Food price inflation drives sales growth for Tesco
The UK’s largest retailer reported strong growth in profits for the first six months of its 2017 financial year

Tesco, the UK’s largest retailer, has reported a 27% increase in half-year operating profits to £759m (€856m) as profit margins widened 50 basis points to 2.7%. The retailer reported sales (excluding fuel) of £25.2bn (€28.4bn), with like-for-like sales growing just 0.8%.

Tesco sales in the UK and Ireland increased 2.1% to a little over £19bn (€21.5bn), while operating profits increased more than 20% to £471m (€530m). In Ireland, Tesco reported like-for-like sales growth of 1.1% as investment in price reductions helped sales volumes grow almost 4% in the six-month period.

In the UK, the retailer’s most important market, Tesco reported like-for-like sales growth of 2.2%, which is mainly as a result of food price inflation due to a weakened sterling. Sales volumes in the period grew a sluggish 0.3%.

From the perspective of the Irish meat sector, it was interesting to note that Tesco is seeing strong growth in meat sales so far this year. For the six-month period, meat sales volumes increased 6% and outperformed the wider market. Tesco chief executive Dave Lewis said the business continues to make progress since he started a turnaround strategy three years ago.

Bright future for Moy Park as its sees huge growth in demand
The new boss of one of the UK’s largest poultry producers is very optimistic on the future for the business

Chris Kirke, Moy Park’s new president believes despite Brexit, there is a huge opportunity for the business on the back of strong demand growth for poultry in the UK market. He was speaking at the launch of the Farmers Journal/KPMG Agribusiness report in Belfast earlier this week.

Current demand in the UK is 20m birds per week

Moy Park is Northern Ireland’s largest private sector company, processing an average of 5.7m birds per week last year, and Kirke believes the UK market will grow at 3% or 600,000 birds per week each year over the next few years.

Current demand in the UK is 20m birds per week. He says the growth is coming from consumers switching from other protein sources such as red meat to poultry.

This will create a big opportunity for the business, according to Kirke. Moy Park supplies a range of fresh chicken products under private label brands.

Supplying some 30% of the UK poultry market, Kirke is concerned about the impact a hard or no-deal Brexit may have on the business. He says that while it has made arrangements with its retail partners in the near term, this is a product with only nine days of shelf life so delays at ports or customs in any Brexit scenario could have knock-on consequences. He said the company has explored options around routes to market.

After all, we are the most expensive place to grow chicke

He is also concerned about the possibility of cheap imports coming into the UK from South American countries such as Brazil. “After all, we are the most expensive place to grow chicken” according to Kirke. However, he believes that provenance will continue to be important to UK consumers, but that the industry must get better at telling their story around quality, welfare and environmental standards.

800 growers

The company has 800 growers across the UK and Northern Ireland. He says that despite the main market being in Britain, Moy Park is very committed to Northern Ireland processing and poultry growers. “This is where the birds are,” he adds.

Moy Park employs 12,000 people across the business with more than 6,000 people in its Northern Ireland operations

The company is continuing to invest in both Northern Ireland and Britain. Last year, Moy Park was acquired by US poultry processor, Pilgrim’s Pride for $1.3bn. (€1.2bn). Today, Moy Park employs 12,000 people across the business with more than 6,000 people in its Northern Ireland operations making it the North’s largest private sector business.

The former CEO of Greencore’s US division said the new owners are very committed to growing Moy Park.

He said it has always been the jewel in the crown of its many owners down through the years and added that it would also look at acquisitions in order to grow.

The latest accounts filed for Moy Park show that it had sales of £1.5bn (€1.7bn) in 2017 with pre-tax profits of £64.5m (€73m). The business has doubled in size over the last 10 years. Moy Park also supplies 25% of the total Western European chicken parent market.

While there are wider industry challenges around welfare and the environment, he believes Moy Park can be competitive but it must drive efficiencies and continue to innovate while working with its growers and retail partners to succeed.

20 minutes with Padraig Hennessy, Terra Nutritech
Lorcan Allen speaks to Padraig Hennessy, chief executive at Terra Nutritech, about the future growth plans for the business.
  • Title: CEO.
  • Company: Terra Nutritech.
  • Location: Athy, Co Kildare.
  • Founded: 2012.
  • What does Terra Nutritech do?

    We’ve developed a system which regulates and accurately measures the dosage of minerals into a water system for animals on a farm, be that pig, poultry or cattle farms. Our system is a plug-and-play model where you simply connect the technology into the existing water infrastructure on the farm.

    How did you develop the technology?

    In our previous business, my brother Tom and I were laying pipes on farms. Farmers kept asking us did we have a way to accurately measure mineral rates in the water. Enough farmers were asking us about it that we could see there was clearly a market for this type of technology. We looked around in New Zealand and Australia to see if there was a product we could import and distribute here in Ireland. But we didn’t see anything that was good enough so we developed our own system.

    We really bootstrapped along the way but we’re now self-funding our expansion

    How has the business grown since?

    In the first three months, we installed our new system on three farms in Ireland just to ensure the product worked. Since we first started in 2012, we’ve doubled the size of the business every year. We really bootstrapped along the way but we’re now self-funding our expansion. In the last two years, we’ve invested over €1m in new offices and a manufacturing site. Having outsourced our IT and software development at the start, we’ve now brought all that expertise in-house.

    Where do you see the opportunities for the company?

    When we were exhibiting at the Eurotier trade show this year, roughly two-thirds of the enquiries we got were potential customers asking if our system could be used in pig and poultry systems. The focus on antimicrobial resistance (AMR) is huge right now and farmers have to be way more targeted in their antibiotic usage. Farming is becoming all about precision. So we think poultry will be really big for us in the years ahead.

    These companies have spent millions developing really good products to boost animal gut health but none of them really thought about how the farmer would administer these products

    How are farmers responding to AMR?

    Effectively what pig and poultry farmers are doing now is using acidifiers to get the gut health right in animals. If you get that gut health right you can really reduce antibiotics usage. We talk to all the mineral companies who supply these acidifiers. These companies have spent millions developing really good products to boost animal gut health but none of them really thought about how the farmer would administer these products at the correct dosage. That’s where our technology comes in to regulate the mineral dosage accurately in the water system.

    Your system collects a lot of data on herds. What has stood out to you in this data?

    The standout for me in all the data we’re collecting is that nobody in this country had any idea how much water a cow drinks. Everyone was quoting US figures that a cow drinks 120 litres of water per day. The reality is the cow drinks nowhere near this. During the drought last year was the first time I ever saw cows in Ireland get anywhere near drinking 100 litres of water per day. Typically, cows drink anywhere between 35 and 60 litres of water per day, depending on the diet and the time of year.

    Glenilen Farm sales to hit €5.7m in 2019
    The family owned dairy company has almost doubled sales in the last six years.

    Glenilen Farm, the family run dairy company based in west Cork, is forecasting sales of €5.7m for 2019.

    Since 2013, the company has almost doubled its sales from just over €3m – thanks to supply contracts with customers such as Tesco, Sainsbury’s, Waitrose and Aer Lingus.

    The company now employs 45 people at its dairy processing facility, which is located on the family farm in Drimoleague, Co Cork.

    Glenilen Farm was established in 1997 by Alan and Valerie Kingston on their 55ac family farm where they milk 60 cows.

    The family farm produces 30% of the milk used in Glenilen products, with the extra milk sourced from nearby Drinagh Co-op. The company produces a range of products, with yoghurts accounting for over 75% of sales (€4.3m), while desserts, butters and other dairy products make up the remaining 25% of turnover.

    The UK market accounts for 25% of Glenilen’s sales. Despite the uncertainties of Brexit, Alan Kingston says the company will continue to focus on the UK as a key market for the near-term.