In the papers this week 19 – 26 Feb 2009
Food delivery changes puts Premier jobs at risk; Food-supply chain broken claims IFA; Expert techniques create convincing cigarette fakes
26 February 2010
Up to 55 jobs may be lost at Premier Foods Ireland as the company reorganises delivery of its branded cakes to supermarkets in the Republic. The Irish Times reports management was in talks with staff earlier this week on plans to end “cake van” deliveries to supermarkets, where some 55 staff are employed. A spokesman for the group which is one of Ireland’s largest food companies with an annual turnover of €150 million and 100 staff, said the move was in response to a demand from the major retailers for a more centralised distribution service. He added the firm had a good record of offering alternative employment where functions ceased, and it was too early therefore to say how many jobs would be lost.
The Irish Farmers Association (IFA) has claimed the food supply chain is “broken” as a result of powerful retailers dictating uneconomic price levels to producers. The organisation has called on the Government and the EU Commission to introduce new regulation as well as enforcing existing competition laws to tackle anti-competitive conduct. According to IFA president John Bryan the new grocery code of conduct must provide the means for a more equitable sharing out of the consumer price across the food chain. The group has also demanded retailers be forced to reveal their profit figures.
Retailers are charging consumers up to five times the prices paid to farmers for basic foodstuffs, according to a new report published by the IFA. According to The Irish Times, a farmer receives just 20% of the retail price of cheese, 33% of the price of milk, and 36% of the price of potatoes despite the fact they allegedly bear the largest proportion of the costs involved. The IFA’s report further notes that many of the products surveyed require only minimal packaging with little or no processing, and normally spend no more than a few days on supermarket shelves.
It is now virtually impossible to tell the difference between a real and fake packet of cigarettes at a cursory glance, according to Paul Cullen in The Irish Times. Both versions bear the same colouring and livery, both carry the required health warnings in English and Irish, and both carry what looks like a genuine tax stamp from the Revenue Commissioners. Perhaps the most damning point however is that in taste tests conducted by the paper, most smokers were unable to tell the fakes from the real thing, and some even expressed a preference for the cigarette that turned out to be black-market.
Gardaí and Customs Officers have also found evidence of a very sophisticated operation to produce counterfeit cigarettes in the Republic, The Irish Times reports. Officers discovered a truck parked in a yard near Carrickmacross, Co Monaghan, which yielded enough tobacco, cigarette paper, filters and packaging to create 12 million cigarettes. According to a source this would have subsequently been processed into finished packets of cigarettes at an illegal processing plant somewhere along the Border.
What’s more, securing a conviction for smugglers is difficult according to The Irish Times, because it can be hard to prove those moving the contraband were aware of the contents of their lorry, boat or container. And even when convictions are secured, investigators have claimed that the courts are inclined towards leniency unless the “guys at the top” are caught. The paper provides a potent example in the form of 57-year-old businessman Roman Vidal who was convicted of involvement in an operation whereby 7.3 million cigarettes were seized in Dublin Port in January 2006. Despite being the “kingpin behind the operation,” Vidal has never been charged in Ireland.
The €1 billion retail dairy sector proved to be resilient last year, according to the National Dairy Council’s annual report and outlook. The Irish Examiner reports milk and dairy products succeeded in sustaining or even improving volume sales in 2009 despite a difficult year for the grocery sector. Milk volumes increased by 1% on 2008, but the sales value were down 4.9%, excluding those through independents and doorsteps. NDC chief executive Helen Brophy noted: "Consumers have adjusted their shopping patterns at this point and consumption levels of dairy are forecasted to remain stable in 2010, with a small growth in volume anticipated."
Heinz has claimed it sold 57.3 million cans of its famous tomato soup during January 2010 in the UK. This represents a 23% increase on January 2009 and the most it has ever sold in a single month. The sales figures suggest that the average household bought more than two cans during the month and stocked up on enough tomato soup to fill more than nine Olympic-sized swimming pools. The Telegraph says this is the latest evidence that the coldest winter in more than 20 years has caused unusual shopping behaviour, with consumer stocking up on bird feed, porridge, wooly clothing, while cutting back on petrol, fresh food and expensive household goods.
Asda chief executive Andy Bond has admitted he is "nervous" about the outlook for consumer spending this year, but said the UK’s second-biggest supermarket would still accelerate the opening of smaller Asda groceries and non-food stores over the next five years. Bond’s warning that UK families would face a raft of rising costs in 2010, came as Asda revealed its underlying sales, excluding fuel, had risen by 4.6% in the three months to 31 January. This was slower than the 5.6% growth in its third quarter, and the latest Kantar Worldpanel data for the 12 weeks to the 24 January, showed that the supermarket, with 4.3% growth, had slipped behind Tesco’s 5.5%, Sainsbury’s 6.8% and Morrisons’ 10.6%.
However there was more positive news for Asda in Eniskillen, where the group witnessed record sales growth and turnover also “exceeded” its sales plans, according to chief executive Andy Bond. The Sunday Tribune reports Asda is also opening smaller shops which could suit the Republic. These new shops are all under 25,000 sq ft and designed “to meet the needs of local communities”, according to Bond, although consumers can do a full weekly shop there. A separate division has been set up to “accelerate” the new format’s growth.
Shares in the Kerry Group hit an all-time earlier this week, after the owner of brands, such as Denny and Dairygold, unveiled full-year results which beat expectations and predicted an 11% rise in 2010 earnings. The Irish Independent reveals the year’s earnings performance was driven by an 80 basis point improvement in Kerry’s trading profit margin as raw material costs fell and the group benefited from efficiencies and a withdrawal from lower return businesses. According to Kerry chief executive Stan McCarthy: "2009 was the stress test for Kerry’s strategy and I think the strategy came through with flying colours."
Sales volumes of the Heineken lager brand fell by 6.8% in Ireland last year, according to latest figures from the Dutch brewing giant. The Irish Examiner reports that the company’s Cork operations – which include Murphy’s and Beamish – still increased market share however. The group added that despite its sales drop, the Heineken lager brand actually outperformed the market. And while Heineken’s sales rose 10% in western Europe, its Irish performance was hindered because "the severe effect of the recession meant beer consumption declined by high single digits," it said.
C&C is hoping to repeat the success of last year’s Bulmers Pear launch by striking out with another fruity variety, Bulmers Berry. The Irish Independent reports the drink giant’s latest addition was unveiled on Wednesday and will be rolled out across the country over the coming months before its €1m plus marketing campaign kicks off in May. Bulmers managing director Michael Merrins said the berry-flavoured cider could “absolutely” achieve the same success as Bulmers Pear, which “completely reinvigorated the brand” and accounted for as much as 15% of Bulmers’ monthly “packaged” sales last year.
Ben Dunne still claims credit for the current success of Dunnes Stores, despite parting ways with the company nearly two decades ago. "It shows I left it in a really good condition!" he told a press conference earlier this week. According to the Irish Independent, while Dunne admitted the Midas Touch had failed him in his new website venture, he rubbished any suggestion that he might want to return to retail. In fact he predicted that big supermarkets would be a "thing of the past" in 10 years’ time and consumers would be shopping online and getting fruit and veg from the convenience store.
Landlords are increasing commercial rents to boost the valuation of property assets ahead of their transfer to NAMA, it was claimed in the Dáil this week. The Irish Times reports Labour Party TD Ciarán Lynch said rents were being “inflated” during the rent review process “as a means of creating an over-valuation of properties for debunked developers as they enter the Nama process”. He added that rent increases were “creating a situation whereby retailers across the country are now threatening to go on a national strike”.
The Sunday Tribune reveals dividends of nearly €5.5m were paid out by a subsidiary of Dunnes Stores during the financial year ending 31 January 2009 – while a similar dividend was also paid the previous year. The consolidated accounts are related to the group’s operations in Spain, property holdings in Ireland and "the manufacturing of foodstuffs" via meat-processing company Tender Meats and frozen-food manufacturer Newbridge Foods. "The group is also in receipt of licence-fee income and incurs landlord-related costs," the directors’ report states.
Over 27,000 counterfeit and smuggled cigarettes were seized by Customs officers in raids on Derry businesses this week. The Irish Times reveals 30 retailers were visited in an operation aimed at the transport, storage and sale of illicit tobacco. NI Revenue and Customs officials seized 27,602 cigarettes along with 10kg of hand-rolling tobacco. The fakes were detected through the use of scanning equipment which detects covert security markings missing, from the fake goods that are contained on legitimate cigarette packets but remain invisible to the naked eye.