In the papers this week 6 – 12 Feb 2010

Musgraves Wholesale Partners announces 80 job cuts; Guinness increases market share despite alcohol sales dip; Retail Ireland seeks 10% rebate on rates

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Musgraves Wholesale Partners has announced it is to cut 80 jobs at depots across Ireland. The Irish Times reports a total of 55 jobs are to be lost in the south with 15 being axed in Cork, 14 in Killarney, Co Kerry and the others from depots in Dublin, Galway, Limerick, Waterford and Donegal. A further 25 jobs will go at Musgrave’s Belfast depot. Managing director Martin Kelleher said a period of consultation with unions and affected employees will begin shortly.

He commented that the restructuring reflected “fundamental changes in the market which has seen the hospitality sector fall by 15% to 20% and the retail market by 7% in 2009.” Kelleher added the company had “made every effort to minimise job losses” and would be “working closely with union representatives and staff through the consultation process.” He also said reshaping  would bring lower prices for consumers and "position the business for long term future growth."

Guinness owner Diageo has said alcohol sales plummeted 10% in the second half of last year as the recession continued to hit consumers. Diageo stated in The Irish Independent that pubs suffered the biggest decline, with sales falling 14% as people headed across the border to stock up on cheaper drink. However, the off-licence trade in the North shot up by more than a third. And while Diageo’s net sales dropped 9%, but Guinness’s share in the declining beer market increased in both pubs and off-licences thanks in large part to its 250th anniversary celebrations.

IBEC group, Retail Ireland, has called on local authorities to give retailers a 10% rebate on their commercial rates bill. The Irish Times reports the group has written to the chairperson of every local authority and all city and country managers to ask that retailers be given a 10% rebate on last year’s rates bill and that upward revaluations are suspended where neccessary. According to director Torlach Denihan, a rebate would help avoid further redundancies in the retail sector, following 30,000 job losses last year.

The volume of retail sales fell 7.5% in December from a year earlier, and provisional figures showed sales fell 14.1% during 2009, according to CSO data. Food and beverages fell 6.8% in volume compared to December 2008, while fuel sales were down 12.2%. Ulster Bank’s Lynsey Clemenger told The Irish Times this was a surprising result given that in the three months preceding December, sales of food rose at average monthly pace of 0.1%. However, he added that the drop likely reflected “difficulties in capturing the seasonal nature of some purchases around the Christmas period."

The Irish Times reports further falls in consumer spending have been predicted forthis year, following 2009 – which Retail Ireland described as “clearly the worst year experienced by the sector in living memory”. Ulster Bank economist Lynsey Clemenger forecast a further decline of 1% in consumer spending in 2010, while Bloxham economist Alan McQuaid said he expected spending on goods and services to fall 1.8% this year.

However despite such negative forecasts, The Irish Examiner reports consumer confidence actually hit a two-year high in January. The KBC/ESRI consumer sentiment index reached 64.6 in January – which is the highest level since January 2008- but still well below its 14-year average of 92.4. KBC Ireland chief economist Austin Hughes said this suggests “a clear brightening in the mood among Irish consumers," but added there may be a "significant correction in February data as Christmas sales end and Christmas credit card bills arrive."

A Dublin newsagent that has been run by three generations of the same family since 1925 has become the latest victim of the economic downturn, reports The Sunday Business Post.  Well-known Kavanaghs’ sweet shop on Aungier Street, which sold traditional confectionery using old fashioned scales and jars, has now closed after revenues fell by 30% last year. Owner Patrick Kavanagh said a dramatic drop in sales followed increased competition from big-brand stores and a market trend towards pre-packed sweets. However he still sells 150 varieties of sweets in his newer premises, Kavanagh’s Costcutters Express, also situated on Aungier Street.

Both buyers and Irish food and drinks manufacturers have expressed satisfaction at the Bord Bia marketing event that hosted 3,800 business meetings at Croke Park. The Irish Times reports that the event which is expected to generate €10 million worth of new business, used a "speed dating" formula, to match up 300 international and local buyers with a capacity to purchase more than €85 billion worth of product, with 150 Irish producers. International buyers represented some of the world’s largest retailers including Carrefour, Sainsbury, Morrisons, Asda, Intermarche and Tesco.

The sale of Greencore Malt to the Soufflet group of France has stalled and the €120 million deal is understood to have collapsed, according to The Irish Examiner. Major convenience food group Greencore was hoping to sell its malting business this year to give it a clear focus on its core convenience food business. However Groupe Soufflet, which had emerged as the main contender to buy the business, is allegedly not going ahead with the purchase for several factors including the state of the malting market, which was hard hit by the global downturn and the resulting fall off in alcohol consumption.

Northern Ireland’s economy has been hit by the Artic weather conditions which prevented shoppers from travelling across the Border to stock up in stores in the North, a new report has suggested. The Irish Times reveals the Ulster Bank’s Purchasing Managers’ Index (PMI), shows business activity in the North’s private sector fell at its fastest rate in seven months during the cold spell at the beginning of 2010. January also marked the 23rd month of continuous job losses, with Northern Ireland experiencing the fastest rate of job losses of all the UK regions.

Fianna Fáil TD Chris Andrews has called on Tánaiste Mary Coughlan to intervene in the "rental crisis” facing retailers. Andrews believes a legislative framework should be put in place to force property owners to “engage constructively” with their leaseholders, rather than keeping rents “artificially high.” This would extend further than the ban on upward-only rent reviews which comes into effect on 28 February, as it applies only to new leases. Andrews planned to raise the matter at this week’s Fianna Fáil parliamentary party meeting.

Private equity group Duke Street will take over the business of failed payments group Payzone, in a move the company says will safeguard 500 jobs and ensure all creditors are paid. The Irish Independent reports that under the deal, receivers from Ernst & Young will be appointed to Payzone and Duke Street will invest €45m to give it a controlling stake in the business. The company added the financial restructuring would be executed without any interruption to the Payzone business.

Approximately €2.5 million in unpaid wages was recovered last year for workers who were found to have been paid less than their statutory minimum entitlements following investigations by the National Employment Rights Authority (NERA). The Irish Times reports there was a compliance rate of 28% in the retail and grocery area, compared to 27% in the hotel sector, 27% in electrical contracting, and 21% in the catering sector. In its report for 2009, NERA said over 6,000 workers received money back on foot of its investigations, with €410 being received on average per employee.

And finally… upmarket UK grocery chain Waitrose has launched a toilet roll containing cashmere. The Irish Independent reports that the supermarket is promising its new toilet roll – billed as the "most luxurious bathroom tissue yet" – will offer the same softness as Cashmere at a fraction of the price. The new range costs £2.29 (€2.63) for a pack of four and £4.79 (€5.50) for a pack of nine.

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