Monday 24 October 2016

Irish businesses need to wake up to the real benefits of place and heritage

Published 14/01/2016 | 02:30

From Africa to Europe, Guinness is a brand that is known around the world, and its Dublin visitor centre attracts an astonishing number of visitors. But other companies should copy the model.
From Africa to Europe, Guinness is a brand that is known around the world, and its Dublin visitor centre attracts an astonishing number of visitors. But other companies should copy the model.
Other companies should copy the model of Denmark's Lego.

I was passing through Kingscourt in Co Cavan recently, and it struck me what a significant presence the multi-billion euro building products group Kingspan has been in the town.

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Growing up just eight miles away, I remember seeing its physical presence in Kingscourt grow over the years. It has had a huge financial impact in a small town.

When Eugene Murtagh set up Kingscourt Construction in 1965 (later to become Kingspan) could anyone have guessed it would become a global corporation with a market value of €4.3bn?

But there are few examples of towns in Ireland that have generated and retained a multi-billion euro business.

We have fostered very successful indigenous global businesses which have remained in an area or region, but very few in the home town of the founder.

Sean Quinn and Derrylin is probably the best example of a town or parish which quite literally became "Quinntown".

The impact that Brian McCarthy's Fexco has had on the small Co Kerry town of Kilorglin is another.

After that they are hard to find. Kerry Group is headquartered in Tralee and its economic impact on the Kerry region is enormous, but Tralee isn't quite Kerry Group's town in the same way.

Glanbia is a huge presence in Kilkenny City. But it was formed out of the merger of Kilkenny's Avonmore with Waterford Foods, so it isn't quite the same thing.

Glen Dimplex was set up by Martin Naughton, who was from Dundalk, with its first Glen Electric plant in Newry, and the acquisition of the Dimplex plant in Dunleer. Its impact on the North East region has been immense but doesn't exactly fit the home town being known for the product.

Internationally, there are major examples of the town that delivered the company that defined the town. Billund in Denmark, the home of Lego, is one such example. It has a population of just 6,000 but has 4,000 Lego employees, most of whom commute to Billund.

It takes about 10 minutes to drive around the town but it hosts the world's biggest toy company, which makes profits of close to €1bn per year.

Stuttgart in Germany is home to the world's largest Mercedes Benz factory and museum, as well as that of Porsche. The Mercedes Museum gets around 750,000 visitors per year.

Wolfsburg in Germany is the home of Volkswagen. Described as the richest city in Germany, the motor factory attracts around two million visitors per year.

Other major brand associations with towns stretch from Detroit in the US to Gruyere in Switzerland, home of its Cailler Swiss chocolate.

There are several reasons why in Ireland we don't have so many similar examples.

Firstly, we have built very few global brands. The Kerrygold brand, for example, was invented by Tony O'Reilly, and can claim its origins in the country as a whole. Secondly, the global brands we have built up have tended not to be in manufactured consumer products. Kingspan is making insulation panels, not quite the best sector for a themed visitor centre.

Ryanair is now practically a global consumer brand as one of a handful of airlines to have carried 100 milloin passengers in one year. It isn't strongly associated with a particular town or location having prided itself for years on having low cost Spartan everything. It isn't a company one thinks of as having a visitor experience or museum as part of its identity.

Ireland's global consumer brands include the "Ring of Kerry", the "Cliffs of Moher" or "Newgrange", which are places rather than products or companies.

The real Irish exceptions to this are Guinness and Waterford Crystal. Guinness is a global Irish brand and it is closely associated with Dublin. So much so that a staggering 1.5 million people visited its Guinness Storehouse last year. This is more than you will find at Mercedes or Coca-Cola in Atlanta, and it is up there with the Lego visitor centre in Billund in Denmark.

Waterford Crystal has decades of manufacturing tradition and its brand even includes the name of the city from which it comes. Waterford City has been hugely associated with Waterford Crystal and it would fit the bill for the classic global product that is inseperable from the place it all began.

The problem is that it isn't Irish-owned any more, and very little crystal is made there.

How much Lego is made in Billund? I don't know but its headquarters is there, as are those involved in R&D, product development, as well as the visitor attractions. The design and manufacture of new models is what costs Lego money and that is where the real value-added lies. The raw material plastic costs just $1 per kilogram and sells for $75 per kilogram in Lego sets.

Guinness has not been an Irish company for many decades now. Yet it continues to manufacture its core products in Dublin and it is a testament to the company's heritage, branding and marketing that it is the number one visitor attraction in Ireland. It is the closest we have to a global consumer brand that maximises its association with a place.

In Ireland we had wonderful brands that were associated with particular places such as HB Ice Cream, Jacobs biscuits, Emerald Sweets etc. They were much loved but not global.

Our business culture has seen our entrepreneurs sell businesses too quickly and also underplay the heritage factor in the consumer brands we have.

Baileys is a global "Irish" brand but isn't really associated with any particular place. Jameson is a global "Irish" brand and it is only in relatively recent years that a real push has been made to associate it with Smithfield in Dublin or other whiskey brands with Midleton Distillery in Cork.

At least that is happening now. Visitors spend £50m per year at Scottish distilleries they go and see.

Perhaps we got our approach from the British. Of all the wonderful British brands developed over centuries only one of the UK's top visitor attractions is linked to a product, and that is the Cadbury World at a factory in Bournville near Birmingham, which lands about 680,000 visitors per year.

The most valuable British-connected global brands today include Vodafone, HSBC, Tesco, PWC, Deloitte, Barclays and Sky. It shows how much the British economy has changed that none of them would automatically lend itself to a place you might want to visit.

Thankfully, the Irish approach is changing. Hopefully Irish business's newfound respect for heritage and place is more than a passing "hipster" fad.

Ironically, new companies from craft beers to whiskey distilleries and artisan food producers are putting their place and heritage up front, even though many of them are completely new businesses. They are selling the heritage before they have sold much of the product.

Its a marketing trick but it is better than our previous track record of selling the company and ignoring the heritage.

Indo Business

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