Sunday 18 February 2018

Eastern expansion possible for food exporters with the right attitude

Xi Jinping in Germany last month. Photo: Getty Images
Xi Jinping in Germany last month. Photo: Getty Images

A year ago, Ireland was in the grips of China fever as the now president of the world's most populous country, Xi Jinping, spent time touring Ireland's food production facilities.

The hype about what China could do for Ireland Food Inc only increased as a huge delegation of Irish agri-business leaders headed for China a few months later.

Tales of multi-million euro deals filtered back on a daily basis, as it appeared that the 1.3 billion Chinese couldn't get enough of the Emerald Isle's offerings, whether it was in the form of chickens' feet or swanky racehorses.

But in the background, the old wise heads were sounding a note of caution. "Let's see if these fancy numbers actually translate into real money," was a common refrain.

But the latest food export figures, released by Bord Bia this week, add further weight to the argument that the real action for food exporters is gradually shifting east.

Despite food commodity prices easing by 8pc during 2012, Irish exports hit record levels. The percentage increase was small, at 2pc, but it was enough to push the total amount over the €9bn milestone, a full €2bn higher than three years ago.

Britain is still our main food export outlet, mopping up 42pc of total exports. But the rest of Europe is declining in importance, and it is international markets, notably China, that are making up the difference.

In just two years, exports to these emerging economies have increased by 58pc. And the prospects continue to look good.

While a 1pc or even 0.5pc growth forecast for the economy would be a cause for wild celebration here, China pushes relentlessly on with a forecasted growth rate of over 8pc for 2013, after enduring a 'slump' of 7pc in 2012.

It's also no coincidence that the two best performing food export sectors in 2012 were two of China's favourites – pigs and seafood. These two sectors accounted for €868m worth of sales, up 18pc in just 12 months.

A Donegal crab-fishing company is an example of one Irish firm that has got going in China. When recession hammered his traditional European outlets, Hugh McBride looked east. He is now exporting two tonnes a week of specially chilled live crabs to China.

Of course, it is easier for the big players such as the Kerrys, Rosderras and Coolmores to pour significant resources into getting a foothold in these far-flung markets. But that shouldn't deter smaller companies in the agri-sector having a go at these new markets, too.

In the case of Mr McBride, he has joined forces with a number of other small Irish food exporters to hire a Chinese sales person on the ground.

Apart from a joint approach, Irish exporters will also benefit from the slick positioning of Irish food by the state body Bord Bia. Its Origin Green campaign, which aims to calculate the carbon footprint for all Irish food and make us world leaders in food sustainability, is right on the money, according to all the latest trend analyses.

While ethics, welfare and sustainability were viewed as attractive add-ons in previous years, food analysts are telling us that consumers are now coming to expect these as a given.

Chinese consumers will be no different, and are going to be hunting more of what they like in the future. It's Irish food companies' job to make sure they're offered an Irish option.

Indo Business

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business