Fast Food and Food-to-Go Dominate Irish Foodservice Market
04 Nov 2014 --- Bord Bia published a report on the Irish foodservice sector at its annual industry seminar in Dublin yesterday. The Foodservice Channel Insights Report reveals that the foodservice market has grown from €6.07 billion in 2013 to €6.13 billion this year, with growth forecasts to almost €6.5 billion by end 2017.
The report indicates the fact that Fast Food continues to dominate Irish foodservice channels and that diners’ expectations include health, entertainment and unique offerings when eating out, although price is still a key consideration. Over 200 Irish food suppliers and foodservice trade buyers gathered for Bord Bia’s seminar to hear speakers from TOPAZ, Pallas Foods and Compass Ireland and UK.
Speaking at today’s seminar, Bord Bia’s foodservice specialist, Maureen Gahan said, “The sector has continued to experience moderate improvements in 2014, with a positive outlook expected over the next few years. Growth in consumer spending is predicted to be up 1.9% on a compound annual growth basis through to 2017.” Optimistic indicators for the future of the foodservice market's performance lie in the rise in disposable income, increasing consumer confidence and greater tourist numbers. The report mentions that agreement by the Government to retain the 9% VAT rate for hospitality in this year’s budget will provide stability into 2015. With recent announcements by the likes of Subway, Caffé Nero and JD Wetherspoons to expand their operations in the Irish market, opportunities also exist for Irish food and drink suppliers that have the capacity to service these chains.
Demand for value and high quality casual dining, takeaway and food-to-go options is increasing and accounts for over a third of consumer spend (38%). Quick Service Restaurants (Fast Food) is the fastest growing channel, reflecting a growing consumer need for value, convenience and customisation. Rising consumer expectations around home delivery, mobile technology and snack-sized meals are also driving changes in this channel. A focus on “snackable” menu items and small plates is emerging, along with the need for alternative, portable food-to offerings and these product trends should be monitored by suppliers as a source of innovation ideas for concept development work, according to the report.
Addressing delegates at the seminar, Ms. Gahan commented, “Despite a period of sharp decline, foodservice in Ireland now offers major opportunities for suppliers offering innovative products and solutions to meet changing consumer needs. With certain channels growing at faster rates than others, it’s important for suppliers to analyse their business in terms of where opportunities exist with key trading partners. It’s also important to understand what operators are most positively impacted by the rebound in tourism spend.”
Commenting on the main consumer trends affecting food establishments, Ms Gahan stated “Social media has had a significant impact in terms of directing consumers to new outlets and engaging them in special promotions and events. Food “theatre” is of growing importance and places new demands on chefs to display their culinary skills through front-of-house exhibition cooking. Health will continue to be a key driver with consumers increasingly seeking out smaller portions of food and healthy alternatives when eating out.”
Other trends highlighted in the in-depth report into the “out of home” food and drink market include:
• Health and Wellness continues to experience growing consumer demand, with notable moves towards increased nutritional information on menus. From 13th December 2014, EU legislation will require detailed allergen information on all food products including nutritional information and allergen listing. The onus will rest on caterers to ensure that details relevant to food allergies or intolerances are passed on to their customers. Food and drink companies will be required to help consumers make the right choices for their health and nutrition whilst offering simple convenient solutions.
• Value is still dominant and opportunities exist for producers engaging in lean, efficient production and delivering foodservice innovation. As consumer prices have remained relatively stable over recent years, operators have been required to increase their level of innovation to manage costs and attract customers.
• The origin of food and drink products is identified as a driving trend within the trade. To the extent that a “local” or “made in Ireland” positioning can be used, it can provide a meaningful point of differentiation. With growing interest in ingredients, manufacturers need to be completely transparent about labelling, nutritional and sourcing information declarations.
• While traditional menu options remain important to core foodservice offerings, consumer interest in ethnic cuisine is growing and is opening up new opportunities for outlets to broaden their menus and restaurant offerings. Manufacturers can develop closer ties with operators by working collaboratively to understand and respond to these emerging needs.
Quick Serve Restaurants or Fast Food remains the largest Irish foodservice channel demonstrating how lower spend per transaction is motivating consumer’s choice of venue. Although the decline in the number of Pubs in Ireland has been well documented, this channel still accounts for a quarter (25%) of consumer spend, demonstrating that improved food offering in pubs has gained traction with consumers. Full Service restaurants account for 11% of consumer spend, with Hotels at 6% and Business and Industry at 4.6%.
The Coffee Shops channel accounts for 5.6% of market value and is continuing to capture sales, with compound growth rate of 2.5% forecast over the next three years. An affordable luxury that has shown resilience through recessionary times, foodservice operators recognise that coffee can act as a major footfall driver and that getting the offer right is all important. Coffee shops with extensive food items on offer can contribute significantly to revenue performance. Leisure and Travel, Education, the Defence Forces and the Prison Service account for the remaining market share.
Bord Bia also published its Irish Foodservice Market Directory 2014 today, which includes detailed profiles of over 100 operators and wholesale distributors. It is aimed at providing companies with key background information on potential customers and advice on how to drive their foodservice business. Bord Bia’s Ireland Market Foodservice Programme will continue into next year, assisting suppliers develop relationships with foodservice distributors and operators. Bord Bia works closely with an average of 20 companies each year on its Irish Foodservice Supplier Development Programmes, delivering new foodservice business on the domestic market of circa €2 million annually.
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