Shift in EU food trade ‘sparks market challenges’

A FUNDAMENTAL shift occurring in the European food trade will create major market place challenges, Dairygold chief executive, Jerry Henchy, warned last night.

Addressing shareholders and suppliers at a Dairygold regional information meeting in Limerick, he said Ireland has a huge dependence on exports, with Britain being the biggest by far. Our domestic market is tiny by comparison. Therefore other markets must be found.

Britain’s market place is dominated by the multiples, Tesco, ASDA and Safeway/Morrisons. Carrefour in France is the world’s second largest retailer, while Germany has ALDI and LIDL. These EU markets have large global players leading their retail environment.

Mr Henchy said a major structural change is taking place that will transform national markets.

He predicted that at least three of the top five retailers dominating each national market will be pan-European groups. This will give the top 10 retailers more than 50% of the market within a relatively short time span.

Mr Henchy said these retailers, as they grow in scale, place sustained downward pressure on prices from their suppliers.

“Our products, regardless of how good they are, will quickly lose shelf space in these key multiples if we cannot supply them at the right price, in the face of increasingly attractive lower price product offerings from lower cost producers.

“We must now find the efficiencies to protect our route to market with these European giants,” said Mr Henchy, stressing that the rewards for success will be immense. Gaining a foothold in one pan-European retailer could lead to Dairygold products being sold in supermarkets across Europe.

“Failure in confronting the challenges ahead is not an option.”