12 March 2013

10 minute read

According to new figures released today by Bord Bia, the value of Irish food and drink exports in 2012 surpassed €9 billion for the first time. This builds upon, and consolidates, the food industry's exceptionally strong performance over the past three years, with exports currently valued at €2 billion, or 28%, ahead of 2009 levels. The strongest performing categories were meat and livestock (€3 billion), seafood (€493 million) and beverages (€1.26 billion).

Commenting on the figures, Aidan Cotter, Chief Executive, Bord Bia stated "despite falling global commodity prices, lower output in some sectors and the continued weakness in consumer spending in established markets, the Irish food industry has delivered another robust export performance. The continued diversification into new and emerging markets, benefitting further from favourable exchange rates, is particularly welcoming with exports to Asia up by 75% since 2010."

Bord Bia Chairman Michael Carey added "Irish food and drink was a major contributor to the economy's strong export performance in 2012 and I would like to commend the industry for its performance in what remains a challenging and competitive environment. Many of the major categories recorded increases, led by meat and livestock which increased by €128 million; seafood exports increased by 18%, or €75 million, while beverage exports recorded growth of €37 million."

2013 Prospects

The immediate prospects for Irish food and drink exports in 2013 remain positive, with increased output in some key sectors, most notably beef, combined with more stable global commodity prices expected. However, feed and other input cost developments in the livestock sector will again play a key role in determining farm level performance, following a difficult year for farming due to poor weather conditions and rising costs.

The results of the annual Bord Bia industry survey, completed in December 2012, also show continued confidence among food and drink manufacturers and a strong positive outlook for the year ahead. In total, 77% of exporters reported increased sales over the past 12 months, while 75% expect export sales to increase again in 2013.

Bord Bia's Key Initiatives

Among Bord Bia's key initiatives this year will be the continued development, global promotion and marketing of its Origin Green initiative, designed to establish Ireland as a world leader in sustainability and enhance export performance. Since launching in June 2012, some 164 companies accounting for almost 60% of Irish food and drink exports have signed up to the programme. These companies are currently working with Bord Bia to develop, and commit to, sustainability plans setting out clear targets in key areas such as emissions, energy, waste, water, biodiversity and corporate social responsibility (CSR) activities. Individual sustainability commitments submitted by major players within the Irish food industry include a 20% reduction in energy use by 2015; the implementation of rainwater harvesting by 2014 and a 30% reduction in emissions by 2020.

Today, Bord Bia also announced plans to recruit ten new 'Global Ambassadors', to be jointly funded by Bord Bia and the food industry, as part of a major drive to communicate and promote Ireland's sustainability and green credentials under the Origin Green umbrella. Regions to be targeted include Africa, South East Asia, India, and Russia. It is envisaged that the 'Origin Green Ambassadors' will specifically target the top global companies around the world, including in Europe and in the US, customers or potential customers, to engage in a two-way dialogue on sustainability. The initiative will be linked to the Bord Bia Marketing Fellowship programme.

"As the Origin Green programme is implemented its success will ultimately be measured by the extent to which it acts to enhance the value of Irish food and drink in the global marketplace" commented Aidan Cotter. "Working in conjunction with Bord Bia, food companies, embassies and consulates, the specific role of the Ambassadors will be to promote Origin Green, including the development of networks, leveraging the diaspora, and helping to open doors for Irish food and drink companies."

In the year ahead, Bord Bia also plans to promote Origin Green, and Ireland's green reputation, by hosting a Global Sustainability Conference at the Dublin Convention Centre in September; participating in excess of 25 overseas trade shows and delivering a comprehensive sustainability communications campaign to key stakeholders across Ireland.

Export Reach

The broadening of the food and drink industry's export reach evident over recent years continued throughout 2012, helped by ongoing demand and a more favourable exchange rate. The weakening of the euro relative to sterling helped boost trade to the UK, where the value of exports increased by 5% (€170 million) to reach €3.8 billion, representing 42% of total Irish food and drink exports in 2012.

Ongoing weakness in many economies across the euro zone combined with more favourable exchange rates with both sterling and the US dollar impacted on trade levels to other EU markets in 2012. For the year exports are estimated to have fallen by 8%. However, following growth of 20% in 2011, Irish food and drink exports to International markets put in another strong performance during 2012 with trade estimated to have increased by 8%, or almost €200 million, to exceed €2.4 billion. As a result, the region now accounts for 27% of total exports. The growth in exports was led by Asia, Africa and North America.

Meat & Livestock

The combined value of meat and livestock exports increased by 4% or almost €130 million to reach almost €3 billion. This equates to a third of food and drink exports and shows growth running at twice that of total exports. A combination of stronger prices in some categories, most notably beef and pigmeat, helped offset lower finished cattle supplies.

The value of beef exports is estimated to have increased by 2% despite a drop of 11% in output. As a result, exports were valued at €1.9 billion helped by a 13% rise in average cattle prices.

A rise of 2% in pigmeat production during 2012 combined with a slower domestic consumption and a rise of 10% in average pig prices helped to boost the value of Irish pigmeat exports by 16% or €60 million.

The poultry sector continued to face a competitive export market environment with little scope for price increases while volumes were marginally higher. For the year, the value of Irish poultry exports is estimated to have declined marginally to reach an estimated €208 million.

A strong increase in export availability, reflecting a jump of 11% in output and a slower domestic demand in the latter half of the year, helped offset some easing in lamb prices. This led to the value of Irish sheepmeat exports rising by 7% to reach €205 million.

A drop in the level of live cattle exports was more than offset by a change in the mix of animals exported. Pig exports to Northern Ireland were stable while sheep exports continued to decline. Overall, the value of livestock exports is estimated to have increased by 6% to €217 million.

The prospects for the meat & livestock sector in 2013 remain broadly positive with tight supplies across Europe for most species expected to match demand levels. However, feed price developments will play a critical role, particularly in the pig and poultry sectors.

Dairy Products & Ingredients

Despite the drop in global product prices, the Irish dairy sector performed strongly during 2012. Overall, it is estimated that the value of Irish dairy and ingredient exports for the year fell by around 2% to stand at €2.66 billion.

2012 marked a more difficult year for the global dairy market as a supply response to the strong price prevailing over the previous 18 months led to a significant softening in prices over the course of the spring and early summer with product prices easing by 20% to 25%. However, from late summer and during the autumn, a good recovery in international dairy prices was evident. Since November, the recovery in international prices has slowed considerably with declines reported in US prices in particular. This may reflect a slow down in import levels in key regions.

Milk deliveries in Ireland felt the effects of poor weather conditions for much of the year, which impacted on average yields. For the 10 months to October deliveries were running 2.5% lower according to the CSO.

Mixed trends were evident among the key export destinations for dairy products during 2012. Shipments to international markets and the United Kingdom recorded increases while trade to other European markets declined. The prospects for Irish dairy exports in 2013 remain generally positive with global demand likely to keep exports well ahead of historical averages. Global stock levels, demand in key regions and the relative strength of the euro will largely determine price prospects.

Prepared Foods

The market environment remained challenging as higher input costs and competitive pressures were evident across key markets. Much of this competitive pressure was driven by customers trying to maintain and grow share by offering enhanced value for money offerings to consumers.

Overall, exports of products covered under the prepared foods category fell marginally to an estimated €1.38 billion. If value added meats and poultry are included, exports were in the region of €1.75 billion.

The strongest performing categories during the year were value added dairy products, pizza, sauces, bakery and sugar based confectionery. These helped to largely offset a slower trade in other categories.

Irish prepared food manufacturers have shown very strong resilience over recent years and reacted positively to the challenges faced. This has left a sector that is efficient, innovative and focused on developing a wider portfolio of customers and markets. As a result, it is well positioned to identify and develop market opportunities as they emerge.

However, there are a number of factors outside the direct control of exporters that are likely to have a significant impact on export performance. These include developments in input costs, trends in consumer sentiment and the potential to deliver higher food prices.

Beverages

The global market for beverages showed further growth in 2012 with a renewed focus on premiumisation and growth in the travel retail sector helping market growth. However, the sector continues to face challenges, none more so than the challenging economic climate in many developed markets.

The Irish beverage sector put in another strong performance in 2012 as ongoing growth in whiskey, combined with a stable performance by cream liqueurs and beer, increased exports by 3% in 2012 to reach €1.26 billion.

Growth in exports was led by trade to International markets, which showed a double digit increase to reach €550 million. A good increase to the United States - led by whiskey – and strong sales to emerging markets such as Russia, Canada, Australia and Asia also boosted trade.

The prospects for Irish beverage exports in 2013 continue to be positive with ongoing growth expected in whiskey exports while prospects for cider, beers and cream liqueurs look reasonably good. The key to trade will be the ability of the sector to continue to develop new markets and innovative products for developed markets.

Seafood

Seafood exports in 2012 continued to show good growth with increased volumes evident. The value of seafood exports was also boosted by an increase in pelagic prices which were historically high in 2012.

Overall for the year, the value of seafood exports is estimated to have increased by 18% to an estimated €493 million.

The prospects for Irish seafood exports in 2013 remain positive with good demand anticipated from emerging markets while core markets across Europe also look set to hold reasonably firm. However, across Europe much will depend on the level of consumer demand, exchange rate developments and movement in fuel prices, which have been impacting strongly on transport costs.

Edible Horticulture & Cereals

Improved mushroom exports combined with ongoing strong grain prices helped boost the value of edible horticulture and cereal exports in 2012. Despite lower cereal volumes, the value of edible horticulture and cereals exports increased by 2% to reach €243 million.

The strength or weakness of the euro will continue to be a major factor influencing exports of edible horticulture and cereals in 2013. If current trends continue, it will help create a most positive market environment for Irish mushroom exports in the UK. However, the strong switch to value mushrooms - which seems set to continue in 2013 - is putting strong pressure on profitability in the sector.

January 2013