton today’sconsumer.


bags and skin slackness, howevernowhere near the same level as forwomen. There is potential to furtherdevelop this market segment whentargeting men with skincare productsas men are also concerned with theageing process despite the fact thatsome men are not willing to admit tobeing so.

Men are far behind women interms of the purchasing of personalcare items and ‘embarrassment’ maybe one reason for a reluctance tospend of a range of items. Data showsthat at least one in five men is put offskincare products because theyperceive them to be female products.In one survey, it was acknowledgedamong participants that certainbrands and environments are morepermissible than others.

This is perhaps as this product fitsinto the ream of shaving, rather thangeneral personal care and men felt itwas a ‘male’ brand and not one withovert female overtones. It was notedthat the level of discomfort with theissue of extending male grooming wasreflected in the switching of malerespondents to talking a ‘third party’rather than themselves.

Another interesting finding wasthat the adoption of products may belimited by the lack of other peopleadopting the products. Men agreedthat they would have to accept acertain degree of teasing from friendsbut as the behaviour became morepredominant then it would become anormal activity and ‘they’d all be at it!’(Male, aged 18-25). Consequently,marketers may find that encouragingwomen to buy on men’s behalf mightincrease product use and adoption.

Christmas is a key time of the yearto purchase gifts for loved ones. It isthe ideal time for trying products theywould not normally use in the hopethat they will see the benefits of theproduct once tried and tested andeventually make a repurchase.Likewise gift packages can encouragepeople to buy products for men thatthey would not normally buy forthemselves. One good example is anti-ageing treatments or facial treatments.

Future projections show a steadyrise in this market over the next six

years. Mintel predicts that the malegrooming market will rise by 25% inthe next three years. The most difficultchallenge for manufacturers will be toencourage men over the age of 40 toexpand upon their current malegrooming routine that tends to consistmainly of showering, shaving and hairwashing. Products which meetfunctional needs such as hair colorantsfor the moustache, beard andsideburns may be an effective way oftargeting this category of men.

Male grooming has reached wellbeyond shaving, combing andshowering. As we can see, it is in aready state of innovation andevolution. It is not a good idea to writeoff the impact of the carbon footprinton today’s consumer. Recession or not,a sizeable majority of shoppers stillwant to buy environmentally friendlygoods and Bic has the right idea byintroducing a new product, in atangibly successful sector like malegrooming, that shares this concernwhilst not compromising on quality.

T H E E C O L U T I O N O F B I C

Recession or not, asizeable majority ofshoppers still want tobuy environmentallyfriendly goods andBic has the right ideaby introducing a newproduct, in a tangiblysuccessful sector likemale grooming, thatshares this concern

whilst notcompromising on

quality.

54 TGm


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F I R I N G L I N E

Scientists have invented a chocolate withzero calories which dieters canINHALE. Users breathe chocolatepowder into their mouth from the€1.50 plastic cylinder called LeWhif. It comes in four flavours -raspberry, mint, mango andplain - and can be usedseveral times. The gadgetwas invented by Paris-basedprofessor David Edwards,who believes people eat sofast today that they arealready on the way towards“breathing” food.

•“Substantial amounts” of Irishpork products which wererecalled from 40 overseas marketsbecause of the dioxin scare inDecember are still being held inoverseas warehouses and ports. Nearlyfour months after the crisis began only €45mhas been paid out of the Government’s €180mcontingency fund for the return or destruction of theproducts. Meat Industry Ireland, which represents theprocessing factories, said the delay in getting the productback or destroyed was damaging the reputation of Irish porkand increasing the costs involved.

•Sales of Guinness in Ireland grew by 2 per cent in the sixmonths to the end of December, reversing a decline ofrecent years in the fortunes of the famous stout in its homemarket. Figures produced by parent group Diageo, showthat Guinness also gained share in the pubs market on bothsides of the Irish border and reported upturn in sales inBritain.

•McConnells Media Group and Publicis Groupe Mediahave formed a joint venture that they claim will be Ireland’sbiggest advertising buyer. The advertising groups said thatthey expect to have a combined turnover of €192m in thefirst year of operation. The move follows the merger ofMcConnells and AFA O’Meara in 2008 to form Ireand’sbiggest advertising group.

•We’re some of the biggest chocolate eaters in the world andwe spend over €30m on the stuff over the Easter period.On average a person here eats a massive 11.2kg of it a year.At Easter time we work our way through 1,000 tonnes ofchocolate. In health terms, that’s a billion calories and wouldtake approximately two million marathons to burn off.

•Food products entering Ireland from China that contain thechemical melamine are now being destroyed at Dublin Portfollowing recent powers given to health officials and customsofficers. The legislation, which came into effect last October,now requires all food imports from China that containmilk/soya at any level (which can also include chocolate andbiscuits) to be detained at Dublin Port and tested.

•Senior government ministers are convinced the minimumwage rate is too high and is contributing to the current highlevel of unemployment. While the issue is currently before

the Labour Court for review, privately anumber of cabinet ministers believe thata reduction in the hourly rate of

€8.65 will become inevitable.•

Pat the Baker has launched amonthly lottery of €5,000 topromote its half-pan range. Thebakery will also promote anumber of national initiativesduring the campaign. Thereare four half-pans in therange, and each of these willreplace the heel at one endwith a cardboard token fromthe Forestry StewardshipCouncil. The council is an

international non-profitorganisation dedicated to

promoting the responsiblemanagement of the world’s forests.

Customers can collect seven tokens andsend them to Pat the Baker for entry into a

monthly draw for €5,000.•

The Irish Society for the Prevention of Cruelty to Animals(ISPCA) has called for clear labelling on chickens so thatconsumers know how they have been reared before theymake a purchase. Most standard chickens, which are raisedintensively indoors in Ireland, are kept at a density of 35kgper square metre which is assured by Bord Bia. However itfalls short of the Freedom Food scheme in the UK,monitored by the RSPCA, which sets a minimum standardof 30kg per square metre.

•An Irish cheese manufacturing company has settled itsCommercial Court action over potential €10m losses due toit being supplied with allegedly defective rennet, an enzyme-based ingredient made by a Dutch company. The rennet hadresulted in cheese with a “soapy aftertaste and an off-flavour”. Carbery, of Ballineen, Co Cork had sued CarbonChemicals Group, with registered offices at Ringaskiddy, CoCork, which supplies food ingredients for use in foodmanufacturing, and DSM Food Specialities BV, withregistered offices at Delft, the Netherlands, which makesfood ingredients.

•Dunnes Stores is looking for compensation from its pigmeat suppliers for the loss of profits arising from the recallof pork products last year. The retailer has written tosuppliers, stating that it intends to take a compensationpayment directly from money it owes the suppliers forproducts. The letter has caused anger among pork suppliers,who received a similar letter from Tesco. Retailers regularlybill suppliers for lost profits in cases where the supplier failsto deliver the agreed volume of product. However, pig meatsuppliers believe that this should not happen in this case,as the disruption was a state recall.

•Pfizer unveiled a €51.5 billion takeover of rival drugmaker,Wyeth. The acquisition - to be paid for using equal amountsof cash, equity and debt - creates a group with $71 billionsales from a broad range of products.


todays grocery magazine may 2009

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