This week, our data spotlight takes in the UK markets for infant formula and tinned tomatoes, Ireland’s dairy exports, inflation in Hungary and PepsiCo’s sales in Europe in light of its pricing row with retail giant Carrefour.
Ireland dairy exports revenues slide in 2023
The value of Ireland’s food and drink exports value dropped 4% in 2023 amid pressure on dairy sales.
Sales of the country’s food, drink and horticulture products stood at €16.3bn ($17.9m) last year.
While sales from prepared consumer foods, meat and livestock rose, the country saw its dairy exports curdle, according to data unveiled on Wednesday (10 January) by Charlie McConalogue, Ireland’s Minister for Agriculture, Food and the Marine.
Export revenues from dairy, a sector that accounts for 40% of Ireland’s food and drink exports, dropped 8% to €6.3bn.
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Butter and cheese each account for 21% of Ireland’s dairy exports but the products recorded very different performances in 2023. Butter exports slid 8%, hit by trading down in Germany and falling consumption in the UK. However, cheese sales grew 4%, helped by rising sales in the UK and a recovery in sales in the Middle East and north Africa.
Reflecting on the overall decline in export revenues from dairy, Bord Bia, Ireland’s state agency promoting food and drinks, pointed to falling prices from spring onwards. “
The dairy market showed more positive sentiment in the final quarter of the year which indicates some positivity heading into 2024,” Bord Bia said in its export report.
PepsiCo’s spat with Carrefour rumbles on
The tussle between Carrefour and PepsiCo continued this week, with the retailer also pulling the food-and-bev giant’s products in markets outside France.
Investors will be watching the situation closely, ahead of the publication of PepsiCo’s 2023 financial results on 9 February when the financial community will get its chance to quiz the US giant on the impact of the boycott on its numbers.
The consequences of the spat won't be felt until PepsiCo announces its Q1 2024 numbers in the spring but Europe forms a sizeable percentage of the company's sales and earnings.
In the US heavyweight’s 2022 fiscal year, the region contributed $12.7bn in revenue to the group total of $86.3bn, according to the company’s annual report for those 12 months. The contribution in Europe was equally split 50-50 between beverages and “convenient foods”.
Carrefour is boycotting PepsiCo snacks and drinks in its latest effort to bring down prices.
France kicked off the boycott campaign on 4 January and was then joined by Carrefour stores in Spain, Italy, Belgium and – this week – by Poland. The France-headquartered supermarket giant has put up banners in the outlets saying “we no longer sell this brand due to an unacceptable price increase”.
Europe is PepsiCo’s largest geographical market in terms of revenues, taking in brands such as Lay’s and Doritos snacks to 7Up and Pepsi beverages.
Growing UK infant-formula market in the spotlight
The market power of infant-formula manufacturers operating in the UK has come to the fore in recent weeks.
Prices of infant formula are under scrutiny in the wake of the UK’s Competition and Market Authority (CMA) revealing in November that manufacturers had raised prices by 25% over the past two years. The CMA noted that 85% of the baby-formula market is dominated by two companies.
Danone said in a statement that it acknowledged the challenges faced by parents due to high prices.
It wrote: “During this difficult period, we have worked very hard to absorb the significant cost increases we have faced, make savings, and minimise any price increases.”
According to GlobalData, Just Food's parent company, the category has seen continued growth in the UK
In November, the CMA said baby-formula is vulnerable to higher-than-inflation price rises because parents are wary of brand-switching and only Aldi, the discount retailer, provides its own-label alternative.
Families could make savings of £500 in the first year of a baby's life on formula milk products by buying cheaper baby formula options, the CMA added.
Italy's Mutti targets UK sales growth
In an interview with Just Food this week, the head of Mutti's new UK subsidiary said the Italy-based tomato-products group is aiming for 30% sales growth in the country this year.
Mutti has just set up a new subsidiary in the UK and Dhiresh Hirani, who will head up the unit for the UK and Ireland as managing director, said the company's current focus is on accelerating growth in ambient tomatoes and pasta sauces, with options for ketchup, ready-made sauces and soups further down the line.
The UK subsidiary launches this month – Mutti’s sixth – but there are no plans for a manufacturing base. Products will still be imported from Italy and RH Amar will be retained for the logistics and warehousing functions and select sales operations.
Sales for 2023 are expected to come in at around €20m ($21.8m), covering both retail and foodservice, in a market that Mutti first entered with a “soft launch” in 2015 through its distributor and sales agent RH Amar.
Mutti currently holds an 8% share of the UK ambient tomatoes market at retail, where the company has listings with all the major supermarket chains. It kicked off in the UK with Ocado in 2019.
Retail dominates Mutti’s sales in the UK with the out-of-home channel expected to generate €4m in sales, or about 20% of the group total in the country, Hirani said.
“Foodservice is really gaining momentum,” he added, noting Mutti’s UK focus for now is on “brand building” and increasing distribution in ambient tomatoes and pasta sauce at the retail level before introducing other products from Italy.
Hungary to bring in ‘shrinkflation’ price warnings
One of the issues that’s attracted headlines in France in recent months – shrinkflation – has also come to the fore in Hungary, where the country’s government is to require food retailers to label items to indicate instances of the practice.
According to a statement from the country’s government, food retailers with a sales revenue larger than Ft1bn ($2.9m) will be obliged to display warnings on products that have shrunk in size while their prices have been maintained or increased. Manufacturers will have to inform retailers of any changes in product size.
The scheme is scheduled to be implemented in the first half of February.
Hungary’s food consumer price index hit a peak in December 2022 but the rate of price increases has eased in recent months. Food prices are still rising year on year; in December, the index stood at 104.8.