FBD opens new office in ‘the real capital’
FBD Insurance opened its new office in Cork City this Friday.

FBD’s new office is located on the South Mall in Cork City.

To celebrate the office opening, customers and friends of FBD Insurance were invited to an event in the office where chief executive Fiona Muldoon and Ireland and Munster rugby legend Alan Quinlan, along with Cork branch manager Morgan McGuire, cut the ribbon at the front door to mark the occasion.

New office

Some of the staff who were in the office on Curraheen Road, Bishopstown, will now be working in the new office.

FBD has 34 local sales offices, including five in the county of Cork. This makes “Cork the ‘real capital’ as far as FBD is concerned,” Muldoon said at the opening.

“Cork is a very important growth market for FBD Insurance.

"FBD is celebrating 50 years in business in Ireland and we are proud of the strength of our customer relationships in Cork city and county,” Muldoon said.

“Our Cork city branch manager Morgan McGuire and his team look forward to offering great service and value to even more of Cork’s businesses and citizens.”

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Tesco outperforms as UK supermarkets suffer difficult Christmas
Sainsbury’s, Morrison’s and Marks & Spencer all suffered a disappointing Christmas trading period this year, writes Lorcan Allen.

There is no doubt that Brexit is starting to bite for some of the largest supermarket chains in the UK. A flurry of trading updates released this week by the large UK supermarkets show that UK consumers tightened their purse strings this Christmas and curbed their spending, even on food.

Overall, UK shoppers shelled out £29.3bn on food over Christmas, according to research group Kantar Worldpanel. While this is a record sales figure, the underlying growth in sales was just 1.6% - the slowest growth in more than a year.

The slowdown in the UK economy and the inherent weakness in sterling over the past two years has left many UK households with less disposable income.

As a result, many UK shoppers are switching to cheaper options, which has helped to boost sales for German discounters Aldi and Lidl.

Busiest Christmas

Aldi UK reported its busiest ever Christmas period with sales for the week starting on 17 December delivering year-on-year sales growth of 10%. This way outperforms the wider UK grocery market, which had sluggish sales growth of just 1.6% this Christmas. Overall, Aldi UK recorded sales of close to £1bn this December, which has given the German discounter an all-time high share of the UK grocery market of 7.6%.

The combination of reducing consumer confidence, mild weather, Black Friday and widespread discounting by our competitors made November a very challenging trading period

In contrast, the second largest supermarket in the UK, Sainsbury’s, like-for-like retail sales fell by a disappointing 1.1% this Christmas. While this decline was mainly driven by a 2.3% drop in general merchandise, the growth in food sales was behind the overall UK grocery market at a very sluggish at just 0.4%.

“There were a lot of retailers in distress and a lot of discounted stock out there,” said Sainsbury’s chief executive Mike Coupe.

Morrison’s, the UK’s fourth largest supermarket, reported sales growth over the Christmas period of just 0.6%, which is again well behind the overall market growth rate of 1.6%.

Morrison’s chief executive David Potts said UK shoppers had become “more cautious and careful” as a result of the continuing uncertainty around the UK’s future relationship with the EU.

Worst performance

High-end retailer Marks & Spencer suffered the worst performance of all the UK supermarkets this Christmas.

The retailer reported a disappointing 2.2% decline in sales this Christmas due to the difficult market conditions and weak consumer confidence. M&S said sales of food, which have so often been the star performer for the retailer, shrank by 2.1% in the period.

“The combination of reducing consumer confidence, mild weather, Black Friday and widespread discounting by our competitors made November a very challenging trading period,” said M&S chief executive Steve Rowe.

The major outlier in all of the bad news emanating from the UK retail sector today is Tesco, which bucked the trend over Christmas and posted very healthy sales growth.

Tesco, the UK’s largest supermarket, outperformed the market in both volume and value terms as it reported like-for-like sales growth in its UK stores of 2.2% for the Christmas period. Sales at its Irish stores grew by just 0.3% in comparison.

Tesco chief executive Dave Lewis said the supermarket giant’s strong recovery was “bang on track” as it defied the general sense of gloom that has overshadowed UK retailers in the last 12 months.

“In the UK, we delivered significant improvements in our competitive offer and this is reflected in a very strong Christmas performance which was ahead of the market,” added Lewis.

Thousands of food industry jobs vulnerable to hard Brexit – Enterprise Ireland
A no-deal Brexit could result in thousands of job losses in the food sector, given its exposure to the UK market and WTO tariffs.

Thousands of jobs in the food industry are extremely vulnerable to a no-deal Brexit, according to Enterprise Ireland CEO Julie Sinnamon. Announcing Enterprise Ireland’s End of Year statement on Wednesday, Sinnamon said an analysis by Enterprise Ireland of all its clients suggests as many as 25,000 jobs would be vulnerable and at risk to a no-deal Brexit.

Food companies account for the majority of Enterprise Ireland’s clients and are especially exposed to Brexit given the tariffs food staples such as beef and dairy would attract under a no-deal scenario.

“The food industry is the most exposed sector under a no-deal scenario and WTO tariffs,” said Sinnamon. “In the last year, we’ve allocated €75m in Brexit funding to our clients and food companies have been allocated by far the largest share of this funding. We’ve engaged with more than 200 food companies on the Brexit agenda,” she added.

For 2018, Enterprise Ireland said the net job creation of its client base was just over 9,100, with almost two thirds (61%) of these jobs created outside of Dublin.

2018 – the year that was in agribusiness
From storm Emma to Beet Ireland, Lorcan Allen reflects on some of the standout moments of the agribusiness world during 2018.

Looking back, 2018 is a year that will live long in the memory, particularly for Irish farmers and the agri-food industry given the extraordinary variance we saw in weather over the course of the last 12 months.

In March, the Beast from the East rumbled into town and bombarded the country with snows and icy temperatures that brought many parts of the country to a standstill.

Enniscorthy Red Cross in snow collecting dialysis patients and doing emergency runs for the HSE. The tractor had to be used to knock down the larger snow drifts to collect one patient but for the most part the Land Rover Defender travelled under its own steam.

Food supply chains were pushed to breaking point during Storm Emma as supermarkets quickly ran out of staple foods such as bread, eggs, meat and vegetables. The snow highlighted the fragility of the modern food supply chain with Irish supermarket shelves resembling something from a warzone rather than a three-day weather event.

Storm Emma wasn’t the only seismic happening to hit the supermarket industry in 2018. In May, the second and third largest supermarkets in the UK, Sainsbury’s and Asda, announced plans to merge and create a new supermarket giant that would control almost a third of the £185bn (€210bn) UK grocery market.

Dairy growth

Slightly further back from the supermarket aisles, Ireland’s dairy expansion continued apace with milk production set to break 7.4bn litres this year, thanks to very strong growth in milk production in the last quarter of the year.

There was a slight wobble in milk production in June and July as the summer drought severely hit grass growth on many farms in the south and east of the country. However, the feed industry reacted to fill the fodder shortage with sales of animal feed tonnages up 20% to 30% on normal years.

This incessant growth in milk supply is continuing to drive structural changes at the dairy processing level, with more co-op consolidation.

In March, Monaghan co-op LacPatrick found itself in financial difficulty as it struggled to pay a competitive milk price to its farmers.

This led to the co-op seeking out a merger with neighbouring Lakeland Dairies to form what is now the second largest co-op by milk supply in Ireland.

There was further dairy consolidation in 2018 when two of the smaller co-ops, Feale Bridge & Headley Bridge co-op and Newtownsandes co-op, announced they would merge with Kanturk dairy processor North Cork co-op.

Difference of opinion

At co-op board level, a major difference of opinion arose in October as Glanbia announced the launch of its Truly Grass Fed brand into the US market. For many in the dairy industry, this was seen as a threat to the Kerrygold brand, which has served the Irish industry so well for the best part of 60 years. You can expect this controversy to rumble on into 2019.

Beef consolidation

In the beef sector, we saw Kepak snap up the red meat business of UK-based 2 Sisters, which comprises four processing sites across the UK slaughtering 250,000 cattle and more than one million lambs.

The move by Kepak is the latest of a string of deals over the last two years by the big three Irish meat processors – ABP, Dawn and Kepak – which has seen them become the dominant players in the meat industry, not just in Ireland but also in the UK. Between them, ABP, Dawn and Kepak control 60% of the entire combined cattle kill in the UK and Ireland.

Kepak in Clonee. \ Philip Doyle

Since the Brexit vote in 2016, the strategy of the Irish beef industry has been noticeable in that the three biggest companies have all doubled down on the UK market by snapping up UK meat businesses to give them a processing footprint within the UK itself. This Brexit strategy is in contrast to the dairy industry, which has continued to diversify away from the UK and limit its exposure. Less than half of Irish cheddar goes to the UK market, where it was almost 70% in 2016.

Brexit and US

On Brexit itself, there is as much uncertainty about the final outcome as there was this time last year. It looks set to go right down to the wire whether UK prime minister Theresa May can get her deal through the House of Commons, which is a disaster for businesses trying to plan.

UK prime minister Theresa May and European Commission president Jean-Claude Juncker.

Brexit was not the only issue causing uncertainty in the global trade picture during 2018. US president Donald Trump continued to tear up the rule book when it came to trade over the past 12 months and trade tensions between the US and China are now at an all-time high.

Trump angrily tweeted his way through 2018 as he sought to make global trade “fair” once more for the US. China was the target for much of the US president’s ire. During the year, President Trump slapped tariffs on $200bn worth of Chinese imports coming into the US. In response, the Chinese hit US soya bean imports coming into China with a 25% tariff. The move saw US soya bean exports collapse by 99% overnight and pushed soya bean prices in the US to decade-lows.

Results

However, the US president did get some results in 2018. In August, the renegotiation of the old North America Free Trade Agreement (NAFTA), which was so despised by the Trump administration, was completed and a new trade deal between the US, Mexico and Canada was signed. Known as the US-Mexico-Canada Agreement (USMCA), there are wins in this deal for US farmers, particularly with better access to the highly protected Canadian dairy market. In Europe, the EU completed the signing of a new free-trade deal with Japan, which will be one of the most comprehensive trade agreements ever concluded. The deal is a major win for EU farmers, with Japan one of the most sought-after food markets in the world as the country is only 40% self-sufficient in food. In the deal, tariffs on imported European cheese will reduce from 40% to zero, and beef tariffs from 38.5% to 9.5%.

Sweet note

The year ended on a sweet note as we saw Beet Ireland roll out a series of meetings across Ireland in December to make its pitch to farmers for restarting the sugar industry in Ireland.

Funding

The company is seeking to raise an initial €1m from farmers to fund the pre-development stage of a proposed new sugar processing and bioethanol factory outside Castledermot, on the Kildare-Carlow border.

However, the total investment needed to revive the sugar industry in Ireland will be a significant €300m, which is the cost of building a new sugar processing and bioethanol factory that will have a capacity to produce 210,000t of sugar annually, 19m litres of bioethanol and 250,000t of beet pulp.

Beet Ireland has given farmers interested in putting money into the new venture until the end of this year to commit.

It will be interesting to learn in early 2019 what the farmer take-up has been like and whether we could see the first moves towards bringing back a sugar industry in Ireland.