Google to buy Tesco’s customer analytics company?
US tech giant Google is reported to be considering a bid for Tesco’s customer analytics company Dunnhumby.

After the disastrous year that was 2014 for Tesco, when the retailer reported an annual loss of £6.4bn (€8.9bn), new chief executive, Dave Lewis, has been looking at every option as he tries to turn the business around.

In the aftermath of Tesco’s annual loss, the biggest in its near 100 year history, Lewis announced that he would be reviewing all costs in the business in a bid to clean up the balance sheet and reduce debts of more than £21.7bn.

The group quickly sold off its Blinkbox business, an online streaming service for movies, music and books, before it also offloaded Tesco Broadband.

At the same time, Lewis announced that he was appointing advisers to consider the options for selling Tesco’s customer analytics business, Dunnhumby.

In April 2015, Tesco cleared the way for the sale of Dunnhumby with up to 40 possible suitors, including private equity-led consortiums, showing an interest in the business. However, it is now believed that the US tech giant Google is on the verge of making a serious bid for the analytics company.

A longlist of 10 parties has been drawn up by Tesco, all of which will be invited to make a bid for Dunnhumby by the end of July.

Google is reported to be on this longlist and is in talks with British private equity group, Permira, about making a combined bid for Dunnhumby. Analysts estimate the business is worth up to £2bn (€2.8bn).

Big Data

Tesco acquired the Dunnhumby business in 2004 and it has been hugely successful for it, gathering and analysing data from almost 1bn shoppers around the world. The data is generated from Tesco's Clubcard loyalty scheme and is hugely valuable.

Major food and drinks companies like Coca-Cola, Unilever and Nestle, are all willing to pay Tesco for access to the data and the consumer insight and shopping habits it provides. In the UK alone, there are a staggering 56 million Clubcards in circulation.

Global report: stories from around the world
A weekly selection of global news stories that affect demand, supply and prices.

Chinese soya bean imports for the 2018 calendar year stood at 88m tonnes, which was an 8% decline compared with the previous year.

China’s agriculture ministry also announced it expects Chinese soya bean consumption to fall 3% in 2019 to just under 103m tonnes.

A weaker than expected harvest has seen CONAB, the Brazilian ag research firm, lower its forecast for Brazil’s 2019 soya bean crop to 119m tonnes.

The group has forecast Brazil’s 2019 maize crop at 91m tonnes, compared with the 82m tonne maize harvest in 2018.

German milk production for November stood at 2.4bn litres, which was a 1.3% decline compared with the same month the previous year.

Cumulative German milk production for the first 11 months of 2018 (Jan to Nov) stands at 28.8bn litres, which is up 2% on 2017 production.

The Canadian agriculture ministry has estimated the country’s rapeseed harvest at 20.3m tonnes, which is down from the 21.3m tonnes harvested in 2017.

The country’s maize (corn) harvest has been forecast at 13.9m tonnes for 2018, despite harvest delays due to snow.

20 minutes with Ciaran Gallagher, Bord Bia
Phelim O’Neill speaks to Ciaran Gallagher, Bord Bia market director for Japan, Korea and Southeast Asia, on the opportunities for Irish meat in these new markets.

What is your role within Bord Bia?

I’m based in Singapore as Southeast Asia market director for Bord Bia and am looking after eight markets in the region.

Some of these are real giants in terms of the size of their economies and populations such as Japan, Korea and Singapore but also the fast emerging markets of Indonesia, Malaysia, Philippines, Thailand and Vietnam.

Is demand for meat growing in these regions?

Looking at this region as a whole the demand for meat is growing across the entire species range.

Meat imports for beef meat, pigmeat and sheep meat are all on the rise into these markets as consumer demand grows.

For the Irish meat industry, these are markets where Irish companies will be doing a lot more business in the years ahead.

Are Irish meat companies doing business in all of these markets?

A lot of the markets where we can do business is defined by where Ireland has market access.

Where we don’t have access, Bord Bia is working closely with the Department of Agriculture to advance market access for Irish food exports.

Where we can do business already Bord Bia has established a market prioritisation programme to look at where the big market opportunities are for Irish meat.

Do you believe Irish meat companies will start to have a very significant presence in Asian markets in the years ahead?

Absolutely. We already have a significant presence in many of these markets.

If you take the likes of Japan, it’s a huge market for Irish pigmeat for years and has been growing for the Irish beef trade in more recent years.

To date, the beef from Ireland going to the Japanese market has mostly been for offal and tongue cuts.

Those cuts are a speciality or a delicacy in those markets.

How will the EU-Japan trade deal impact?

The EU-Japan economic partnership is due to be ratified and we will start to see Japanese tariffs on products such as beef and pork exports from Europe coming down very soon.

So that will open up even more opportunities for Ireland in the near future.

Markets such as South Korea, Vietnam and Indonesia are real powerhouses in that part of the world.

Ireland has been doing some business in these markets but can we do more?

Absolutely. But the first thing we need to do is understand the consumer better in these markets.

We work very hard in Bord Bia to identify the market insights in these countries and highlight the opportunities for Irish farmers and the meat industry.

Then the key next step is building up awareness of Ireland and Irish food on the ground in these markets.

So we take a market by market approach to identify what’s most effective.

'Brexit won’t lead to empty UK supermarket shelves'- McCarthy
Tara McCarthy, CEO of Bord Bia, believes Irish food and drink products will still be listed on UK supermarket shelves post Brexit. Eoin Lowry reports.

“Our strategy since the Brexit vote has been to maintain and defend the UK market,” says Bord Bia CEO Tara McCarthy, commenting on the performance of Irish food and drink exports to the UK last year.

She added that the industry has to remain committed to the UK market.

With food and drink exports to the UK up by almost €100m (2%) last year to reach €4.5bn, it suggests Irish food exporters continue to depend on the UK market for a large proportion of their exports.

Overall, the UK now makes up 37% of all Ireland’s food and drink exports.

The main driver of this growth into the UK last year has been dairy (up 6%) and beef (up 4%), which make up 60% of exports to the UK.

The increase in dairy to the UK was mainly formed by large increases in the amount of liquid milk and cream being processed in Northern Ireland and significant rise in the volume of powders.

We cannot turn our back on the UK market

Cheese exports to the UK, which takes half of all our cheese exports, were back 9% in 2018.

This is mainly as a result of Irish processors ageing cheeses in Ireland to help hedge currency concerns. On the beef side, exports to the UK increased 4% to reach €1.3bn due to lower local supplies in the UK.

“We cannot turn our back on the UK market,” she says. “If we are looking to protect returns to the farmer, the UK remains the best returning market of scale, particularly in beef.”

Asked if she is worried about the impact of a no-deal Brexit on farmers, she said: “I am concerned for the supply chain from farmers to processors to logistics.”

She adds: “If this happens, beef and horticulture, and particularly mushrooms, will be most affected.”

“These categories have the least choice to diversify – a dairy processor has options, a beef processor does not.”

So does this mean Irish beef will not be on shelves in the UK after 31 March?

“Post-Brexit, UK supermarket shelves will not be flooded by Brazilian beef,” states McCarthy. She doesn’t see how the UK supermarkets will delist products.

“Supermarket buyers do not want empty shelves – this is a lost profit opportunity,” she adds.

The supermarkets use beef to drive footfall. Bord Bia has held meetings with the CEOs of all the major food retailers and she says they are now mitigating their risk of a UK crash out of the EU.

The retailers are building up stocks locally in the UK and are demanding the brand holders do the same.

This is to provide some level of comfort in the worst-case scenario.

She adds that the retailers won’t risk their brand and lose footfall with a food product or supply chain that they do not trust.

She says they have not conducted any modelling or scenario planning in terms of demand for product in the case of a hard Brexit with WTO tariffs which can add as much as 50% on top of the price of certain foods.

Global context

“Globally, 2018 can be described as a year of instability,” says McCarthy, as she sets the context in which exports of Irish food and drink had to perform last year. She said trade disputes such as the one between the two largest economies (China and the US) had significant knock-on effects for international trade.

She adds that trade disagreements between the US and the EU early last year could have escalated to a situation where further disruption was caused.

Not to mention the ongoing negotiations between the UK and the EU and the volatility in the sterling exchange rate.

She said these challenges had a significant impact on Irish food and drink exports, resulting in a decline in beef prices and the commodity price of butter in the latter half of 2018.

Overall, she is satisfied with the performance given the global context. While export values are back 4% to €12.1bn, she says that over the last eight years, exports have grown by almost €5bn or 64%.

International markets have been responsible for the majority of this growth, driven by Asia, North America and Africa. In 2010, some €1.8bn was exported to countries outside the EU. Last year, that reached €3.5bn.

But she says two drivers dragged exports by 12% to international markets last year.

She explains there was a change in transfer pricing for infant formula by one multinational during the year along with a decline of powdered food preparation to the US.

She said that despite this value loss, which is mainly on paper, volumes have held.

She said that exports to the EU have also performed well given that it is a mature market, with the Netherlands, Italy and Spain driving the growth mainly across three categories – butter, beef and enriched dairy powders.

Overall, she believes Irish food companies have done as much as they can do in the context of the information that is available to them.

She concluded: “The industry is resilient, the structure is strong and global demand is positive.” And she reiterated the importance of continuing to open up new markets to develop markets outside the EU.