My late father, a shopkeeper in the Dublin suburb of Cabra, had a saying: “If times are bad, paint the shop.” For food businesses facing into post-Brexit uncertainty and pressures of adverse currency movements, this difficult period is a great time to focus on innovation as a point of difference, a great time to invest.
Many firms in the food sector have innovation at the core of their business, and the consumer is at the core of their innovation process. Irish food businesses compete directly with massive multinational food and drink brands, taking on these Goliaths both on our home turf and in international export markets. For these Irish food businesses innovation provides a point of difference, a driver of growth and an opportunity to enhance profitability.
For new businesses seeking to engage with Irish and international retailers, a meaningful innovation offering is a vital part of any sales pitch. Consumers are demanding newer and better products, Nielsen recently reported that 57 per cent of shoppers purchased a "new product" on their last trip to a grocery store. Consumers are demanding better-tasting and more nutritious food in more convenient formats and packaging; they want food that fits with their changing lifestyles that is affordable and trustworthy. Consumers' demands are complex and food firms need to have a deep understanding of these evolving needs if their new innovations are to have any chance of success.
As a combined industry, the Irish food and drink sector exports €11 billion worth of dairy, beef, whiskey, chocolate and other food and drink products. If that combined export business was considered to be a single company, it would rank at approximately number 40 on a list of global food and drink firms. We are competing against some firms of extraordinary scale.
These global competitors have many advantages: greater scale and extensive resources, generations of management experience and closer trading relationships, particularly with international retail groups. Many of our global competitors also have extensive innovation capability within their businesses, with well-resourced insight teams, research capability and development departments.
Few Irish businesses can justify that level of investment, and must be clever and cautious about how they choose to allocate their very limited innovation resources.
One Irish leader in food innovation, the hugely successful Kerry Group, last year invested over €100 million in its remarkable Global Technology & Innovation Centre near Naas in Co Kildare. On arrival at this facility (which currently employs 860 staff) client firms are exposed to deep-dive market analysis, trend reviews, product development using highly innovative ingredients, taste and sensory testing, and trial production on industrial-scale mixing, baking, bottling and packing mini-factories. The 500 clients that were hosted in its first six months were left with an image of Kerry as unquestionably a global leader in ingredients and a true partner in innovation. Having such a facility based here in Ireland is a major contribution to the perception of Ireland as a source of innovative food and drink. However, Kerry Group is one of the very few Irish firms with the resources to do this at such a global leading standard.
For most Irish food businesses, current scale limits the realisation of grand ambitions. Innovation capability for most Irish food businesses is a weakness and needs to be enhanced and supported. The ability of Irish food and drink companies to base their innovation programmes on deeply understood consumer insights and emerging shopping and consumption trends is not at the required level. Few Irish food and drink firms, acting alone, can hope to keep up to speed and ensure their innovations are grounded in an identified shopper or consumer insight.
Launched last week by Bord Bia, the Thinking House is part of the solution to that competitive deficit, an inspirational and creative space that aims to integrate the consumer into the core of the sector’s innovation planning. The Thinking House provides a shared resource for all Irish food and drink firms, free access to the latest robust market data, a deep understanding of current and possible future international trends and a high-tech facility for consumer discussion groups. The consumer insight team at the Thinking House have exceptional talent and experience.
This impressive new venture is a unique undertaking; no other country has ever attempted to provide such an industry-wide solution to enhancing its food sector’s consumer insight capability. If Irish food businesses are to win in such a highly competitive environment, we need to be even better than our competitors at innovation. By using the resources and talent now available at the Thinking House, Irish food and drink firms have a chance to excel.
Michael Carey is chairman of Bord Bia and managing director of East Coast Bakehouse. @careyonfood