Address to Joint Oireachtas Committee on Agriculture, Food & Marine
December 1st 2015
Chairman, Committee members, thank you for the opportunity to address you today. My name is Eileen Bentley, I am the Entrepreneurship Manager in Bord Bia, and I am joined today by my colleagues Declan Fennell and Mark Zieg from the Bord Bia Meat & Livestock Division. Over the course of the next ten minutes, we will share with you Bord Bia’s activity within the organic sector, on the Irish and export markets and with a specific focus on the meat sector.
Bord Bia’s role is to drive through market insight and in partnership with industry the commercial success of a world class Irish food, drink and horticulture industry.
In the context of the organic sector, our focus is to establish markets for organic, rather than the recruitment of new producers into the supply base. This role is undertaken through the creation and execution of the annual Organic Marketing Plan, overseen and funded by the Organic Unit of the Department of Agriculture, Food & Marine. In addition, there are over 40 active organic companies on Bord Bia’s database of clients, all of whom can benefit from the many marketing and business development support services that are provided by Bord Bia on a daily basis.
I would now like to give you a brief overview of current market performance of organic. The value of the Irish organic retail market is just over €110 million. The organic market is about 1% of the overall food and drink market in Ireland, and like all aspects of the market, has had significant challenges at retail level in the years of the economic recession. However, in 2014 and 2015, the organic market has returned to growth, and although not yet back at pre-recession value, year to date growth in 2015 is +9%. According to Kantar’s Worldpanel data, this growth is being driven by more shoppers, buying more products more often.
In terms of market share, three categories make up over half of the market for organic sales at retail level in Ireland – these are vegetables, yoghurt and fruit. It is always interesting to understand who is purchasing organic products, and again through Kantar data, we can see that the key segments are the Pre-Family group, the over 45’s with family and households with older dependents. In other words, appeal is greatest in households with highest level of disposable incomes. The majority of retail sales for organic are through the established multiple retailers. Super-Valu has performed strongest for organic in 2015 in terms of the value of organic sales, but Tesco is the most important retailer in volume terms. Interestingly, the biggest share growth for organic in 2015 was in Aldi, an indication of the importance of the discounters to the future growth of the sector in Ireland.
Internationally, the market for organic food and drink is valued at £40 billion pounds according to recent figures from the Soil Association. There was a slow-down and in some markets a decline in organic growth over recent years, but similar to the market here at home, there has been renewed growth in the 2014/15 period. The USA accounts for almost half of this £40 billion and is by far the leading organic market in the world. Germany, France, UK, Italy and Switzerland are the top five markets for organic sales in Europe, with a combined value of approximately €17 billion euro.
For the next part of my presentation, I would like to focus on how Bord Bia supports the organic sector on the domestic and international markets. In both cases, by way of reminder, Bord Bia’s remit is to act as the link between suppliers and potential new customers, providing market and consumer insight, route to market, brand communication and 1:1 support. In addition to the Origin Green programme, these are the strategic pillars under which Bord Bia operates.
On the domestic market, in addition to a market development role, our role is also to increase the awareness and understanding of organic with the Irish consumer. Through research, we can get under the bonnet of organic with consumers and use this information to help us target messages and advertorials across the right media to the right audience. Importantly, this research is also a powerful tool in our meetings with buyers and retailers as we showcase the potential of the sector and the value of an organic offer to their customers.
The bi-annual National Organic Awards are another powerful means by which to showcase the sector to consumers and retailers alike and are used by the winning producers to raise their own profile and generate new business. And finally Bloom – this is the ultimate shop window for organic producers to meet over 100,000 current and prospective consumers and over the last number of years, the sector has been well represented within the Bord Bia Food Village as well as educating the next generation of consumers via the Organic Schools Garden initiative.
A programme of retail mentoring support specifically for organic producers large and small was introduced by Bord Bia in 2014 and feedback to date from participating companies has been overwhelmingly positive as they look to gain a stronger foothold in the retail market.
Not surprisingly, with a size of prize of over £40 billion pounds, making in-roads into export markets is the ambition for many organic suppliers. Bord Bia supports the identification of potential new markets and customers for the organic sector through a joined up process of market study visits and the research and publication of organic market reports. In 2014, the focus was Germany, in 2015 it was France and next year it will be the UK market. This year’s French market activity included research of the organic consumer in France and their awareness and expectations of organic products and brands from Ireland. This is critical information for companies intending to export to that market and gives them a head-start versus international competitors in the development of market specific products and communications. From a trade fair perspective, the annual Biofach fair in Nurnberg, Germany is the key event for organics on the European market. Each year approximately 8-10 Irish producers participate on the Ireland stand across a range of categories. The estimated value of new business to participants on this stand in 2015 was €2.5 million.
Looking at two export focused sectors in particular, I will now ask my colleague Mark Zieg to share a brief insight into how Bord Bia supports the development of the organic beef sector internationally. He will be followed by Declan Fennell who will focus on the opportunity and supports for the organic sheep meat sector.
Irish Beef
Irish beef exports in 2014totalled 524,000tonnes (carcassweight equivalent).It is estimated that organic beef accounted for approximately 2,800tonnes in total production. This was marketed both on the home market which is dominated by retail sales, as well as exports to retail and value added customers in markets such as Britain, Germany and the Netherlands.
BordBia's promotional strategy for Irish beefis centred around finding differentiated and premium markets and promoting Irish beef with higher value customers in those markets. Organic beef is very much part of this strategy representing a high value differentiated niche offering andconsumer perceptions of organic are very well aligned with the natural and sustainable image of Irish beef. In recent research in some of our key markets such as Germany, Holland and Italy we have found high correlations in positive opinions of Irish beef amongst consumers with a higher propensity to purchase organic beef.
Earlier this year, Irish organic beef secured a listing withone of our largest retail customers in Germany. BordBia supported the successful brand development and listing of this product. In Britain we are undertaking a consumer insight and branding project for an Irish organic beef range with a leading online retailer. This presents an important opportunity for Irish Beef. According to Kantar Worldpanel research, organic and branded retail have been identified as two of the most promising growth trends in the UK beef retail category.
In the context of the future outlook, it is estimated that organic beef production in Ireland could grow by as much as 40% over the next five years, as a result of the high uptake in organic conversion amongst beef farmers.Feedback from our overseas offices contact with existing and potential customers and discussion with exporters, suggest that this additional volume will be well received in meeting the growing international demand for organic beef. Specifically we see opportunities in the retail and foodservice sector in Northern Europe, the USA and Asia. That said, full access to the US market for Irish manufacturing beef and certification of Irish beef plants to export to China will be a pre-requisite to unlocking this potential. On the production side seasonality of supply remains an issue and as most customers require a year-round supply capability. This is a challenge that the entire sector will need to address.
Sheep meat
The Irish sheep sector has delivered a solid performance over recent years with the value of exports growing at a faster rate than volume. Since 2009, total sheep meat exports increased by 25% to reach €218 million whist volumes have reached 42,000 tonnes, equivalent to a 4% increase.
The UK and France continue to be the core markets for Irish sheep meat accounting for some 60% of total export volumes.
The success of Irish sheep meat exports can be attributed to the shift away from trading in carcasses towards developing primal-cuts. Our ability to deliver a product according to an exact market specification has enabled us to optimise our product and market mix. This has ultimately delivered a better price return back to the farmer.
Notwithstanding the above, the Irish sheep sector and indeed the broader European industry are faced with a universal challenge; how do we attract younger, lighter buyer consumers into the lamb category? According Kantar Worldpanel data, some 65% of Irish lamb shoppers are over 45 years of age. This trend is not unique to the Irish market. Younger consumers lack exposure to lamb and knowledge on how to prepare and cook this meat.
In an initiative to address this challenge, Bord Bia in partnership with our counterparts in France and the UK launched a three year campaign to promote lamb across six EU markets earlier this year. The ‘Lamb- Tasty, Easy, Fun’ campaign is targeting consumers within the 25-45 year group across six EU markets and aims to highlight the importance of European lamb production and its versatility as an everyday meal.
From a consumer perspective we need to recognise that lamb is relatively more expensive meat when compared to other offerings within the fresh meat category and thereby commands a smaller share of retail shelf space when compared to the lamb offering.
Whilst organic beef is relatively successful, organic lamb faces more challenges, as outlined above. In general, conventional lamb sales are down in the UK and across the rest of the EU. Nevertheless, it is important to stress that there are some niche opportunities for Irish organic lamb within mainstream retailers and specialist organic stores in our main export markets. However listings of organic lamb within these outlets are often of small volumes, with a limited range of one or two types of cut such as the leg or rack of lamb.
Recognising that the number of organic sheep in Ireland is set to increase as a result of the GLAS scheme Bord Bia has put in place a programme of activities which will seek to identify and develop market opportunities for organic lamb. In partnership with the Irish processing industry and through the network of our overseas offices, Bord Bia is engaging in a number of initiatives in the area of trade research, brand development and market prioritisation to further the development of the organic sheep meat market.
Conclusion
Chairman and members, our presentation this morning has focused on the bespoke set of supports for organic producers that are delivered under the Organic Marketing Plan. In the interests of time, I have not outlined all of the other range of supports that are available to organic and conventional producers alike as part of Bord Bia’s annual activity. These supports include supplier development programmes like Food Academy and Tesco Taste Buds and export programmes in retail and foodservice on the UK and Continental markets. Many organic companies have undertaken extensive consumer and brand development work through Bord Bia’s Super Brands and Foresight for Food services and others are exploring new routes to market via our Digital Food Hub with Google. Just last March, approximately 20 organic companies participated at Marketplace International in the National Convention Centre, the largest buyer-supplier showcase for the food sector staged in Ireland, with over 180 participating companies and more than 500 buyers that will generate in excess of €30 million of new sales for participants within the year.
It is the view of Bord Bia that the potential for continued growth of organic exists and that organic plays an important role for consumers at home and abroad. Through the collective efforts of all elements of the organic sector to overcome the challenges of supply, we hope that Irish organic producers can make the most of this potential.
Thank you.