Food and drink sector a break from the gloom

THE food and drinks sector continues to provide solid evidence that this economy still has something to build on for the future.

At the start of the week Aryzta, the Zurich-based speciality bakery group made up of the Irish-based IAWS, owners of Cuisine de France, and Hiestand in Switzerland, said it would make its earnings targets for 2011.

Headed by Owed Killian, the former chief executive of IAWS, Aryzta is expanding rapidly and building on its specialist bakery reputation that it is taking worldwide at this stage.

With the uncertainty still persisting about the global economy the food is once more proving it can buck trends and deliver profits for investors by providing the convenience that increasing numbers of consumers are demanding.

Arytza has operations in Europe, North America, South America, South-East Asia, Australia and New Zealand. It was formed in 2008 through the merger of IAWS Group and Hiestand, and its main listing is now in Switzerland.

While its HQ has migrated to Switzerland, IAWS, which emerged out of the Irish co-op movement, was the driving force that led to the merger. It got its impetus by providing retail outlets with par-baked rolls and other bakery options they could bake off in their own stores.

That initiative eventually formed the basis of the huge surge in IAWS’s growth while it made millions for the originators of the idea, who sold the business to IAWS for €50m.

Those in the know thought that Philip Lynch, who was then boss of IAWS, was mad to pay that much money for the business, but time has proved it to have been a stroke of genius.

The IAWS evolution into Aryzta demonstrates the food sector in Ireland has the potential to do great things and Aryzta is set to deliver good results.

The talk is of continuing expansion. It was noteworthy that the merger with Hiestand took place in mid-2008 when the stock market was in deep trouble due to the emerging bank crisis.

Since then the group’s share price has continued to make gains. Kerry Group has also bucked the trend with its shares continuing to rise above the chaos that has virtually destroyed the Irish banking sector.

It has increased profits every year since it came to the market, and the only talking point in the past was that its earnings progress slipped back to single digit growth for a few years, but it never stopped growing its profits.

Thanks to companies such as Aryzta, Glanbia and Kerry this sector of the economy has leaders to point the way to a better future.

Today Kerry is valued at over €4.4bn while the two main banks combined are worth substantially less than €1bn.

On the drinks side C&C, owners of Magners cider, seem to have turned the corner in Britain. Latest Nielsen figures, which is an independent measure of market share in the drinks sector, are looking quite positive for the group.

Nielsen found that in the British on-trade sector Magners showed volumes grew by 15% year-on-year compared to on-trade cider market volumes up just 2.2%.

Overall the on-trade beer market saw volumes decline 4% in the period.

Davy Research said the figures demonstrated that Irish cider was beginning to gain traction in that key market where its draught volumes rose 27% while those of a key competitor dropped 7%.

C&C had struggled for some time in getting a breakthrough with Magners in Britain, but then it brought in top management from Scottish & Newcastle which has brought a new dynamism to the group, when it looked as if Magners was a lost cause.

It’s not all gloom out there.

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