Wednesday 12 December 2018

Musgrave eyes 'Ireland 2040' blueprint to boost growth

Chris Martin, chief executive officer at the Musgrave Group
Chris Martin, chief executive officer at the Musgrave Group
Donal O'Donovan

Donal O'Donovan

Musgrave Group is studying the Government's 'Ireland 2040' infrastructure plans as well as demographic trends as it plots new store and product rollouts. It believes intensive urbanisation in Dublin and Belfast will suit its online grocery business.

The retail and wholesale group, whose brands include SuperValu and Centra, made a pre-tax profit of €80m in the year to December 30, on sales of €3.7bn.

Profits were up 9pc on 2016, the third year in a row of profitability, and the business was sitting on net cash of €71m and net assets of €330m at year-end.

The group has plans to open two new SuperValu stores this year, and after withdrawing from the UK in recent years is now largely focused on growing on the island of Ireland, although with some export tie-ups targeting China and the Middle East.

"A lot of food retailers have retrenched to their domestic markets," said Musgrave Group CEO Chris Martin.

On the island of Ireland, the market for food consumed in-home or out of the house is €30bn and growing, he said.

The group was "looking at the plans around 2040" he said.

That reference to the Government's 'Ireland 2040' development plan is among the first times a senior business figure as explicitly cited the planning blueprint in his own strategic thinking.

That's big enough for further growth, he said.

"Uniquely, the Irish food market is faster-growing than the UK, despite food deflation," he said.

Competition in the grocery sector remains fierce, with pressure from German discounters Aldi and Lidl a big factor, but Musgrave reported double-digit online growth and is focused on building up its branded offerings including the Frank & Honest Coffee chain, Mood Icecream which is now in 60 stores, and Chip Monger, a franchise that promises economies of scale to independent chip shop operators similar to the Centra brand for shops.

Mr Martin said Musgrave Group is studying demographic trends as it plans further development

In Ireland, online sales make up just 2pc of the Irish grocery market, compared to 6pc to 7pc in the UK, he said. "Consolidation of population, particularly in and around Dublin and Belfast will facilitate Musgrave's own online business," he said.

"Dublin is on course to account for 45pc of the Republic's population - and will increase by the size of Cork in the next decade."

Denser populations mean shorter delivery routes and make it easier to access more customers.

Unlike other big grocery chains, the shift online will have to be done without "losing the face of the independent retailers" that operate much of the franchise, he said.

The need to tailor SuperValu Online around those operators means a partnership with Ocado - the listed UK business that provides technology to a growing cohort of big international retailers - probably wouldn't work, he said.

The accounts show Musgrave's SuperValu brand, which is now the biggest grocery chain in the Republic, recorded sales of €2.7bn - a record for the chain.

Centra stores clocked up combined sales of €1.58bn.

MarketPlace, a wholesale food-service business owned by Musgraves, has acquired CJ O' Loughlin in 2016 and La Rousse Foods this year, to boost sales to restaurants.

Irish Independent

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