Foodservice market emerges from period of decline, with growth forecast for the next 5 years

A report on the Irish foodservice industry, which is currently valued at €6.07bn at consumer prices, was published at the annual Bord Bia foodservice seminar in Dublin today. The Foodservice Channel Insights Report highlights the fact that Fast Food continues to dominate Irish foodservice channels and that although price is still a venue differentiator for today’s value-conscious consumer, diners are also looking for excitement and new product offerings when eating out.  Further growth of the market will rely on operators revitalising the dining out experience, whilst maintaining a sense of familiarity. Initial findings from the Lunchtime Study were also presented by Bord Bia today, revealing that on average we spend €6.24 on lunch every day and almost two thirds (57%) of lunches consumed at work are brought from home.

Now in its fifth year, the Bord Bia foodservice seminar was attended by over 200 Irish food suppliers and foodservice trade buyers. Among the speakers at the event were Larry Murrin, CEO of Dawn Farm Foods; Noel Keeley, MD of Musgraves Wholesale Partners; Joan O’Shaughnessy, Vice Chairperson and Special Advisor of ARAMARK and Sarah Furno, Director of Cashel Blue.

Speaking at today’s seminar, Bord Bia’s foodservice specialist, Maureen Gahan commented, “2012 saw a return to growth in four of the five commercial channels, which ended a period of decline that began in 2008. The good news today is that the market is predicted to show continued growth over the next 5 years to 2018, averaging a 0.8% increase per annum from 2013 to 2018. Interestingly, there is also an ongoing emphasis on Irish sourcing across all product categories – with provenance, transparency and origin identified as driving trends within the trade.”

Quick Serve Restaurants (QSR) or Fast Food remains the largest Irish foodservice channel, making up 37% of the market. Joining QSR in the list of Top 5 most valuable foodservice channels are: Pubs, Cafes and Coffee shops at 32%, Full Service restaurants (FSR) at 11%, Hotels at 6% and Business and Industry (B&I) at 5%. Leisure & Travel, Education, the Defence Forces and the Prison Service account for the remaining market share. The combined value of the top 2 performing channels – QSR and Pubs, Cafes and Coffee Shops – accounts for the majority (69%) of total foodservice sales. This demonstrates how Irish consumers have traded down in terms of their meal options and that lower transaction spend is motivating venue choice.

At the event, Larry Murrin, Chief Executive, Dawn Farm Foods presented an overview of how the company has successfully developed exports through long term partnerships. According to Mr Murrin, “Food innovation and new product development are an integral part of the service that we provide to our global foodservice customers. Our value added protein products are consumed by millions of consumers every day across Europe and the Middle East in sandwiches, ready meals and pizza toppings.” In 2010 Dawn Farm Foods won a €700m, 7 year contract to supply the SUBWAY sandwich chain with meat ingredients. Meeting today’s consumer needs for value, convenience and customisation, SUBWAY is now one of the largest growing global fast food chains with over 40,000 outlets worldwide.

Among the key findings of the Foodservice Channel Insights Report are:

  • ·         In the past year, the Hotels channel experienced its biggest growth increase since the recession began – expanding by almost 3% between 2012 and 2013, to a market value of €384m at consumer prices.
  • ·         Improved food offering in pubs has gained traction with consumers, who are increasingly seeing pubs as meal venue choices. Half of Irish consumers (50%) ate in a pub in the 3 month period to September 2013.
  • ·         Delivered Wholesale remains the principle route to market, accounting for 65% of the distribution value ahead of Direct at 13%, Cash & Carry at 11%, Contract at 10% and Retail at just 1%.
  • ·         Fruit & Vegetables is the leading category in terms of share and sales value, accounting for €355m at operator buying prices or 19% of the total market in 2013 – ahead of Poultry at €251m, Beef at €248m, Bread/Bakery at €238m, Bacon at €186m and Dairy at €181m.
  • ·         Of the top ten global foodservice trends identified in this report, 5 relate to menu offerings. This emphasises the importance of new product development within the future growth of the Irish foodservice market.
  • ·         Lower price points are driving spend within the foodservice industry. Lunch and/or dinner is typically eaten out-of-home 2-3 times per month (by one quarter of consumers), while light snacks are eaten out of the home up to 2 or 3 times a week (by one fifth of consumers).
  • ·         When it comes to eating outside the home, meal deals and efficient service are the two key drivers consumers are most concerned with when choosing a venue.

The Lunchtime Study which focuses on consumer behaviour was also released by Bord Bia today. Among the key findings are:

  • ·         On average, we spend €6.24 on lunch every day, rising to an average of €9.88 when dining at a serviced outlet. However when brought from home, the typical lunch costs as little as €4.
  • ·         Almost two thirds (57%) of lunches consumed at work are brought from home. Just 1 in 5 lunches eaten in work are items that have been purchased locally and brought back.
  • ·         Key considerations when choosing lunch foods are control over budget, ingredients used and calories consumed.
  • ·         Interestingly, around a third of us (30%) eat lunch in work while 17% choose to eat out at serviced outlets like cafés, restaurants or pubs.
  • ·         We’re a nation of sandwich-lovers! Over 40% of us opt for bread-based lunches.

Building Business Opportunities

Bord Bia also published its Irish Foodservice Market Directory 2013 today. Aimed at providing companies with key background information on potential foodservice customers, the directory includes detailed profiles of over 100 operators and wholesale distributors. Reflecting the growing cross-over between retail and foodservice markets, particularly in the area of food-to-go, the 2013 Directory includes profiles for a number of Forecourt Convenience retailers.

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