In the papers this week 24 – 30 October 2009

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Pictured: Ronald Kers of Valeo Foods Group (Photo by Dave Warren/Picture Team)

Retailers at breaking point after 20 months of declining sales; Shopping in the north will also cost ROI over €810 million this year; State seizes largest haul of contraband cigarettes



29 October 2009

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Musgrave has upped the dividends paid to directors last year to €20.2 million despite falling sales and profits, according to accounts filed with the Companies Registration Office. The Irish Independent has revealed dividends paid to directors rose 22% from the previous year, despite pre-tax profits falling 19.7% to €75.5 million in 2008 as sales dipped 0.8% to €4.85 billion.


Retailers are at breaking point after 20 months of declining fortunes, although many will battle through the Christmas period in a bid to survive, Retail Excellence Ireland has stated in The Irish Independent. A new report by the group found the rate of decline in retail sales levelled off in the third quarter of the year – but this is only when compared with a weak period in 2008. Consumers are also said to be living in fear of Budget cuts to come, and are handing over an average of €46 in each transaction when they go shopping, down from nearly €67 this time last year.


Cross-border shopping will cost the Exchequer almost €430 million in lost tax revenues this year, Ibec has forecasted. The Irish Times reports the business group has called on the Government to reduce taxes, pointing to its research which estimates the direct loss of VAT and excise duty will amount to €190 million, a further €200 million will be incurred from income tax loss and welfare costs as a result of 9,800 retail job losses, and an "incidental spend" during cross-Border shopping trips, such as lunches, will strip the Exchequer of a further €40 million.


Shopping in the north will also cost the Republic’s economy over €810 million this year, it is estimated, compared to €640 million last year and €393 million in 2007. According to The Irish Times, some 250,000 households in the Republic are now regularly doing their grocery shopping in the North, up 25% since the end of last year, new Nielsen Ireland reveal. The Irish Times also shows separate data compiled by InterTrade Ireland has found the proportion of Southern-registered cars in shopping centre car parks in Newry, Enniskillen and Derry has increased from 40-50% over the summer to 70% now.


One tenth of all Irish shoppers will be heading north to buy alcohol by the end of the year, according to The Alcohol Beverage Federation of Ireland (ABFI). The Irish Examiner reveals the federation is also calling for lower alcohol taxes in the Republic, in light of new Nielsen Ireland data which reveals off-licence sales here have already plummeted by 7%, while stores in Northern Ireland are reporting a 30% increase in sales to the end of August.


Despite Tesco making a profit of £1.4 billion (€1.54 billion) in the six months to the end of August 2009, it has decided not to give its Irish pensioners a pay rise this year. The Irish Times reports Irish pensioners were due an increase in July, but considering that "over the last year, the cost of living has reduced," the supermarket giant letter has concluded that keeping payments at their current levels is "the appropriate course of action."


The largest seizure of contraband cigarettes in the history of the State and possibly in Europe was made this week in Greenore, Co Louth, when customs, gardaí, the navy and air corps joined forces to seize 120 million cigarettes, worth an estimated €50 million. The Irish Times reports seven Irish nationals, a Lithuanian and a Ukranian have subsequently been arrested for their involvement in the illegal consignment from the Philippines, which would have cost the Exchequer €40 million.


According to The Irish Examiner, Garda sources have said there was a "possible" involvement by dissident republicans in the massive smuggling operation, either via links with the criminal gang who organised it and/or in distributing portions of the haul. Customs have stated the cigarettes would probably have been sold at half price, at around €4 per pack. Considering a pack of 20 costs 50 cent in the Philippines, the criminals could have generated a profit of around €20m. If even some of this fell to the Real IRA it could have funded their terrorist campaign, the paper claims.


Meanwhile, The Evening Herald reports that despite the introduction of the smoking ban and increased health warnings, the number of Irish people taking up smoking is on the rise. An EU survey has found that one third of Irish people smoke, and this proportion has been increasing since 2007.


An Irish Independent investigation has revealed a string of the biggest UK stores with shops in the Republic are charging Irish customers up to 45% more. The paper claims that despite retailers blaming higher operating costs in Ireland for the mark-ups, some retailers have a much narrower price gap showing exorbitant differences are not inevitable. And according to Dermott Jewell of the Consumers Association of Ireland such differences showed "contempt" for Irish shoppers.


It could be seen as early as 2005, that Ireland Is heading towards an oversupply of shops, particularly outside Dublin, according to Aiden McDonnell, head of retail at agent Colliers Jackson-Stops. He writes in The Irish Times that by 2007 an additional 2.5 million sq ft of retail space had been created, with major centres and extensions appearing across the country. However, tenants paying a rent which equated to 20% or more of turnover was unsustainable in McDonnell’s view.


The Irish Times examines whether the long-promised introduction of a carbon tax in December’s budget, will change the behaviour of consumers who use peat briquettes or coal for home heating. According to the Commission on Taxation, a carbon tax should be clearly visible at the point of sale to ensure it would not be seen as "just another tax," and enable it to exert the same influence as the levy on supermarket plastic bags.


Cadbury is expecting Kraft to formally launch its £10 billion bid for the confectioner at the end of next week, according to The Daily Mail (UK). The paper claims the British maker of Dairy Milk has subsequently "drawn up extensive plans aimed at repelling Kraft’s Irene Rosenfeld and is holing up for a protracted bid battle."


McBride, the producer of own-label toiletries and household products for supermarkets such as Tesco and Sainsbury’s, has seen its shares soar by 10%. According to The Daily Telegraph (UK), McBride which has moved "away from commodity products such as bleach and fabric softeners to high-value, hard-to-make products such as five-in-one dishwasher tablets," has benefited from rising own-brand sales and witnessed its revenues rise 7% in the last financial period.


Lord Stern, the author of the influential 2006 Stern Review on the cost of tackling global warming, has said consumers will need to turn vegetarian if the world is to conquer climate change. According to The Times (UK), the leading authority on global warming has claimed a successful deal at the Climate Change Conference in Copenhagen in December would lead to soaring costs for meat and other foods that generate large quantities of greenhouse gases.









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