Let’s take three examples of Irish business success – Kingspan, Applegreen and Kerry Group. In each case, leadership and ambition eclipsed the disadvantages and challenges they faced as relatively small and financially stretched enterprises. Instead of laying out a litany of reasons why they could not succeed, each instead dreamt about and executed great plans. Rather than pointing out the hurdles that explained why progress was impossible, they navigated a route over them all. At the end of each journey lies a success of significant note.

At its simplest, a €10,000 investment in Kingspan shares in 1989 is worth €2.1m today. A €10,000 investment in Kerry Group shares in 1986 is valued at €1.6m presently. And finally Applegreen, the business with two petrol stations and a loan in 1992 is today a portfolio of over 400 forecourt retail outlets in Ireland, the UK and the US. Moreover, all three have become major employers offering opportunity for many Irish men and women working in Ireland and across the globe.

Kerry is the most glaring example in the food industry of success but there are others too. History shows us that Irish food companies and co-operatives are capable of reaching great heights but it also reveals some uncomfortable truths. Despite much fanfare, there is little factual evidence that much of the food produced in Ireland creates equity value. By that, I mean has it delivered a return on invested capital that consistently exceeds the cost of that capital? If above one the answer is yes, but more often it is stuck submerged below one. And this helps explain why large flows of international investment capital are not enamoured by large swathes of the Irish dairy and meat industries.

It also explains why much of the artisan Irish food sector is comprised of relatively small businesses that have struggled to scale or internationalise.

The great challenge is to find and develop food businesses that can create equity value over an extended time period.

We have to ask some hard questions about why this is a problem. Is the food industry too fragmented, or under-capitalised, or over-politicised? There are reasons to believe all three.

The dairy sector continues, in my view, to carry on its back too many individual co-operatives to be optimally efficient. The plethora of co-operatives and private-owned family-dominated companies, in respectively the dairy and meat sectors, suggests a weak equity base which, in turn, constrains risk investments. The political agendas, both at farmer and national level, often collide with the commercial interests of the sector. All of these issues need some reflection if ambitions are to be raised to another level.

Six themes that hold the keys to success or failure for Irish food:

  • A retailing and distribution revolution. The retail landscape is fast changing as traditional big-box stores give way to localised, smaller outlets, home delivery, self-service and online retailing. This is creating enormous pressure on traditional retailers, while opening up new retail and distribution business models as customers for food producers.
  • The production of sustainable, safe and inexpensive food is a mega trend picking up speed. Authentic, organic, animal welfare proven foods produced without artificial additives or preservatives are the go-to attributes. All of this, though, has to arrive at price points akin to those produced in the past because choice and online comparison platforms undercut any additional cost levers.
  • The absolute growth in demand for food, driven by fast-growing populations, will continue. Moreover, the most rapid growth is surfacing in developing economies where demand for international cuisines are mushrooming. Healthier populations in economies that are growing richer lift absolute demand for food.
  • Technology changes in the production of food are promising to disrupt traditional methods. Finite water and land resources are making entrepeneurs develop systems that produce food without soil and limited amounts of water. The evolution of high-power, inexpensive mobile devices is delivering food choices and delivery options unimaginable 10 years ago. Many of these are nascent presently but will accelerate as technology advances.
  • The rapid onset of functional foods will create billionaires in the food industry. Those who tap a combination of safe and proven pharmaceutical applications with tasty food solutions that help improve health and extend lives will win big with an aging but growing population. Big data processing and the human genome project point to a break-out in discoveries and inventions that will provide defensive foods for healthy consumers and foods that attack illness and disease in unhealthy consumers via pleasant eating experiences. In many ways this could be a nirvana for the food industry.
  • An explosion in food tourism. Recent surveys show that global tourism is expanding rapidly but is also changing its profile. Within the mass numbers involved in a fast-growing cohort are well-heeled food tourists seeking authentic foods and eating experiences. If there ever was a mega trend made for Ireland, surely this is it. We have the legacy, heritage, artisan food producers, award-winning restaurants and gastro pubs, and a sophisticated tourism infrastructure in place to leverage that.
  • In summary

    If we had a magic wand to wave over Irish food, here are five radical ideas worth exploring that set a course of action that can exploit these opportunities.

  • Collapse the dairy industry into two, large farmer-controlled co-operative processors while releasing Ornua as a free-standing food company whose shares create value via international development as a food distributor.
  • Isolate €2bn from the strategic investment fund (ISIF) for equity investment, matching third-party funds in publicly listed Irish companies that establish global R&D and product development centres in Ireland.
  • Create an extension of the enterprise securities market on the Irish Stock Exchange that channels Enterprise Ireland support, alongside tax-efficient investment behind small and medium-sized high-growth food companies
  • Establish in Ireland an annual high-profile global food investor summit that connects the leading minds in finance with the leaders of global food to network and strike financing deals while debating the industry’s future.
  • Encourage the meat industry to inject a significant amount of equity to reposition as global high-margin protein businesses.