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October 11, 2021

IRISH INDEPENDENT: Cost of ‘practically everything’ rising Inflation, Brexit fallout and changed shopping habits are squeezing margins at East Coast Bakehouse, says managing director Sean Murphy
April 27, 2021 Profiles and Interview

Link to original article: https://www.independent.ie/business/brexit/cost-of-practically-everything-rising-40359452.html

Cost of ‘practically everything’ rising

Inflation, Brexit fallout and changed shopping habits are squeezing margins at East Coast Bakehouse, says managing director Sean Murphy

Irish Independent

The combined effects of Brexit and the pandemic are driving up costs and hitting margins, according to the managing director of biscuit maker East Coast Bakehouse, Sean Murphy.

“We have inflation on practically everything we use at the moment, which is obviously squeezing our margins and [we are] having some difficult conversations with customers,” said Mr Murphy.

Located in Drogheda, Co Louth, 30pc of the biscuits and cookies it produces are for its own brand. The remaining 70pc of its produce is sold as private label to grocery retailers.

Its customers include supermarket giants Lidl, SuperValu, and Dunnes Stores.

At the start of the pandemic, the company benefitted as shoppers engaged in panic buying of groceries.

However, by the middle of 2020 “we found it quite difficult to engage buyers and get them to take on new business”, Mr Murphy said.

“Our business relies on growth and therefore the delay of getting that new business made it quite difficult for us in terms of getting growth into the business and getting ourselves to a more financially secure place.”

Towards the end of last year things improved, as businesses and consumers became used to life under Covid restrictions.

“We have seen buyers and other brand owners be a lot more open and engaged as they look to grow their own businesses… across quarter four last year and into this year a lot more new business has come onboard and [there has been] a big step up in terms of discussions with potential customers,” he said.

Meanwhile, Brexit has hit the price competitiveness of Irish producers versus UK rivals and disrupted supply chains.

When the UK voted to leave the European Union in 2016, East Coast Bakehouse’s factory was being commissioned.

“This plant was designed to primarily service [the] UK and Ireland, and of course the pound went from being 75-80 pence to the euro to 90 or 95 or almost parity, so our competitiveness was significantly disrupted.”

Agreement on trade between the UK and the EU was reached at the end of last year.

Since then the pound has started to strengthen against the euro, which has been good for Irish companies that do business in the UK.

Nonetheless, Mr Murphy says the increase in the value of the British pound “needs to go a long way yet”.

In terms of sending produce to the UK, the company was well-prepared and has “not had any significant disruption of goods going into the UK”, according to Mr Murphy, however, he says it is “more challenging”.

A bigger issue has come from getting raw materials into Ireland.

“European suppliers, I don’t think really understood that a landbridge was going to be an issue and they were sending products via the UK still,” Mr Murphy said.

“We had one case where one of our nuts deliveries was tied up in Dublin Port for three weeks because the right documentation wasn’t in place, and that product had come out of Europe. And some of the UK suppliers really didn’t know what documentation was required.”

So far this year, the company has had “a lot more engagement” from retailers around the possibility of East Coast Bakehouse supplying supermarkets with more products.

“We have got a couple of live conversations at the moment, that’s us contract manufacturing their brand. That, I believe, is driven by simplifying supply chains…the likes of Tesco are looking at bringing more of their private label [production] onto the island of Ireland to simplify their supply chains, which is a good opportunity for us,” Mr Murphy said.

Meanwhile, just over a quarter of small and medium businesses (SMEs) in the food sector here say the UK remains their most important market.

Research from Love Irish Food and PwC found almost 70pc of food SMEs say the Republic remains their most important territory for growth.

Of 68 firms surveyed, 24pc said that more than one-fifth of their company’s revenues this year will come from trade with the UK compared to 19pc in 2019.

Sean Murphy says East Coast Bakehouse has “a really positive pipeline”.

“We are in a much better position than we were this time last year. There are two drivers of that, one is we have improved our own capabilities and the second is now the new world is a lot more obvious to people, everyone is starting to refocus on driving growth.”
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IRISH EXAMINER: RAY RYAN: Farm to festive fork — why it’s so important to keep it local this Christmas
December 14, 2020 Profiles and Interview

A Festive Food Heroes campaign by Agri Aware highlights the work of farmers in producing the food that we all enjoy this festive season

SUN, 13 DEC, 2020 – 14:58

RAY RYAN

AN explosion in online shopping has led to a big increase in delivery van traffic across rural as well as urban Ireland.

Rural roads have never seen since such activity since the days of the Circuit of Ireland motor rally and the Rás Tailteann and other cycle races which brought cavalcades of service trucks, vans, motor bikes, and cars through remote places.

Christmas shopping is being done in a different landscape this year due to Covid-19 restrictions with a greater emphasis than ever on buying local whether in store or online.

The food chain from farm to fork is among the sectors which has responded in style to the growing demands of consumers.

With the mere click of a mouse, or a simple telephone call, people can order their food, groceries, and other products from the comfort of their own homes.
They can also be assured of prompt deliveries to their front door due to the increasing use of individual postcodes or even avail of click and collect services.

The food chain includes those who are in farming and fishing, those who process and market the products, drivers who deliver to shops and supermarkets and staff who stock shelves and operate counter and checkout services.

All links in the chain, which also includes butcher’s shops, have helped to maintain food supplies during the public health restrictions and are continuing to provide valuable services as they adapt to Christmas 2020 after ten challenging months.

A Festive Food Heroes campaign just launched by Agri Aware aims to show the work of farmers in producing the food that is eaten and enjoyed by millions of people at Christmas.

It involves farmers explaining to consumers how they look after their animals and crops to the highest standards all year round to ensure families can enjoy fresh and sustainable Irish produce.

Agri Aware chairman Alan Jagoe said this year more than ever, it is important that consumers buy Irish locally produced food and realise that farmers are the backbone behind the food eaten at Christmas.

Minister of State Pippa Hackett, who visited vegetable growers in north County Dublin, last week to coincide with the campaign launch, urged consumers to consider their responsibilities as well as their options when it comes to choosing their vegetables.

“This is not just about the excellent quality of the Irish root vegetables which are available.

It is also about sustainability.

“I believe that as consumers we all have a responsibility to buy local so that unnecessary food miles, which are a significant factor contributing to climate change, can be eliminated,” she said.

Ms Hackett, who has responsibility for horticulture in the Department of Agriculture, Food and Marine, outlined the range of vegetables available.

“While vegetables such as cauliflower and cabbage thrive all year, this is also the season for root vegetables.

“Fresh Irish carrots, parsnips, turnips, onions, swedes, sprouts, cauliflower and broccoli all are both delicious and versatile, and can make up a wide range of dishes,” she said.
It’s been a difficult year for the foodservice industry.
According to Bord Bia, it has been a difficult year for the Irish food service industry which is expected to lose over €4bn in consumer spending, a 47% drop.

However, it predicts that, even in a worst-case scenario, there will be some bounce back next year in market recovery.

The sector covers everything from pubs, restaurants, cafes, and hotels to catering services offered in institutional settings such as workplaces, hospitals, and educational institutions.

Bord Bia chief executive Tara McCarthy said despite 2020 being a tough time for many in the sector, there were also amazing examples of resilience in the face of adversity.

Some of these were shared with almost 500 delegates at its virtual food service seminar broadcast from the RDS last month.

They included a restaurant chain driving increased sales through off premises activity and ‘cloud’ kitchens, a city centre-based salad bar partnering with a suburban coffee shop to reach customers working from home and a handmade dessert producer that developed a direct-to-consumer channel.

“These are just some examples of the grit and determination that the Irish food and drink industry continues to display and ultimately a testament to those that rise to ongoing challenges day in, day out.”

Good Food Ireland founder and chief executive Margaret Jeffares also stressed recently that choosing to buy local is needed now more than ever.

“If 2020, has shown us anything it is the strong sense of solidarity that the public feels for our local hotels, restaurants, food shops, cafes, food and drink producers and other local businesses within our towns and villages,” she said.

She added that Good Food Ireland members are committed to sourcing ingredients locally in support of local farmers, food producers and fishermen, ensuring local jobs and businesses continue to remain viable.

Love Irish Food executive director Kieran Rumley said Covid-19 has been an unprecedented challenge to the sector.
Farmers need our support now more than ever.
As a material contributor to the local and national economies, it faces significant uncertainty, He said Irish food brands are increasingly being supported by shoppers, but Brexit will bring further complexity to an industry already over-burdened by the Covid-19 fallout.

Love Irish Food has called on shoppers to increase their support for locally produced food brands to ensure a strong, vibrant, and independent supply to supermarket shelves at a vital point in our economic history.

As the Christmas shopping spree intensifies, Taoiseach Micheál Martin has urged people to shop local and safely this Christmas.

Tánaiste Leo Varadkar, noting that small businesses employ over one million people and are a crucial part of the economy, said: “I hope we can all get behind them this Christmas.”

There are already signs that those appeals are having an impact. Recent research by Visa showed that shoppers are keen to repay local businesses for their work during lockdown, including the delivery of essential food and other items to vulnerable customers.

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