Future Foods & Market Trends

1. Future Foods & Market Trends

2. About us…

3. Mintel Ireland Overview • Mintel International Group Ltd is one of the UK’s market leaders in the production of Consumer-orientated research • Mintel’s Irish office was established in 2001 through an agency agreement with OCO Consulting • OCO Consulting write, edit and produce Mintel’s Irish Series of reports • 31 reports produced annually including 7 ‘Special’ or ‘Horizons’ reports • Mintel Ireland has over 60 Irish clients from across 11 sectors • “Irish Lifestyles” is the centrepiece of the Irish Series.

4. Welcome to the new Ireland…..

5. A New Ireland…. ‘Homes more important than children say Irish’’ Irish Times, November 2005 ‘Irish up to their eyes in debt’ Irish Independent, December 2005 ‘Rip Off Republic has short-term effect on buying’ The Sunday Business Post, December 2005 ‘Irish spending boom returns’ Sunday Business Post, December 2005 ‘Condoms & House Prices: The Irish Experience’ Irish Independent, May 2006 ‘Irish less confident about job security’ Irish Independent, May 2006

6. A New Ireland…. ‘Beware of big debt and rising rates’ Irish Times, August 2004 ‘Supermarkets to explain why Ireland is being ripped-off’ Irish Examiner, October 2004 ‘Ireland pays price as rip-off capital of EU’ Irish Examiner, September 2004 ‘High prices killing golden goose’ Irish Times, January 2005 ‘Ireland wealthier than the US and fourth in global 'richest' league’ Belfast Telegraph, January 2005 ‘Beware of big debt and rising rates’ Irish Times, January 2005

7. The New Ireland “You’ve never had it so good”? • GDP in RoI has nearly doubled between 1996 – 2004 whilst in NI it grew by 46% • Within the same period, personal consumption expenditure in RoI increased by 113% whilst NI showed an increase of 59% [6% higher than rest of UK] • GDP growth forecast at +5% in RoI and below 3% in NI • RoI cited as one of the fastest growing economies in the world • Robust labour markets in RoI and NI with low unemployment rates • The Republic has been billed as one of the most desirable places to live in world as it climbs up the league of richest countries. NI has benefited from a process of ‘normalisation’ despite the suspension of the Assembly and inertia • 1 in 5 adults in RoI and 1 in 4 adults in NI have found an improvement in their lifestyle since 2001 and are not constrained to sticking to a strict budget.

8. The Irish Consumer

9. Focus on the Irish Consumer DID YOU KNOW? • 1 in 2 Irish adults are obese or overweight. • Over 1 in 3 Dubliners hold retailers liable for Ireland being so expensive. • The cost of a weekly shop stretches over 1 in 4 in the Republic and 1 in 5 in NI. • More than 53% of men surveyed in RoI believe that c-stores offer better service than supermarkets in comparison to a significantly lower percentage of women. • NI consumers are the world’s largest per capita consumers of Diet Coke. • Irish food prices are the highest in Europe. • Over 80% of consumers in NI and RoI agreed that they often stop on the way home from work to get something for dinner. • The average weekly grocery shop spend by the Irish consumer is €130. • The home of the Traditional hardcore [Chocolate & Crisps] snacker in Ireland is Munster.

10. The “Rebellious Consumer” • Consumers are becoming savvy, discerning and rebellious – they are rebelling against mass marketing campaigns which are not reflective of their lifestyle and lifestage. • Taking control of their own spending – consumers will pay for items if justified [perception and expectation]. Demanding value and the right not to be exploited/’ripped-off’. • More care about health, quality of produce and local environment. • Food scares have made consumers more concerned about the origin of food. • Many people will buy a combination of fresh ingredients and ready meals, from a variety of shops. • Supermarkets have the edge because they are able to provide the biggest range of options but they must not alienate consumers who care about preserving the appearance of their high streets and the experience of local shopping.

11. “Ready Steady Cook” Factor Cash-rich, Time-poor Consumers Role of global media - huge promotional and advertising expenditure Cocooning Dieting and Fads fanned by the Media & the Cult of Celebrity Spheres of influence on the Consumer Demand for more sophisticated leisure choices “You are what you eat”, Health Scares and Health Initiatives Travel & Accessibility to Foreign destinations Greater Choice, Greater Offer, Greater Need? The Greying Population Increasing demands for more ethnic foods i.e. Thai, Mexican, Italian Emphasis on Quality, Price and Value Consumer Overview

12. Consumer Overview – Market Drivers • Cash-rich, Time-poor Consumers – Consumers are working longer hours, spending longer in traffic jams and are constantly under pressure in respect to their leisure time. Consequently the work hard, play hard philosophy is enacted as we attempt to squeeze as much out of our meagre leisure time – do more, spend more. = Demand for more sophisticated leisure choices • Cocooning – Many consumers choosing to forego an opportunity to ‘go out’ for the evening, preferring to stay at home with friends or family. • Greater choice, greater offer, greater need? – consumers are bombarded with many product variations and varying price points to meet their needs and income. Whilst consumers appreciate greater choice, the question remains do we need 68 variations of cheese in our supermarkets? • “Ready Steady Cook” Factor – Increased interest in a wider spectrum of tastes, exotic dishes and cooking habits. The consumer is bombarded by a plethora of cooking shows on television and a multitude of Food Guides, Magazines and Cookery Books. Delia Smith’s ‘Winter Wonderland’ series caused a rush of demand for cranberries out-of-season. Indian, Italian, Greek and French breads are becoming more and more a feature of the Irish shopping basket instead of Irish breads.

13. Consumer Overview – Market Drivers • Government Policy & Health Initiatives – e.g. a recommended five portions of fruit and/or vegetables to be consumed daily [WHO]. A study by Cancer Research UK in 2004 showed that a third of children’s diets are deficient in both fruit and vegetables and packed with refined, processed foods and sugar. • Healthy Eating and Dieting – the popularity of the Atkins Diet has boosted meat sales from 1999; the health benefits of oily fish has encouraged more consumers to buy fish [Omega-3 fatty acids can reduce the risk of heart and circulatory disease]; regular portions of fruit, vegetables and fibre can reduce the risk of obesity, cancer, heart disease, strokes and diabetes. • Health Scares – Foot-and-Mouth Disease and BSE had a detrimental effect on meat consumption particularly beef but poultry, pork and lamb benefited from consumer switching. Some consumers abandoned meat altogether in favour of vegetarianism or fish. Consumers, despite Governmental assurances are concerned by the increase of GM ingredients in the food chain. • “Ready Steady Cook” Factor – Increased interest in a wider spectrum of tastes, exotic dishes and cooking habits. The consumer is bombarded by a plethora of cooking shows on television and a multitude of Food Guides, Magazines and Cookery Books. Delia Smith’s ‘Winter Wonderland’ series caused a rush of demand for cranberries out-of-season.

14. Consumer Overview – Market Drivers • Travel – The increase of outbound flights from Ireland by low-cost operators to other European destinations coupled with increased incomes have allowed many more Irish consumers to sample the tastes and dishes of the continent. These tastes are then transferred into the weekly shop. • A Greying Population – the population of Ireland is ‘Greying’. By 2009, 65% of the population will be over 45 years old. The challenge for food manufacturers is to offer this wealthy, health-conscious and educated segment a range of products more reflective their lifestage and lifestyles. • “Rip-off Ireland” – whether real or perceived, many Irish consumers believe that they are paying more for food than their EU counterparts. With nearly 2 in 5 adults in Ireland struggling to balance income and expenditure, greater emphasis will be placed on value, price and deliverability. Conversely the wealthier segment of the population [those who have benefited most from the Celtic Tiger] are willing to pay more for quality and choice. • Dual-Income families – With both parents working, many households in Ireland are looking for convenient food solutions for the family.

15. Consumer Overview – Market Drivers • The Influence of the Media/The Cult of Celebrity – with television the number one leisure choice, it is little wonder that many Irish consumers are heavily influenced by TV food advertising. The media can manipulate health scares or create them. The media’s fixation with celebrity culture particularly in the aesthetic appearance of female ‘Stars’ influences some consumers as to the ideal or acceptable body form/shape. • Obesity – With obesity becoming a serious health concern throughout the developing world, many questions have been raised regarding modern consumption habits and eating patterns and their link to obesity. Healthy eating has again become thrust to the forefront with many consumers attempting to take corrective action. Opportunities for manufacturers lie in the supply of nutritious healthy food options to consumers willing to pay a premium. • One & Two-person households – A rise in one-and two-person households has fuelled consumer demand for convenience foods including takeaways. Composed of young professionals and students, these households have little inclination to cook frequently and tend to consume more ready meals and takeaways than other demographic groupings. • Increased wealth – vis-à-vis previous generations, many Irish consumers have more disposable income [PDI] to spend on leisure choices, consumer goods and food.

16. The Irish Food Market • The retail value of food sales in Ireland in 2002 was estimated at €7.51 bn or Stg£4.66 bn. In RoI, the market was estimated at €5.35 billion or Stg£3.32 bn, having grown by 25.3% since 1995. In NI the market was estimated to be worth Stg£1.34 bn or €2.16 bn, having grown by 39.6% since 1995. • Use of SPSS forecasting, predicts a market value for RoI in 2007 at just under €7bn with a corresponding value of under £2bn for NI. • In 2003, the Irish Organic Food Market was valued at under €40m with vegetables, fruit and meat accounting for in access of 60% of the market. • An estimated 70% of organic fruit and vegetables are imported into the country. According to Teagasc, there seems to be a lack of penetration by local producers. The challenge for the agriculture industry in NI and RoI is to substitute these imports with home grown organic produce. However many manufacturers are reluctant to diversify into organic food produce, with the unpredictable weather cited as being one of the many reasons. • Factors driving growth in the health, nutrition and functional food markets include changing consumer attitudes to health and changing lifestyles, which have all led to a growing demand for convenient health food options. The UK Health market is valued at £1bn and the Irish market valued at €25m. • The Irish Food Service Market was valued at under €3bn in 2004.

17. “The Cost of Being Irish” • “The notion of “rip-off” Ireland was reinforced by 1 in 4 RoI consumers stating that the general cost of living requires them to stick to a strict financial budget against 1 in 5 in NI • Not surprisingly, Dubliners felt the adverse effects of rises in the cost of living more than other areas of Ireland. The cost of living impacted much less in Northern Ireland where the cost of living was not as high as in the Euro zone. • 3 in 10 and 1 in 3 adults, in RoI and NI respectively, stated that their lifestyles had improved over the previous three years. The research showed that it was married men in both RoI and NI who experienced the greatest improvement to their lifestyle whilst single females were least likely to see significant improvement. • In the Republic, consumers living in Cork/Munster witnessed the greatest improvement in lifestyles whereas consumers in greater Belfast believed that they were better off. • Traditional leisure activities for men such as going to the pub were being challenged by new activities such as attendance at sporting events particular Rugby and GAA matches.

18. Channels – Brand Loyalism • The Irish Shopper remains one of the most brand-loyal in Europe, less persuaded by own-label brands to the same degree as their GB and European counterparts. Own-label penetration in Ireland stands between 15% and 20% compared to penetration levels of 31% in Germany, 21% in France and up to 40% within GB. • Whilst most consumers recognise that the quality and choice available from the non-branded range of products is constantly improving, Irish consumers still suffer a ‘psychic block’, which insists that branded goods have a higher quality threshold than Non-label. • One of the fastest growing segments within own-label products is the provision of fresh food and ready meals. Responding to lifestyle changes and evolving consumer tastes, many retailers intent on positioning their products further up-market have developed premium own-label brands capable of competing directly with established brands.

19. Shopping and the consumer • Resurgence of the Symbols = Greater choice for Consumers • Market becoming even more competitive – new entrants • Evidence that shoppers vary shopping patterns – destination shopping • Mintel research has shown that RoI consumers doing a majority shop in Dunnes Stores are significantly more own-brand orientated than others.  • Mintel consumer research confirms the popularity of budget own-brands suggesting that no major grocer can afford to be without one. These ranges are by definition, the cheapest on display and sell in significant volume. • Six out of ten RoI shoppers do the majority of their shopping in either a Tesco or Dunnes Stores. In NI, Tesco is by far the dominant player with 44% of consumers favouring a Tesco store for their majority shop.

20. Shopping – North vs. South • 2 in 5 Consumer sin NI and RoI will seek out the lowest possible prices when they shop • 3 in 5 consumer sin NI and RoI tend to stick to a brand they like when they have found it • 2 in 5 NI consumers and 2 in 5 in the Republic find shopping a boring experience  • 1 in 3 NI consumers and 2 in 5 RoI consumers believe it is worth paying more for organic food • 3 in 5 consumers in Ni and RoI believe that own label brands are made by the big manufacturers • 1 in 3 NI and RoI consumers will attempt to purchase Fair Trade products where they can • 1 in 4 consumers in RoI and NI always buy the brands preferred by their children • 1 in 2 Ni consumers and 2 in 5 RoI consumers would suggest that they are bargain hunters • Over half of NI and RoI consumers will always look out for special offers when shopping

21. Opportunities • Changing lifestyles such as an increasing number of working women and varying employment patterns all affect food choices. During the week in particular, many consumers spend less time on food preparation but yet still want the benefits of a healthy meal. This has created opportunities for healthy meals, particularly in the ready meals sector, but also provides scope for on-pack labeling to reassure consumers in their food choice. The increase in working women suggests that Ireland’s traditional lifestyles and gender roles will continue to change, creating a larger market for convenient and fast foods. • Different types of diets/food fads and specific dietary requirements have resulted in the growth of a number of sub-sectors such as vegetarian, functional and organic foods, in addition to more niche areas such as gluten free products. No longer reserved to the specialist outlets, the multiples now cater for the majority of food and dietary requirements. However, the associated premium pricing strategies mean that the consumer base for many of these foods typically derives from ABC1 socio-economic groupings. • The healthy eating sector as a whole looks set to expand rapidly with ongoing new product development (NPD) resulting in an increased product offer on the part of the manufacturers. Greater acceptance by consumers of the whole healthy foods concept should see the market grow. Continual research will ensure alignment between the market needs and the retail offer, with branding and on-pack labeling proving to be key drivers for reassurance in product purchase.

22. Welcome to the new Ireland…..