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Weekly Round Up, April 23, 2014

By Publications Checkout
Weekly Round Up, April 23, 2014

Tesco Ireland has bought a site on the Navan Road from the state for €1.7 million. The 0.69 acre site in Meath was surplus to the requirements of the Department of Social Protection and until recently was used as a local office for the Department. Junior Minister Brian Hayes said that 50% of the sale price will go to the Exchequer and the remaining 50% will go to the Office of Public Works. Meanwhile, Tesco Ballymun is charging a €10 deposit to use its trolleys in an effort to encourage shoppers to return them. The North Dublin-based store has erected a sign notifying its customers that there is a €10 deposit charge on all trolleys ‘due to massive trolley loss’. The sign says, “Customers, due to massive trolley loss there will be a €10 charge on all trollies even if its just to the car park. Please return trolley and token together to cashier within 24 hours. We apologise for any inconvenience this may cause to you.” 

The latest IRI Pulse report reveals that poor weather, below average temperatures and changing drinking habits across Europe affected sales of drinks, including mineral water last year. The market insights and shopper intelligence firm analysed sales in its Pulse Drinks Report (Q4 2013) to discover that total sales for non-alcoholic drinks across Europe dropped 0.4% to €43.6 million. Only the UK and France saw sales increase over the previous year while all other markets were in decline, with coffee and tea seeing the biggest drop. The report showed a change in drinking behaviour in countries like Germany and Italy, with carbonated mineral water declining in popularity as younger people turn to still water, non-alcoholic beers and adult lemonades, as well as energy drinks. Björn Steinbach, Senior Consultant at IRI said, “The weather plays a major factor in the drinks market. In the UK, for example, we experienced the coldest March on record in the last 50 years, and as a result saw an upswing in sales of hot beverages, while during the hot summer shoppers spent more on mineral water, soft drinks, squashes and juices.” IRI advises manufacturers and retailers to do more to capitalise on the weather, including running mineral water promotions in the summer to help regain lost sales during the colder months.

Ibec has published its 'Business manifesto for the local elections 2014', which asks all political parties and candidates to commit to wide ranging local government reforms to reduce costs, improve efficiencies and deliver a more transparent and accountable system of local government. The representative for Irish businesses is calling for local government to introduce multi-annual budgets, reduce spending by 3-5% annually, reduce commercial rates, improve financial transparency and implement accountability reforms by the end of 2014. Ibec Head of Regional Policy Reg McCabe said, "Business funds about one-third of the cost of local government through the commercial rates system and other local measures such as water, and waste charges. We recognise the role played by local authorities in providing essential services, but the costs are too high, and there is scope for savings. Official figures show that between 2008 and 2013 the commercial rates contribution increased from 28% to 35%. Reductions are now long overdue to allow business to grow and compete, and to support growth in jobs." Currently business contributes more than €1,600 million a year to the cost of local government through commercial rates and water charges which Ibec says is a substantial burden for companies of every size, regardless of employment headcount, turnover or profitability. 

Nestlé is expecting sales growth in the next few quarters after a recent drop in sales of 4.2% in Q1, attributed to unusually cold weather in North America and Europeans switching to cheaper brands. Nestlé said it expected a continued strengthening of the Swiss franc to pull on its reported sales this year, but that a roll-out of new products was helping to sustain growth in difficult market conditions. Nestlé said in a statement, “We confirm our full-year outlook: performance will be weighted to the second half, outperforming the market, with organic growth around 5%." Nestlé is reportedly reviewing its portfolio to let go of underperforming brands. Nestlé shares, which have gained 2.5 % this year, are trading at around 19 times forward earnings, in line with competitors Danone and Unilever.

Drinks group Diageo has reported a drop of 1.3% in sales in its third quarter, due to weakness in emerging markets. The unexpected dip reflects the challenging environment Diageo is operating in, according to Ivan Menezes, chief executive. He said, “In the emerging markets, currency volatility and caution about the outlook for GDP growth are negatively impacting business and consumer confidence.” In the past few years, Diageo has made several acquisitions in emerging markets, but growth has slowed. Despite these challenges, Diageo remain confident for the future. According to Menzes, “The current emerging market weakness does not reduce our confidence in the long-term growth opportunities of these markets and we have continued to invest to build our brands and routes to consumer for the future.”


Nolan's Supermarket in Clontarf has unveiled plans to demolish a large part of its existing supermarket space, along with three adjoining houses, and develop a new 'part two-storey, part three-storey' retail and commercial space. Plans were lodged with Dublin City Council last week, and reveal that the supermarket intends to develop a 635 square metre extension to its current retail floor space, 100 square metres of additional retail space, a 147 square metre commercial unit, 247 square metres of administration offices for the supermarket and 185 square metres of créche accommodation at first floor, a 186 square metre enclosed créche play-area at first floor roof level, another 122 square metre commercial unit and 146 square metres of créche accommodation and external terrace on the second floor. It also intends to to develop additional parking spaces along Vernon Avenue to serve the development. Last month, Nolan's posted a profit after tax of €1.05 million for the year to 30 June 2013.

Tesco Kilrush in County Clare made it an Easter to remember for locals, as the store decorated the town's streets and square with over 5,000 Easter eggs. Tesco Kilrush manager Noelle Cotter told the Irish Examiner that the gesture was to cheer up the town after it was hit hard by winter storms. Cotter said, “A big thank you to the Easter Bunny, who certainly created a real buzz and lots of happiness around the town. It was really lovely to see the surprise and delight on the faces of the children of Kilrush this morning.” Mayor of Kilrush Councillor Paul Moroney said of the surprise, “It was an amazing sight altogether. It was Christmas morning on Easter Sunday, it was such an unexpected surprise. There were nets of eggs hanging from trees, door handles, just everywhere. It was an incredible surprise.”

Ireland ended 2013 almost 1% over quota for milk in the run up to the abolition of milk quotas in April 2015. Irish dairies supplied 483 million litres in March which is 0.94% over quota as a provisional total for the year to 5.4 billion litres. Last year, Ireland was charged with a €16 million fine for producing over its quota by 1.05% for 2011-2012, but came up short for 2012. Minister for Agriculture, Food and the Marine Simon Coveney said that farmers need to be careful and watch their quota position, but also prepare for the lift of the quota in April 2015. He said, “We are now entering a momentous phase in Irish agriculture’s history. This time next year the Irish dairy sector will be unbound by quota restrictions and can begin to realise its vast potential and make an even greater contribution to our national economy.” Ireland is planning to raise milk production by 50% or 2.75bn litres by the end of the decade as part of its Food Harvest 2020 plan.

Bord Bia has launched a new CV Booklet for the Bord Bia Marketing Fellowship Class of 2014. The booklet profiles the 20 fellows currently completing the programme and will be circulated to HR managers and food industry leaders this week. Speaking at the launch, Aidan Cotter, CEO, said, “With the current programme nearing completion, this cohort of graduates will be keen to follow in the footsteps of previous fellows in securing employment within the Irish food industry both at home and abroad. All of the previous Fellowship graduates secured employment, 88% within the food industry.” This is the fifth year of the Marketing Fellowship programme, which has recruited more than 120 fellows, who have completed in excess of 400 business development and market research projects for Irish food and drink companies in key international markets, including the UK, Continental Europe, the US, China and the Middle East. In partnership with UCD Michael Smurfit Graduate Business School, the course aims to create a new generation of marketing professionals within the agri-food industry and to broaden the export reach of Irish food companies. 

The Irish Dairy Board (IDB) has started a search in China for possible acquisitions but says that Irish producers are not ready to supply to the Chinese market yet. Kevin Lane, chief executive of the IDB said, "I just came back from there (China) ten days ago and I will tell you what the Chinese consumer is looking for is not the dairy products that are manufactured in Ireland today.” Instead, Lane suggested that Irish producers will have to tailor their produce to Chinese tastes if they wish to make an impact on the market there. There are opportunities for milk powders, dairy-based beverages and spreadable cheeses, according to Lane, but they must meet the standards the Chinese consumer is looking for. The IDB reported sales if €1.2 billion last week, a 5.5% increase on last year. 


© 2014 - Checkout Magazine by Genna Patterson

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