Kerry realigns as consumers seek more convenience

One of the dominant trends in food is the switch from retail to foodservice. The latter covers any outlet which prepares food for immediate consumption on site.

Essentially, we’re consuming more food in these establishments and the trend persists as busy work lives mean we seek more convenience.

Kerry, the State’s largest food firm, spent a whopping €900 million on eight acquisitions last year, equivalent to its total spend over the previous five years.

Foodservice demand

Several of its new businesses are plugged directly into this shift towards foodservice.

Kerry chief executive Stan McCarthy said most of the acquisitions were supplying foodservice operators either directly or indirectly with menu items or flavouring products.

He also noted that foodservice is now growing at three times the rate of retail and had overtaken retail as the number-one channel for food and beverage in the US.

While it was difficult to put a number on how much of Kerry’s business is being generated from this sector, he reckoned about 35 per cent.

“However, it’s growing at a much faster clip than the traditional retail channel,” he said.

Publishing its annual figures yesterday, Kerry noted developed markets remained challenging as food and beverage providers compete to meet changing consumer lifestyles, shopping behaviours and retail/foodservice channel requirements.

Last year, its numbers were flattered somewhat by favourable currency swings – in other words, a weak euro. The opposite appears to be the case this year.

Currency headwind

“We expect to achieve 6 per cent to 10 per cent growth in adjusted earnings to a range of 320 cent to 332 cent per share in 2016 taking into account a 3 per cent currency headwind at current exchange rates,” he said.

On the possible consequences of Britain splitting from the EU or greater political instability here after Friday’s vote, Mr McCarthy was phlegmatic, insisting the scope and scale of the business insulated it from such domestic concerns.

On wider uncertainty about the global economy, he said: “Sometimes food and beverage gets lost in the macro news around emerging markets and economic trends.

“What we see is a greater move and a greater trend towards western-style standards, albeit with local tastes and preferences.”

He said the company remained as optimistic as ever about China and Asia despite the negative headlines.