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EU Agri-food Exports Start 2017 at High Level

The monthly value of EU agri-food exports in January 2017 reached a level of €10.3 billion, which is almost €1 billion higher than in January 2016, according to the latest agri-food trade report. USA remains the most important destination for EU agri-food exports with the highest increases in monthly export values (January 2017 compared to January 2016) being recorded for that country (€+206 million) followed by China(€+120 million).

The highest increases in monthly export values were achieved for wine (€+127 million), pork (€+112 million) and spirits and liqueurs (€+83 million). EU agri-food exports to Russia increased in value by 3.6%. Thus, Russia remains on rank number 5 of EU export destinations for agri-food products, behind the USA, China, Switzerland and Japan.

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HARIBO Group to Build Manufacturing Plant in the US

HARIBO Group, the German confectionery manufacturer, is planning to build its first manufacturing facility in the United States of America. The world market leader in the fruit gum and liquorice segment, HARIBO is a family company which is now run by the third generation. It currently operates 16 production facilities throughout Europe, and employs nearly 7,000 people world-wide.

“The decision to build a manufacturing facility in Wisconsin is of great importance for the HARIBO Group,” says Hans Guido Riegel, managing partner of the HARIBO Group. “HARIBO of America is the fastest growing sugar confectionery business in the USA, hence the strategic importance of our manufacturing facility to commence production in 2020.”

“HARIBO has already been in the process of selecting a location for a first manufacturing facility in the USA for several years. In an elaborate process, we have examined many different sites. We are very excited to announce this important decision,” states Rick LaBerge, executive vice president and chief operating officer at HARIBO of America.

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Scottish Food & Drink Industry Aims to Double Size to £30 Billion By 2030

A new, ambitious strategy to drive growth in Scotland’s farming, fishing, food and drink industry has been unveiled by industry body, Scotland Food & Drink. Food and drink has been Scotland’s best performing sector in recent years, with record export figures and sales at home increasing rapidly too.

The sector is worth £14.4 billion annually, 119,000 people are working directly in the industry and food manufacturing in Scotland is growing at twice the rate of the UK average for the sector.

The new strategy, ‘Ambition 2030’, establishes a vision to cement food and drink as Scotland’s most valuable industry, with the opportunity to more than double turnover in the sector to reach £30 billion by 2030.

The strategy has been developed by the Scotland Food & Drink Partnership, an industry-led partnership of the main organisations in the farming, fishing, food and drink sector, alongside The Scottish Government and its key agencies.

The industry’s focus will be on building Scotland’s national brand as a Land of Food and Drink and driving sales within Scotland, across the rest of the UK and globally. To unlock the £30 billion potential of the industry, the strategy focuses on three areas:

  1. People and Skills: raising attractiveness of the industry as a career destination and investing in the existing workforce.
  2. Supply Chain: ensuring farmers, fishermen, manufacturers and buyers work in closer partnership, to ensure greater profitability is shared across the industry.
  3. Innovation: embracing a new culture of developing new products and processes to drive growth.

In addition, the industry has made a renewed commitment to responsible growth, committing to deliver broader benefits to the country beyond just sales growth. This includes an offer of a new partnership with Government and its agencies to drive improvements in Scotland’s health and wellbeing and to commit again to embracing world-leading standards of environmental sustainability.

The 2030 strategy identifies collaboration as the most important ingredient in the sector’s success to date with plans to deepen joint-working between the industry, government and its agencies in the coming years, as well as to make support easier to access for businesses.

James Withers, Scotland Food & Drink Chief Executive, says: “Ten years ago, when the Scotland Food & Drink Partnership was formed, our sector was relatively static. It is now one of the country’s best performing industries and it’s our fastest growing export sector.”

He continues: “As an industry, we have identified an opportunity to more than double the size of our sector to £30 billion by 2030, making it Scotland’s most valuable industry. A huge amount of work is required to unlock that potential and it will not come easily. There is uncertainty ahead, with Brexit in the forefront of everybody’s mind. Whilst big political upheavals are out of the industry’s control, we can control how we develop the Scottish brand, the markets we want to sell to and the investments we make in improving skills, innovation and supply chains.”

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The Coca-Cola Company Unveils Senior Leadership Appointments

The Coca-Cola Company has announced a number of senior leadership appointments to drive its ongoing transformation into a growth-oriented, consumer-centered, total beverage company.  Key changes, which will be effective when President and COO James Quincey becomes Chief Executive Officer on May 1, include:

* Combining Global Marketing, Customer and Commercial Leadership, and Strategy into one combined function under the leadership of a new Chief Growth Officer to drive growth across five strategic beverage categories.

* Appointing a Chief Innovation Officer to elevate Global Research & Development into a standalone innovation function reporting directly to the CEO. This represents the increased importance of innovation to the company’s growth plans.

* Positioning the Information Technology function as a direct report to the CEO given the importance of digitization as a growth enabler for the company’s business.

* Combining key global transactional and expertise services into an expanded and reconstituted Integrated Services organization that will primarily focus on financial, procurement and associate shared services.

James Quincey comments: “We are moving quickly to structure our organization for faster growth and to ensure we can respond to the fast-changing needs of our consumers, customers, system and associates around the world.”

The changes support work already under way to create a leaner, more agile corporate organization that is focused on strategy, governance and vital strategic initiatives, such as innovation and portfolio growth through leading brands and categories. They also follow changes made by James Quincey to the company’s international operations leadership team last year.

Leaders assuming new or expanded responsibility in the organization and reporting directly to Quincey, effective May 1, include:

Francisco Crespo, who currently serves as President of the Mexico business unit, will fill the newly created role of Chief Growth Officer.  A 28-year company veteran, Crespo will lead the company’s global marketing, corporate strategy, and customer and commercial leadership teams to create a consolidated team with a clear mandate for driving global growth. This role will lead the evolving category cluster model focused around five beverage categories: sparkling, juice/dairy/plant-based, tea and coffee, water and enhanced waters and energy.

Robert Long, currently Vice President, Research and Development, will become a direct report to the CEO as Chief Innovation Officer. This move is indicative of Coca-Cola’s increased focus on accelerating the growth of its consumer-centric brand portfolio with hundreds of new products and continued innovation in beverages, packaging, ingredients and other areas of the business around the world.

Barry Simpson, currently Senior Vice President and Chief Information Officer, will remain in his role but be elevated as a direct report to the CEO to increase visibility and focus on efforts to digitize all aspects of the company’s business.

Kathy Waller, currently Executive Vice President and Chief Financial Officer, will assume expanded responsibility for the company’s strategic governance areas as Executive Vice President, Chief Financial Officer and President, Enabling Services.

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A Record Brewing Year For Adnams

Adnams has reported a record brewing year for 2016 with volumes passing the 100,000 barrels mark for the first time in the English regional brewer’s history. Overall turnover for the year to 31 December 2016 was also a record high at £70.3 million – up 7% on 2015 – and operating profits were £3.94 million. The operating result was 3.8% behind the previous year, adversely impacted by the fall in Sterling in the second half of the year. Adnams has substantial Euro and US Dollar costs relating to wine and hop purchases.

Profit before tax at £5.02 million was 23% ahead of 2015 driven mainly by the profit made on the sale of the UK distribution rights for Lagunitas beer. The sale took place at the half year, and second half operating profits were consequently reduced.

Jonathan Adnams OBE, chairman of Adnams, comments: “Adnams saw strong growth in the volumes that it brewed and distilled in 2016. Brewery sales volumes rose by 9% and distillery volumes by 66%. A record level for both parts of the business. Whilst the depreciation of sterling depressed profits, underlying trading was good with our shops trading well. We continue to innovate and invest in the long-term future of our company.”

He continues: “We have witnessed some substantial changes in our business over a short period as beer consumers have changed where they buy and what they buy. The long-term shift towards beer being bought from supermarkets and other shops, with less being sold in pubs, has continued and the taste for high quality products from small producers has also grown. We have been closely watching these trends and adapting our business accordingly.”

Although Adnams remains committed to being a major cask ale producer, it was the sale of beer in kegs, bottles and cans that drove increased production in 2016. Adnams is making new investments in its brewery including extensions and improvements that will increase beer conditioning and filtration capacity, enhanced cooling and an automated kegging line. Entailing investment of £7 million, the brewery project will be complete by the middle of 2017.

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Bord Bia’s ‘Brexit Barometer’ to Measure Impact on Irish Food Exporters

A dedicated team of Bord Bia food, drink and horticulture specialists will embark on a ‘Brexit Roadshow’ over the coming weeks visiting more than 150 Irish exporters nationwide. Following Theresa May’s announcement to trigger Article 50 on March 29th, this timely initiative will see fourteen Bord Bia sector managers travel across the country to conduct face to face in-depth analyses of the likely impact of Brexit on individual businesses. The Minister for Agriculture, Food and the Marine Michael Creed TD launched ‘Bord Bia’s Brexit Barometer’, a new interactive analytical tool which will be used at each consultation to help companies identify and assess their unique Brexit requirements, risks and opportunities.

Developed by Bord Bia in conjunction with PwC Ireland, the Brexit Barometer includes 100 questions across six specific risk areas – Routes to Market, Customs and Tax, Supply Chain, Trade, Currency and Human Resources. With the support of an onsite Bord Bia specialist, the senior management team of each participating company will be requested to come together as a group to collectively discuss each of the areas and potential scenarios. As a company progresses through the Barometer, traffic light system feedback will be given at each stage, red representing highest risks, vulnerability and areas that need to be addressed. While Bord Bia expects the industry will be keen to engage, the organization is initially targeting companies with the highest dependency on the UK market. In 2016, Ireland exported €4.1 billion worth of food, drink and horticulture products to the UK market, representing 37% of our total exports. In particular, 54% of Irish meat and livestock exports and 90% of horticultural and cereal exports are destined for the UK.

Tara McCarthy, Chief Executive Bord Bia says that Bord Bia’s bespoke approach was necessary as: “We know Brexit will affect every sector and every company in a different way. Detailed feedback from our pilot ‘Brexit Baromoter’ programme, combined with extensive ongoing dialogue with our client companies, has provided Bord Bia with a unique insight into the industry’s concerns. It is with this insight in mind that we developed the this tool to urge exporters conduct a comprehensive cross-functional analysis of all potential scenarios. The impacts of Brexit will reach into almost every aspect of our food, drink and horticulture businesses and we are aware there is no one solution that fits all and it is one the responsibility of any one person or department.”

She adds: “To help futureproof a business, it is critical for companies to discuss exactly how each risk or challenge will impact the various divisions from finance and distribution to human resources and innovation. We want companies to engage at the highest level for their own benefit but also because the data we collect will be central to Bord Bia’s Brexit strategy hereon, including a review and realignment of all our programmes, initiatives and resources. We want to deliver data-driven supports to the industry.”

In addition to the Barometer, Bord Bia’s recently launched Brexit initiatives include a number of Consumer and Market Insight studies across South East Asia, Africa, UK & Continental Europe; a new Market Placement Programme which will see additional Bord Bia staff working for key customers of Irish exporters on an internship basis; a full review of Bord Bia resources in an effort to ensure the impact is more acute than ever; a significantly increased participation in international Trade Fairs (one every fortnight in 2017) and increased number of Trade Missions and export market visits with a stronger focus on business conversion and some €650,000 additional funding has been allocated for marketing grants to help companies affected by Brexit. The organisation has also undertaken a comprehensive Sectoral Analysis to examine the challenges faced by each product and sector and appointed a dedicated Brexit Manager Shane Hamill who based in the UK and supported by a wider Bord Bia Brexit working group, chaired by Tara McCarthy.

For more information about the Brexit Barometer or the seminar, visit www.bordbia.ie/brexit

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Bonduelle Completes $409 Million US Acquisition

Bonduelle, the world leader in ready-to-eat vegetables, present in canned, frozen, fresh cut and delicatessen, has completed its $409 million acquisition of Ready Pac Foods, the US-based producer of convenience fresh meal solutions, salads and fresh cut produce. Having established a national presence and wide customer base in the US, Ready Pac Foods operates four production facilities and has annual revenues of about $800 million. Ready Pac Foods is the US market leader in single serve salad bowls.

The purchase price represents a multiple of about 11 times the US company’s adjusted EBITDA estimated for financial year 2016-2017.

Bonduelle is a well-respected, family-owned company, with seven generations of the Bonduelle family involved since its founding in 1853. The French company owns four brands of canned, frozen and fresh vegetables with presence in 100 countries worldwide and has revenues of US$3 billion.

The acquisition of Ready Pac Foods makes the US Bonduelle’s largest country of operation and biggest division. This aligns with its strategic plan and will strengthen the brand’s leadership positions in its core business lines. These include development of Bonduelle’s business in the consumer convenience and healthy food segments, increasing presence in the fast growing fresh prepared segment and reinforcement of its footprint in North America.

“This milestone acquisition for Bonduelle is a key step toward achieving our strategic ambition –‘VegeGo! 2025’ – to become the world reference in well-living through vegetable products,” says Christophe Bonduelle, chairman and chief executive of Bonduelle. “This acquisition will strengthen Bonduelle’s international footprint and dramatically change our profile.”

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Acquisitions Boost Emmi

Acquisitions enabled Emmi, the Swiss dairy group, to achieve 1.4 % sales growth to SFr3.259 billion (€3.047 billion) in 2016. In organic terms (adjusted for currency and acquisition effects), sales declined by 1.0 %, which is at the lower end of the -1 % to +1 % range forecast in August 2016.

However, earnings increased more than sales. Earnings before interest and taxes (EBIT) rose by 7.3 % to SFr202.7 million. Net profit amounted to SFr140.3 million, 16.7 % higher than in the previous year, resulting in a net profit margin of 4.3 %, up from 3.7 % in 2015.

Emmi expects conditions to remain challenging in 2017, but nonetheless plans to achieve slightly higher sales and to stabilise its improved earning power.

Urs Riedener, chief executive of Emmi Group, comments: “Given the pressure on the Swiss business, this is a pleasing result. This success has been driven by further progress abroad, the geographical expansion of the Operational Excellence programme and the good performance of higher-margin brands. Switzerland remains at the heart of our strategy.”

Sales in the Switzerland business division fell by 2.9 % to SFr1.74 billion. This was the result of a price effect of -1.3 % and a volume effect of -1.6 %. The business division Switzerland accounted for 53 % of group sales in 2016, down from 56% in 2015.

The acquisitions that impacted favourably on Emmi’s overall results were:

* Purchase of the cheese business of JL Freeman (Canada, 15 April 2015);

* Acquisition of Redwood Hill (USA, 31 December 2015);

* 60 % stake in Bettinehoeve (Netherlands, 2 February 2016);

* Increased stake in SDA Chile (Chile, 19 May 2016);

* Acquisition of Cowgirl Creamery (USA, 31 May 2016).

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Fever-Tree Breaks Through £100 Million Revenue Barrier

Fever-Tree, the world’s leading supplier of premium carbonated mixers, increased revenue by 73% to £102.2 million for the year ended for 31 December 2016. The revenue growth achieved in 2016 was underpinned by improving margins, with a gross profit margin of 55.2% and adjusted EBITDA margin of 35.1%, resulting in adjusted EBITDA of £35.8 million generated in the year, growth of 97% on 2015. Fever-Tree ended the year with a robust balance sheet and net cash of £26.9 million, an increase of £15.3 million on the previous year.

Based in the UK, the brand was launched in 2005 to provide high quality mixers which could cater to the growing demand for premium spirits, in particular gin, but also increasingly for vodka, rum and whisky. The company now has distribution to over 50 countries worldwide. Approximately 56% of the group’s sales were derived from outside of the UK in financial year 2016, with key overseas markets in the US and Europe.

Tim Warrillow, chief executive of Fever-Tree, comments: “2016 has been another exceptional year of growth for Fever-Tree, with strong results achieved across all regions, channels and flavours, emphasising the global appeal of the Fever-Tree brand. As the pioneer and market leader of the premium mixer category, in both market share and reputation, our quality, award winning range of products continues to help drive the momentum towards premiumisation and simple long drink mixability that is transforming both the spirits and mixer categories worldwide.”

He adds; “We have had an encouraging start to 2017 and remain confident that we are increasingly well positioned to deliver further growth across the business.”

Manufacturing and distribution is completely outsourced, with the group responsible for arranging for the delivery of key ingredients, flavours, water, glass, cans and packaging to a manufacturer who then bottles or cans the final product from these component parts.

Fever-Tree’s primary bottling partner in the UK completed an investment in a new site in 2016 which will double capacity from 2017. In addition to this, Fever-Tree also uses a second UK bottler for contingency purposes, fills its 150ml cans with a Netherlands-based canner and continues to bottle locally in Germany with the reusable glass bottles required in that market. Therefore, Fever-Tree works with four different partners across three different countries to manufacture its products, which underlines the flexibility of the outsourced model and its ability to scale and fulfil the production demands generated by the group’s strong growth.

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Coca-Cola European Partners Benefits From Improved Platform For Growth

Coca-Cola European Partners, the world’s largest independent Coca-Cola bottler based on revenue, has reported a 12% increase in operating profit to €851 million on net revenue up by 44.5% to €9.1 billion for the year ended 31 December 2016, reflecting the inclusion of Germany and Iberia in 2016.

Created following last year’s merger of Coca-Cola Enterprises (CCE), Coca-Cola Iberian Partners (CCIP) and Germany-based Coca-Cola Erfrischungsgetranke (CCEG), Coca-Cola European Partners serves over 300 million consumers across Western Europe, including Andorra, Belgium, continental France, Germany, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain and Sweden. Subsequent to the close of the merger, CCEP acquired Vifilfell, the Icelandic Coca-Cola bottler.

Pro forma comparable operating profit for 2016 was €1.4 billion, up 1.0%, or up 5.0% on a pro forma comparable and fx-neutral basis. Full-year pro forma comparable revenue was €10.9 billion, down 1.5%, or up 1.0% on a pro forma comparable and fx-neutral basis. Revenue per unit case grew 0.5% on a pro forma comparable and fx-neutral basis. Volume increased 0.5% on a pro forma comparable basis.

Damian Gammell, chief executive of Coca-Cola European Partners.

“During 2016, we successfully brought together the businesses of Coca-Cola European Partners, while delivering our growth objectives for revenue, profit, and diluted earnings per share,” says Damian Gammell, chief executive of Coca-Cola European Partners. “This transaction, completed only 10 months ago, establishes an improved platform for growth as we diversify and increase our portfolio value, collaborate to win with our customers, and operate more efficiently, effectively, and locally to capture the market opportunities.”

“As we worked to integrate our business in 2016, our company remained focused on driving core revenue, operating profit, and improving profit margins,” he adds. “We believe the operating advantages of our new company, coupled with the skill and dedication of our people, will enable us to deliver consistent, value-building growth that creates benefits for our stakeholders and drives shareholder value.”

Coca-Cola European Partners remains on track to achieve pre-tax savings of €315 million to €340 million through synergies by mid-2019.

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94% of World’s 19,000+ Breweries are Craft

The craft beer revolution is taking hold in more countries across the globe. According to a new survey released by Alltech and The Brewers Journal, the number of breweries worldwide has surpassed 19,000, representing 209 countries and territories surveyed. Some 17,732, or 94 percent, of these breweries can be defined as craft beer producers. For the purpose of the survey, a craft brewery is defined as having fewer than 30 staff or producing less than 5,000 hectolitres per year or more than 50 percent of the brewery being privately owned.

The craft beer movement has created a global surge in the number of new breweries opening, with the US and the UK alone seeing a greater than 10 percent increase in the number of craft breweries year-on-year. This has drastically changed the fonts and fridges in pubs and bars on every continent. The thrill of innovation, experimentation and community engagement is creating a new market for brewers and retailers.

The largest craft beer producer remains the U.S. with 4,750 craft breweries out of a total of 5,025 breweries. However, the U.K. has the most craft breweries per capita with 25 breweries per million people, compared with 15 in the U.S. and 16 in Germany.

“The U.S. and the U.K. fermented their lead in craft beer production as a result of legislation that paved the way for craft brewers,” says Tim Sheahan, editor of The Brewers Journal. “In the US, the pivotal point was in 1978, when President Jimmy Carter allowed home brewing for the first time since Prohibition. The UK’s watershed moment came in 2002 with Prime Minister Gordon Brown’s progressive beer duty legislation, which reduced beer duty to nil for breweries producing less than 5,000 hectolitres.”

Although the US is recognised as the originator of the recent craft beer movement and has heavily influenced the modern take on traditional styles, there are more craft breweries in Europe than North America. The top 10 craft beer-producing countries are the US, the UK, Germany, Italy, Spain, France, Canada, the Netherlands, Switzerland and Australia.

The global momentum behind the craft beer craze has led Alltech, an international company with a brewing and distilling division renowned for its Kentucky Bourbon Barrel Ale®, to leverage its worldwide presence and create opportunities for craft brewers to network and showcase their creations.

Alltech hosts multiple beer festivals around the globe, the largest of which is the Alltech Craft Brews & Food Fair in Dublin, Ireland. Now in its fifth year, the event featured 38 breweries from five countries and attracted more than 7,000 attendees. The event has since been replicated in other Alltech locations, including Kentucky, Canada, Brazil and China.

“It is great to see so many different brews being developed for these festivals. In Ireland, we found that the majority of seasonals were launched for the first time at the Alltech Craft Brews & Food Fair,” says Gearoid Cahill, European director of brewing science, Alltech. “There is a real spirit of collaboration among craft brewers, and, for consumers, the opportunity to meet their favourite master brewer face to face offers a memorable experience.”

For more information on the Alltech Craft Brews & Food Fair, visit http://eu.alltechbrewsandfood.com/

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Record Year For Scottish Food and Drink Exports

Food and drink exports from Scotland grew by £421 million in 2016, to a record £5.5 billion. The latest figures show an 8% increase in the value of exports to Scotland’s successful food and drink sector over the past year.

The figures also show that food exports alone grew by 22% to £1.5 billion. The fish and seafood category recorded the largest overall increase of £156 million (up 26%), with Europe the leading export destination. Exports to EU countries were worth £2.3 billion overall, up £133 million last year.

Scotch whisky exports grew by £153 million (up 4%) to over £4 billion in 2016.

These figures come ahead of the launch of the new industry strategy, which will outline plans to support and grow the sector to 2030.

James Withers, Chief Executive of Scotland Food & Drink, says: “The latest export figures are fantastic news and a new high for Scottish food and drink. This industry is Scotland’s fastest growing major sector. Yet we have huge ambitions to grow further. We are clear we want to internationalise our food industry, following in the footsteps of our greatest export, Scotch whisky. We have now doubled food exports since 2007, transforming the level of trade in growing markets like Asia. That is crucial to extend our footprint beyond just Europe which is still the destination for over 70% of our food exports.”

James Withers adds: “The game changer has been developing a national brand for Scottish produce in export markets, with industry and government working hand in hand to invest in overseas trade experts and activity.  If we now further deepen that work, this success story has much further to go.”

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EU Support Scheme Helps to Reduce Milk Production

Nearly 44,000 farmers from across the EU have applied for support from the EU for agreeing to voluntarily reduce their production of milk by nearly 852,000t in the last quarter of 2016. This EU milk production reduction scheme, launched last summer and financed with €150 million, was one of the flagship measures decided by the European Commission to face the milk crisis. It contributed to the rising trend in EU milk prices over the last few months, balancing the markets.

Agriculture Commissioner Phil Hogan comments: “The European Union continues to strongly support dairy farmers in good times and bad. When I took office in 2014, Europe was entering a profound and lasting dairy price crisis. We saw the storm clouds coming. And we took decisive action at every stage of the crisis, exhausting every legislative tool at our disposal. The voluntary reduction production scheme is a measure which had never been done before, but which has been a clear success. There has been a slow but unmistakeable price recovery, with the milk market witnessing a rising trend for a number of months. EU average farm gate milk prices have increased by 31% since last summer, up to 33.7 c/kg in February. Is this a perfect recovery? Of course not. But is it evidence that things are moving in the right direction? I would say yes.”

According to the final figures received by Member States for the first reduction period (October to December 2016), 43,968 milk producers reached a total production reduction of 851,700 tonnes of milk. The scheme’s wide take-up and the ensuing price recovery show that it responded both to farmers’ expectations and to market needs.

The money not used as part of the €150 million set aside for the scheme will remain available for agricultural expenditure and will finance other market measures that may prove necessary in the agricultural sector.

The final figures of the second reduction period (November 2016 to January 2017) will be known at the beginning of April and will provide the full overview of this exceptional, one off scheme launched by the European Commission.

Under the scheme, farmers receive 14 euro cents for every kilogramme of milk production they agree to reduce. Each Member States could decide to top up that amount with EU funds distributed as national envelopes for extra support by the European Commission in July 2016. Farmers are paid on the basis of the actual reduction in production and not the planned amount applied for, based on proof of the actual reduction provided to their national authority.

The voluntary milk production reduction scheme was one of the several tools deployed by the European Commission to support farmers facing the crisis that hit the sector. In total, more than €1 billion has been mobilised since September 2015 in the form of market measures like public intervention and private storage for dairy products and other exceptional measures.

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Ferrero International to Acquire US Chocolate Confectionery Manufacturer

Ferrero International, the Italian confectionery group, has agreed to acquire Fannie May Confections Brands, a US premium chocolate confectionery manufacturer of the Fannie May and Harry London brands, from 1-800-FLOWERS.COM. Additionally, Ferrero will enter into a strategic commercial partnership agreement, to be signed on or before the transaction close, to include selected Ferrero and Fannie May products in 1-800-Flowers gift baskets, towers and on e-commerce sites.

Ferrero and Fannie May share long histories and strong track records of growing premium confectionery brands with loyal followings.

Fannie May is a manufacturer of premium chocolates and confections and was founded in 1920 in Chicago, Illinois. Over nearly 100 years, the company has grown into one of the most well-known and loved premium confectionery brands in the Midwestern United States. Currently owned by 1-800-Flowers, a multi-brand provider of gourmet and floral gifts, Fannie May’s primary distribution channels include online – leveraging 1-800-Flowers.com’s e-commerce platform – telephone, QVC home shopping channel, a network of 80 retail stores operated by Fannie May, conventional retail, and private label/contract manufacturing activities. The company operates a production facility in Ohio and distribution centers in Ohio and Illinois, and employs 750 people full-time, with additional seasonal hires.

Founded in 1946, Ferrero is the third-largest company in the global chocolate confectionery market, with global sales expected to exceed $11 billion this year, distribution across over 160 countries, and a workforce of more than 30,000 people across 53 countries. Ferrero entered the U.S. in 1969 with Tic Tac® breath mints, which have become an icon in the U.S. breath mint market. The company subsequently introduced Ferrero Rocher® pralines and Nutella® hazelnut spread.

Giovanni Ferrero, chief executive of the Ferrero Group, comments: “Fannie May represents a strong strategic and cultural fit for Ferrero and we are happy that Fannie May’s talented people, premium brand and quality products will become part of the Ferrero Group. The US is an important growth market for Ferrero and we are excited about the opportunity to support and grow a great American brand as we continue to expand our presence in the U.S.”

Following the transaction close, Fannie May will operate as a stand-alone entity and brand within the Ferrero Group, with support from Ferrero USA. as needed. Ferrero plans to maintain Fannie May’s plant in Ohio, as well as its distribution centers in Ohio and Illinois. Ferrero will continue to operate a network of Fannie May retail stores, with plans to grow the network over time. Ferrero intends to work with the existing Fannie May management team on a go-forward basis.

Ferrero will maintain its US headquarters in Parsippany, New Jersey and its assembly and packaging facility in Somerset, New Jersey.

The transaction is subject to customary closing conditions and regulatory approvals, and is expected to close by the end of May.

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Good Progress By Refresco

Refresco, the European soft drinks and fruit juices group, has reported a 4.5% rise in 2016 revenue to €2.107 billion as volume increased by 6% to 6.46 billion litres and adjusted EBITDA advanced 2.7% to €222 million and adjusted net profit by 11.1% to €86 million.

On a like-for-like basis total volume decreased by 2.1%. Volume growth in the Benelux was mainly driven by the acquisition of DIS, significant volume increase in the UK related to the new carbonated soft drinks line which started production this year and in Germany and Poland the effect of the discontinued low margin-large volume private label contracts continued.

In the full year, Co-Packing volume amounted to 1.731 billion litres, an increase of 49.0% compared to 2015. On a like-for-like basis, Co-Packing reported in 2016 high single digit volume growth of 8.3%. As a percentage of total volume, Co-Packing increased from 19.1% in 2015 to 26.8% in 2016, which is in line with Refresco’s strategic focus of growing Co-Packing volume faster than Private Label. In the full year, Private Label volume decreased 4.1% to 4.732 billion litres.

Hans Roelofs, chief executive of Refresco, comments: “Looking back on the 2016 results and our strategic objectives, we are pleased to report good progress. Our strategy to grow rapidly the Co-Packing business is contributing very positively to volume development. With many branded players looking for international partners like Refresco, we expect this part of our business to continue to grow at a rapid pace.”

He elaborates: “We made strong progress on our buy & build strategy, strengthening our position in Europe with the acquisition of DIS. A major highlight of the year was undoubtedly the acquisition of Whitlock Packaging with which we took our first step into the US market. Integration of this business is now underway and proceeding smoothly. Buy & build remains an important focus for us and we see ample opportunities for consolidation – in Europe and the US – going forward.”

For the full year total capital expenditure spending was €88 million – up from €81 million in 2015. Capex was invested in the installation of six new production lines and in the optimization of the existing manufacturing sites and warehousing facilities.

Hans Roelofs adds: “In our operations we continued to invest in new bottling lines and warehousing facilities across the business, expanding further our capabilities especially in Aseptic PET. The expansion of our customer offering is an important driver of organic growth, which remains our top priority.”

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Brexit Upheaval Demands EU State Aid Exemptions For Ireland

Food and Drink Industry Ireland (FDII), the Ibec group, has said the increased likelihood of a hard and disruptive Brexit, and a fracture of the single market demands a series of exceptions from EU state aid rules for the Irish agri-food and drink sector. In a new report, which sets out the case for exceptional support, FDII calls on the Government and the European Commission to put in place a comprehensive package to protect viable businesses and jobs during a potentially fraught Brexit process.

FDII Director Paul Kelly says: “The Irish agri-food and drink sector is uniquely exposed. There is a compelling case for exceptional state aid support to minimise the economic fallout and job losses. Already the currency squeeze is putting intense strain on exporters. This pressure is likely to intensify as the challenges and economic costs of a hard Brexit crystalise. The hardening of EU and UK negotiating positions mean we must plan for a very difficult Brexit process and the high possibility of a divisive outcome.”

The report proposes that state aid support should be targeted across three distinct areas:

* Enterprise stabilisation: Short term measures to allow the Irish Government to introduce enterprise stabilisation measures, as happened in 2009 during the economic crisis;

* Investment in competitiveness: Medium term measures to allow the Irish Government to introduce investment aids to support Irish food and drink companies invest in enabling technology, plant renewal and expansion, refinancing, market development and innovation to regain competitiveness following single market fracture;

* Diversification: Trade related measures, include export financing and export credit guarantees, to support the continued development of international export markets.

Paul Kelly.

To justify the exemptions under existing European legislation, the report sets out the unique position and exposure of the food and drink industry. The report highlights:

* Irish food and drink exports are more exposed to the UK than any other European sector across a large number of categories; typically four to six times more exposed than the average EU country.

* The extensive regional footprint of the food and drink sector, including regions which are economically disadvantaged relative to the EU average, means it is directly linked to the performance of the whole economy.

* Food and drink manufacturing accounts for half of direct expenditure by the entire manufacturing sector in the Irish economy (payroll, Irish materials and Irish services).

* The sector provides the exclusive outlet for much of farmer/SME produce, providing extensive added value and is thus crucially important to farm incomes.

“The industry is deeply integrated into the wider economy and its broad geographic footprint means the regions are particularly exposed to any shock to the sector. In the short term, the objective must be to put in place mitigating measures to help companies manage their businesses through on-going currency shifts and during exit negotiations. The medium term focus must be on maintaining markets in the UK, developing other markets and ensuring that in the domestic market, companies remain competitive against imports and the threat of cross-border shopping,” concludes Paul Kelly.

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A Third of All British Drinkers Have Reduced or Limited Their Alcohol Intake

While the majority of British adults enjoy a tipple, it seems today’s consumers are taking a more conservative approach towards their alcohol consumption. Indeed, new research from Mintel reveals that as many as one third (32%) of all Brits have reduced or limited their alcohol intake over the past 12 months* in comparison to what they would usually consume. What is more, half (51%) of the nation’s beer, wine and cider drinkers say they are drinking less alcohol than a few years ago, confirming Brits are actively moderating their drinking habits.

While many glasses may now be half empty, it is economical factors which are encouraging consumers to cut back. Over two in four (44%) Brits who have reduced their alcohol have done so in order to save money, while 41% of those choosing to limit alcohol intake have done so to lose or avoid gaining weight. Improving personal health (39%) is also a notable trigger for cutting down and a further 30% have cut-back to reduce the risk of disease. Additionally, some 14% of all those who have cut back on alcohol have done so because they are worried about becoming dependent on alcohol and the same proportion (14%) have cut back to stay within current NHS and government guidelines.

The consumers most likely to have cut back at some point are those aged 25-34 (35%) and 35-44 (36%); meanwhile, geographically this peaks at 41% in the North East and dips to 27% in the South East/East Anglia.

Today, one fifth (19%) of adults report they do not drink alcohol, with a slightly higher proportion of women (22%) than men (17%) being teetotal.

Richard Caines, Senior Food & Drink Analyst at Mintel, comments: “As many as a third of all Brits have limited or reduced their alcohol consumption at some point in the last year. While this includes consumers cutting back for shorter and longer periods of time, it is a strong indicator that steps to moderate alcohol consumption are now widespread. Reducing alcohol consumption to save money reflects the discretionary nature of drinks and how they can add significantly to outgoings.”

The fact that Brits are reducing the amount of alcohol they drink presents a significant opportunity for low-alcohol and alcohol-free beers, ciders and wines. Today, lower-alcohol beer, cider or wine is drunk by around one quarter (23%) of alcohol drinkers, while overall, just 14% of Brits drink non-alcoholic or alcohol-free beer, cider or wine. Usage of lower-alcohol drinks is higher among men (26%) and significantly above average for 18-34-year-olds (41%).

Pubs and bars are proving popular venues for low alcohol brands, as a night out (26%) and a casual drink at the pub (22%) are when low-alcohol drinks most appeal to consumers if they are limiting or reducing their alcohol intake.

A taste more like standard-strength equivalents would sway nearly three in 10 drinkers (28%) to consume low-alcohol or alcohol-free versions of alcoholic drinks. However, overall, soft drinks are more popular than low-alcohol, alcohol-free versions of alcoholic drinks for all occasions. For current alcohol drinkers, 41% say that if they were limiting the amount of alcohol they were drinking when having a casual drink at the pub then they’d pick a soft drink, compared to 29% who would pick a low-alcohol or non-alcoholic version of an alcoholic drink.

“Replicating the taste of standard-strength alcoholic drinks and changing perceptions remains a key challenge for low-alcohol and alcohol-free manufacturers. Alcohol-free versions of alcoholic drink brands also need to look at the reasons why consumers are limiting or reducing their alcohol intake in order to increase their appeal as an alternative to standard-strength alcoholic drinks. This includes offering bigger savings to those looking to save money, as well as prominently highlighting lower calorie content compared to standard-strength equivalents to those looking to better manage their weight and improve their health,” Richard Caines adds.

Finally, Mintel research reveals that weekly alcohol limits are a mystery for most Brits. Introduced in January, new guidelines on alcohol advise men and women to drink no more than 14 units of alcohol per week on a regular basis. However, when asked how many units of alcohol per week the current NHS and government guidelines advise for men and women, Mintel research indicates that only one in 10 (10%) adults correctly stated the 14 units a week recommended and more than four in 10 (42%) admitted that they didn’t know.

“While consumers are aware of the health dangers from drinking too much alcohol, few are clear on the limits advised in the new guidelines to keep health risks low. Low-alcohol drinks brands could benefit from driving awareness of these limits and what the number of units in individual drinks means in terms of their contribution to that weekly guidance. Doing so could help to encourage more switching over to low-alcohol products from higher-alcohol drinks,” Richard Caines concludes.

*12 months to November 2016

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New £38 Million Roastery Fires Costa Growth Plans

Costa, the UK coffee brand, has commenced production at its new £38 million roastery, signalling a major milestone in the business’ expansion to serve an increasingly global customer base. The £38 million new facility has more than quadrupled Costa’s roasting capacity from 11,000 tonnes of coffee per annum to 45,000 tonnes per annum, providing the platform for its national and global growth plans.

Rapid growth in the UK and internationally has driven up demand for Costa’s famous coffee. The new roastery is a response to that demand and will provide the infrastructure for sustained global expansion.

Construction started in November 2015 on a specially chosen site in Basildon, Essex close to Tilbury Docks where its raw coffee beans are imported. Named Paradise Street, the new facility is one of Europe’s biggest coffee roasting facilities and covers 85,690 sq ft and will enable Costa to produce coffee for 2.1 billion cups of coffee per year. It is expected to operate for the next 20-30 years.

Dominic Paul, Managing Director of Costa, says: “Costa is growing rapidly as a global business and our new roastery will provide the platform for sustained international expansion as we continue inspiring the world to love great coffee. Turning on our new roasting capacity is a landmark for the business. It’s a statement of our ambition to grow and our passion for great coffee.”

He adds: “Roasting here in Basildon keeps the UK at the centre of our growing global brand and enables us to build on everything we have learned from more than four decades of roasting in Lambeth. Today is about quality, capacity, investing in the future and being true to our heritage – it’s about embracing our traditions whilst continuing to innovate and drive global growth.”

The new roastery is carefully designed to improve efficiency. Green coffee beans from Rainforest Alliance certified growers are shipped from coffee producing countries to Tilbury Docks just 14 miles from the roastery – this is half the distance to the old Lambeth roastery meaning fewer road miles and much improved supply chain efficiency.

Once the beans arrive, new production methods now allow the receipt and storage of 24 tonnes of green coffee per hour – up from 6 tonnes at Lambeth. Whilst roasting that coffee, state-of-the-art in-house processes will increase productivity by 25 per cent compared to the previous roastery.

The new roastery also includes a new coffee academy to train 3,000 baristi per year, putting investment in people alongside investment in great coffee. Expert barista service is central to the Costa brand and customer experience.

Paradise Street will also be one of the most sustainable industrial buildings in the world and will operate on a zero waste-to-landfill basis. On-site renewable energy generation will further reduce the building’s carbon footprint, with the roof hosting a 249kw solar PV system which will provide power for the roastery. In tandem with the rainwater harvesting system, this will also generate hot water for the building.

Already achieving BREEAM Outstanding (to latest standards) during its design stage assessment, the roastery is also shortlisted for the 2017 BREEAM Awards and aiming to receive a further ‘Outstanding’ certification at the final stage assessment.

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Danish Crown Sells American Business to JBS

Danish Crown has signed an agreement to sell its American subsidiary Plumrose USA for DKr1.6 billion (€215 million) to Brazil-based JBS, which is the world’s largest meat-processing company. The sale is in line with the 4WD strategy, under which Danish Crown has decided to focus its business on Northern Europe and Asia.

“The focus of Danish Crown’s 4WD strategy is to lead our home markets in Northern Europe, to further grow our positions in Asia and to expand our leading position in casings globally,” says Jais Valeur, group chief executive of Danish Crown. “We have therefore decided to sell Plumrose USA. I am certain that JBS, with its wide presence and access to raw materials in North America, is a perfect match for Plumrose USA and will help fortify its business for the benefit of many loyal customers.”

For more than 80 years, Plumrose USA has supplied consumers across the USA. In 1932, the company started production of sliced cooked ham, and over the years it has developed into a company offering a wide selection of products including premium bacons, packaged deli meats, quality deli counter hams, cooked ribs and canned hams.

“Plumrose USA is a highly respected business with an outstanding professional team, a strong portfolio of branded cooked and prepared foods, and first-class, well-invested assets in strategic geographic locations that complement our current business structure,” says Andre Nogueira, chief executive of JBS USA Food Company.

Jais Valeur.

Four months ago, Danish Crown launched its ambitious 4WD strategy with the predominant aim of growing its four home markets in Denmark, Sweden, Poland and the UK. The strategy includes plans to expand exports to Asia in general, and to establish a production facility in China based on Danish pork. Also, Danish Crown is focused on achieving global leadership in selected categories.

“Selling Plumrose USA is a step forward in achieving the long-term goals of the 4WD strategy. We have strengthened our financial capacity quite substantially. This gives us extensive room for manoeuvre and for taking part in what I would call a necessary consolidation of the food sector in our four home markets,” says Jais Valeur.

In the most recent financial year, Plumrose USA posted revenue of DKr3.4 billion. The company manages five plants and two distribution centres with 1,200 employees across the USA. The sale of Plumrose USA to JBS is contingent on approval by the US competition authorities.

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Green Light For Bath Ales Investment

St Austell Brewery, the English regional brewer, has unveiled its ambitious plans for its Bath Ales business with a multi-million pound investment. The investment in a state-of-the-art new brewery – which is set to double the available brewing capacity – will put Bath Ales on the map as having some of the most sophisticated and technologically-advanced brewing and packaging facilities in the South West.

Following the acquisition of the fellow South West brewer and pub company in July last year, the investment forms part of St Austell Brewery’s exciting growth plans for Bath Ales.

James Staughton, chief executive of St Austell Brewery, says: “When we announced the coming together of St Austell Brewery and Bath Ales we committed to a long-term significant investment in the brands, pub estate, people and the brewing facilities. The creation of a new brew house will ensure we’re able to offer even more of what Bath Ales’ customers know and love.”

Once complete there will be a total brewing capacity of up to 50,000 brewers’ barrels which equates to more than 14.5 million pints. New bottling and canning facilities will also form part of future expansion plans.

The new-look brewery will be versatile and give Bath Ales the opportunity to create new beer styles in cask, keg and bottles. The plans include a lauter tun, which for the first time will give Bath Ales the capability to brew traditional continental style lagers alongside its much-loved range of premium ales.

Musk Engineering has been selected to build the new brewery at the existing headquarters in Warmley, between Bath and Bristol. The leading British company will be tasked with the fitting and installation of the new four-vessel brew house at the newly titled ‘Hare Brewery’.

Work on the Hare Brewery will get underway in September and it’s expected it will be complete by Spring 2018.

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Dunnes Stores Remains Ireland’s Largest Grocer For a Second Month

For the first time Dunnes Stores has held its position as Ireland’s largest grocer for two consecutive months. This is according to the latest supermarket share figures from Kantar Worldpanel in Ireland, for the 12 weeks ending 26 February 2017.

David Berry, director at Kantar Worldpanel, explains: “Dunnes’ shoppers are adding more to their baskets, helping the retailer to maintain the title of Ireland’s largest supermarket this month. The grocer’s “Shop & Save” initiative is continuing to influence customers, with the average basket featuring an extra one and a half items – an additional €3 per trip and €25 million for the retailer in the past 12 weeks.”

Sales at Dunnes grew by 4.6% and the retailer increased its market share to 22.9%, up from 22.5% last year.

David Berry, director at Kantar Worldpanel.

David Berry continues: “SuperValu remains hot on the heels of Dunnes, with a 22.6% share of the market. The retailer also managed to convince shoppers to splash a little more cash. The average customer spent over €1 more per trip, causing sales to grow by 0.5% amounting to an extra €3 million for the grocer.

“With Supervalu planning to open three new stores and refurbish a host of others, the retailer will be expecting to experience a boost in sales later in the year.”

Following three months of steady growth, Tesco sales dropped by 1.0% as eleven days of staff strikes led to disruption for the retailer. Despite the industrial action only affecting eight stores there has been a clear impact on the retailer’s performance, with market share falling by 0.9 percentage points to 21.7%.

Aldi’s and Lidl’s success is continuing, with sales rising by 5.3% and 4.1% respectively. Over the past twelve weeks Aldi managed to attract an additional 20,000 customers into its stores, while also encouraging them to visit more frequently. Lidl’s uplift in sales enabled the retailer to increase its share of the market to 10.6%.

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Maison Ferrand Makes First Distillery Acquisition Outside France

French spirits distiller Maison Ferrand has acquired the West Indies Rum Distillery in Barbados which has produced rum continually since the 19th century. Maison Ferrand is the owner of the Plantation rum brand with global distribution in 68 countries. The company produces Cognac and gin at its facility in Cognac, France and the purchase of West Indies Rum Distillery (WIRD) marks the first distillery acquisition outside of France. The acquisition signifies Maison Ferrand’s long term commitment to the quality production of Plantation rum.

Plantation Rum was first introduced in 2003 with the desire to bring rum to the same quality standards of the best Cognacs. Since then Maison Ferrand has been selecting, aging and blending rum from the best Caribbean distilleries for its award-winning Plantation Rum expressions. Barbados is the historical birthplace of rum making and Barbadian rum has been the backbone of Plantation vintage editions as well as its special blends.

“We are production guys and having our own distillery in the Caribbean has been a dream for many years,” says Alexandre Gabriel, proprietor of Maison Ferrand. “It is like getting married, we wanted to find a great match, one for life and we have found it in West Indies Rum Distillery and the exceptional rum makers there. The team there is as passionate as we are and we can’t wait to start producing delicious rum together.”

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£1 Million Boost For Scottish Aquaculture Supply Chain Innovation

A £1 million pilot programme to boost innovation in aquaculture in the Highlands and Islands of Scotland is set to go ahead. Highlands and Islands Enterprise (HIE) has approved the funding package and will run the programme in conjunction with the Scottish Aquaculture Innovation Centre (SAIC).

The 30-month pilot is expected to attract a similar level of funding from the private sector. It is targeted at helping small to medium enterprises (SMEs) achieve greater commercialisation of new innovative products and services, which will have a positive and sustainable economic and social impact.

Projects supported will have clear commercial outcomes. Together they are expected to boost industry turnover in the region by around £8 million and create up to 50 jobs, including many in fragile areas.

Aquaculture is a priority sector for HIE and of growing importance to Scotland’s economy. It is estimated to contribute as much as £1.8 billion turnover a year to the Scottish economy and support around 8,000 jobs. The Aquaculture Growth Strategy 2030, ‘A Strategic Plan for Farming Scotland’s Seas’, states the industry has potential for this to increase to £3.6 billion and 18,000 jobs by 2030.

In the Highlands and Islands the sector is deemed crucial to rural economies. Rural Economy Secretary Fergus Ewing says: “Scotland’s aquaculture industry is a real pillar of our rural economy, particularly for the Highlands and Islands, and this Government is committed to working with partners across the sector to support continued sustainable growth. Maximising the opportunities that innovation can bring will be central in delivering the industry’s vision for the future of aquaculture. That is why it’s pleasing to see this collaborative programme come to fruition, which will provide a boost for the sector and support job creation.”

Charlotte Wright, HIE’s interim chief executive, says: “We anticipate significant investment in the years ahead from aquaculture firms operating in the region. It is important that we use public sector funding to support innovation in a way that benefits the whole sector, including firms in the supply chain. In turn this will support the sector’s growth as well as strengthen resilience of rural communities, particularly those in some of our most remote and fragile areas.”

Heather Jones, SAIC CEO, adds: “Through our extensive engagement with companies large and small across the supply chain, it became clear that SMEs in the HIE region would benefit from, and openly welcome, support to innovate and grow. To see those early discussions result in this new pilot scheme is a truly landmark moment and shows just how much can be achieved when different players unite over a shared goal.”

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Irish Grocery Spending Rises For Seventh Consecutive Quarter

The amount Irish consumers spent on everyday grocery items, such as food, drinks and toiletries, increased year-on-year for the seventh consecutive quarter, according to Nielsen retail performance data. The amount people spent on groceries increased +2.1% in Q4 2016 versus Q4 2015. The 2.1% rise was based on a 1.5% increase in the volume of groceries purchased and a 0.6% rise in the average prices paid.

The Irish market outperformed both Europe as a whole (1.8% rise) and the UK (0.7% rise).

Alongside this, consumer confidence in Ireland at the end of 2016 was at its highest level since the recession and is now the sixth most confident country in Europe, according to Nielsen’s latest Global Survey of Consumer Confidence and Spending Intentions.

The Republic of Ireland’s Consumer Confidence Index score – which measures attitudes each quarter on topics including personal finances and job prospects – hit 100 in the final two quarters of 2016, the first time it’s reached this mark in nine years (Q4 2007). A score over 100 indicates degrees of optimism, below 100, degrees of pessimism.

The latest quarterly study shows the proportion of Irish consumers:

* Who’ve switched to cheaper grocery brands to save money – an activity often regarded as a barometer of consumer sentiment and behaviour – hit its lowest level since the recession (32%)

* Who’ve changed spending habits to save money hit its lowest level since the recession (59%)

* Feeling positive about their personal finances and feeling now is a good time to make purchases stood at 52%

* Feeling positive about their job prospects hit its highest level since the recession (58%) –the third highest in Europe, behind the Czech Republic and Switzerland.

“Irish consumer confidence has been steadily rising for the last few years and has been stable enough to withstand recent unsettling events such as the UK Brexit and the US election,” says Matt Clark, Nielsen’s commercial director in Ireland. “Although we’re a long way from seeing a return to the days of the Celtic Tiger, this confidence has slowly been translating into increasing spend among consumers. A good barometer of this is year-on-year grocery spend rising for seven consecutive quarters plus the volume of groceries purchased jumping by its highest level for a year. This provides encouraging signs for the future, particularly with a flat consumer price index and ECB interest rates remaining at a record low.”

How Ireland confidence compares globally

The global Consumer Confidence Index stands one point above Ireland at 101, whilst Europe’s is 81 and Great Britain is 102. India (136) has the highest score globally, South Korea the lowest (43).

The scores are derived from Nielsen’s study, established in 2005, which measures among 30,000+ internet consumers in 63 countries. To view historical trends for all countries, broken down by metrics such as financial concerns and job prospects, visit the interactive Nielsen Global Consumer Confidence Trend Tracker.

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Bel Group Increases Profits as Revenue Remains Flat

French and international cheese manufacturer Bel Group has recorded a slight 0.4% decrease in sales to €2.936 billion for 2016 as operating income advanced 9.5% to €298 million with the operating margin exceeding 10%. The Americas, Asia-Pacific region continued to grow, reporting organic sales growth of 4.5%. A price war among food retailers in Europe and France in particular directly impacted producer sales, with Bel’s sales in the region contracting 2.1% organically during the year. Volumes in the Middle East, Greater Africa were negatively affected by unrest in several markets in the region, where sales declined 2.3% organically in 2016.

The group nevertheless confirmed its ability to support and develop its strong brands to grow market share and win new markets, while consolidating its operating margin. Helped by a generally favorable foreign exchange impact and bottom-of-the-cycle raw material prices throughout much of the year, operating income advanced 9.5% in 2016. In 2016, consolidated net profit totalled €213 million, versus €184 million in 2015.

In Europe, markets remain affected by fierce competition among food retailers that is unfavourable to rolling out campaign plans for Bel’s brands. The uncertain geopolitical and economic environment in numerous world regions continues to cloud visibility. Further, the new hike in dairy raw material prices announced at the end of 2016 is expected to weigh on operating margin in 2017.

Bel Group will focus in particular on its future projects in the healthy snack market, following the consolidation of its latest acquisitions, Safilait and MOM.

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Short-term Outlook For Agricultural Markets Shows Recovery in EU Milk Prices

The European Commission has published its short-term outlook for arable crops, olive oil, meat and dairy markets in the EU for 2017-2018, confirming that the reduction in the EU milk supply at the end of 2016 contributed to a significant recovery in EU milk prices. Exports and domestic demand led to record high prices for butter and a significant price recovery for cheese.

By contrast, the skimmed milk powder (SMP) price is expected to remain around current levels given the high stock levels and that the seasonal peak of milk collection is still to come. Low cereal prices were driven by abundant world supply and stocks. By contrast, EU cereal production declined by 5.5% in 2016/2017, following smaller-than-average soft wheat and maize harvests. This should result in a slowdown in EU cereal exports. EU rapeseed harvest was also below average but, given the large world oilseed supply, this only resulted in a small price surge.

EU sugar prices are catching up with high world prices. As for olive oil, low 2016/2017 production (13% below average) together with low stock levels resulted in higher prices.

EU meat production reached a record level in 2016 but is showing signs of downward adjustments. Sustained pig meat exports to China facilitated a recovery in the EU price. Continued good beef exports held EU price decreases in check. The production of sheep meat is growing at a slower rate, on the back of lower prices.

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First Milk Renews Contract With Nestlé UK & Ireland

First Milk, the UK’s only major dairy company owned by British family farms, has agreed a new long-term contract with Nestlé UK & Ireland. First Milk has supplied fresh British milk to Nestlé UK & Ireland since 2003, in a relationship that has focused on building a long term sustainable supply chain for Nestlé’s confectionery and beverage businesses.

Mike Gallacher, chief executive of First Milk, comments: “Nestlé are a hugely important customer for First Milk and I am delighted to see this relationship renewed for the long term. Nestlé have consistently supported British Dairy farmers and are at the forefront of driving best practice on responsible sourcing and sustainability. Initiatives like our Next Generation Young Farmer Program demonstrate a long term and strategic commitment to the UK supply chain.”

Mike Gallacher, chief executive of First Milk.

Robin Sundaram, Responsible Sourcing Lead – Milk Buyer at Nestlé UK & Ireland, says: “Good quality milk is a key ingredient in some of our iconic brands such as Nescafe and KitKat. We look forward to continuing our strategic long-term partnership to drive our vision of supporting our farmers and our environment.”

First Milk supplies the retail, foodservice and milk markets with a wide range of dairy products and ingredients, in the UK and internationally.

First Milk is currently pursuing a new strategy focused on its core business of Liquid Milk Contract supply and Cheddar manufacturing. This has resulted in a £30 million improvement in profitability over the last two years. At the same time the business has been able to step up its milk price to members, fuelled by the transformation in the business performance.

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UK Grocery Market Grows as Price Rises Continue

The latest grocery market share figures from Kantar Worldpanel, for the 12 weeks ending 26 February 2017, show supermarket sales grew at their fastest rate since June 2014 – up by 2.3% compared to the same time last year.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Like-for-like inflation has doubled since last month to stand at 1.4% during the past 12 weeks. However, when placed in their longer-term context, these price increases are still fairly minimal.

“Staples such as butter, tea and fish all saw prices rise by more than 5% during the past 12 weeks, as fruit and vegetables – many of which are imported – also saw an uptick in price. However, it’s important to point out that inflation is still far from universal, with prices actually falling across a number of categories including crisps, bacon and eggs.

“While consumers may be starting to feel a very slight pinch, increased inflation has led to overall market growth. Simultaneously, combined sales at the UK’s four largest supermarkets increased by 0.5% year on year. This is a timely reminder that despite the huge interest in the discounters during recent years the big four remain a force to be reckoned with: they still hold just over 70% of the market, with almost 99% of the population shopping in a Tesco, Sainsbury’s, Asda or Morrisons during the latest quarter.”

Individually, Morrisons grew ahead of the market with a sales increase of 2.6% signalling its fastest growth in five years. Holding market share steady year on year at 10.6%, the retailer’s positive bricks and mortar performance was buoyed further by the continued rapid expansion of its e-commerce business.

Tesco increased sales for the sixth period in a row – a run it hasn’t experienced since January 2014 – although this wasn’t enough to stop the grocer’s market share slipping by 0.5 percentage points to 27.9%. Asda was the only retailer to see sales fall during the past 12 weeks, but a decline of just 0.8% represents a significant improvement and is the grocer’s best performance since November 2014.

Fraser McKevitt continues: “To the catchy soundtrack of its new ‘food dancing’ advertising campaign, Sainsbury’s returned to growth for the first time since March last year, with sales up by 0.3%. At the same time, its market share slipped by 0.3 percentage points leaving the grocer with 16.5% of the market.

“Lidl became Britain’s fastest growing supermarket during the past 12 weeks – with sales up by 13.0% – while Aldi grew almost as quickly, increasing sales by 12.9% to reach a record market share of 6.3%. Also growing ahead of the market was Iceland, with sales up 8.8%. Meanwhile Co-op and Waitrose both increased sales by 1.7% and 2.9% respectively.”

There were signs of changing shopping habits too. Having peaked at just over 40% of sales in 2015, the proportion of groceries sold on promotion continues to decline, falling to 34.3% during the past 12 weeks – its lowest level since October 2009. The most dramatic shift has been a move away from multi-buy promotions, with shoppers spending half a billion less on these types of deals than last year. Fraser McKevitt comments: “Despite the general move away from multi-buys, meal deals remain popular – particularly around Valentine’s Day. Premium meal deals, which offer dinner for two at a price point of £10 or above, were bought by nearly 2 million consumers in February as Valentine’s Day offered a welcome opportunity to splash out.

“In fact, British diners spent £9 million more on premium meal deals than during the same period last year, suggesting that celebrating special occasions at home is an increasingly appealing option. 1.2 million shoppers bought still wine as part of their premium meal deal, 700,000 plumped for sparkling wine and 840,000 bought chocolates.”

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One in Four British Dairy Farmers to Benefit From £31 Million Arla Windfall

Arla Foods UK, Britain’s leading farmer-owned dairy company, has announced that its British owners will receive £31 million as their 2016 year-end bonus. Arla is owned by 12,000 dairy farmers across Europe, 2,500 of whom are British and make up almost a quarter of all British dairy farmers.

Once a year, Arla distributes its profits equally between all of its farmer owners in its so-called supplementary (13th) payment. This will be paid as a cash bonus. £7 million of the windfall will be invested into each farmer’s individual savings accounts for each farmer to build up a lump sum should they decide to leave the cooperative.

The 13th payment is equally distributed to all farmer owners; proportionate to the amount of milk they supply rather than based on their equity investment in Arla. This year, the 13th payment is equivalent to an average of almost £9,000 to each Arla farmer across England, Wales and Scotland.

The bonus was agreed by the company’s board of representatives, which is almost wholly comprised of elected farmer owners and includes 20 British farmers. In 2017, this will increase to 23 British farmers, reflecting the increasing strength of British farming within the dairy cooperative.

Farmer owner and Arla Foods board director, Jonathan Ovens, says: “The 13th payment is one of many important benefits for farmer owners like me and is particularly welcome as we begin to come out of a difficult year. It enables us to invest in our farms, and also save for the future.”

He adds: “It’s an annual benefit and a return on my investment that I couldn’t achieve elsewhere. It’s good to work together with Arla to back British dairy farming. As we need to increase the country’s milk production to meet growing demand, it’s also reassuring that Arla promises to collect every drop of milk I produce at the Arla price.”

Arla Foods UK has a turnover of €2.2 billion and is home to leading dairy brands Anchor®, Arla Cravendale®, and Arla Lactofree®. As well as being a leading supplier of fresh milk, number one in butter, spreads and cream, Arla is the UK’s largest cheese manufacturer. It has also built the world’s largest fresh milk facility located at Aylesbury that later this year will become the first net zero carbon site of its kind. The UK contributes 25% of Arla Foods’ group revenue.

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Bacardi Unveils Leadership Succession Plan

Family-owned Bacardi Ltd, the world’s largest privately held spirits company, has announced that Mahesh Madhavan (pictured), a 20-year Bacardi veteran who is currently a member of the company’s global leadership team and regional president of Asia, Middle East & Africa, will succeed Michael J Dolan, who will retire as chief executive Officer, effective April 1, 2018. In the interim, Dolan will continue as chief executive, while Madhavan will transition to a new role as regional president of Europe for much of 2017. Dolan will continue to serve on the Bacardi board of directors until the 2019 annual general meeting, when he will retire from the company.

Facundo L Bacardi, chairman of the board of Bacardi, says: “For almost three years, the Board has conducted a rigorous succession planning process to ensure an orderly transition of leadership. With a proud history that dates back 155 years, it is critical to us to advance our goals as a company in a manner consistent with our culture. As a long-time Bacardi executive, Mahesh has the ideal mix of leadership skills, commercial, operational and financial expertise, and global brands experience. Importantly, he fully embraces our culture, history, and values, and he is an exemplary leader of people. We have great confidence in Mahesh and his vision to lead Bacardi well into the future, providing continuity of leadership to build on our success during Mike’s tenure and capitalize on the momentum of our brands and the tremendous global opportunity in both developed and emerging markets.”

Dolan has worked with Bacardi since 2009, when he joined the board of directors, and has demonstrated a deep understanding of both the business and unique values of Bacardi. During Dolan’s leadership as chief executive since 2014, the company has taken a disciplined approach to increase operational efficiencies, reduce costs, and re-invest in its iconic portfolio of brands.

“Our team is proud of the work we’ve done to strengthen the financial position of the company and improve the top-line through a sharp focus on enhancing the equity of our core brands. We’re delivering cost savings and reinvesting those savings in incremental advertising and promotion activities designed to captivate a new generation of consumers,” says Dolan. “As importantly, we have stabilized our leadership team and created robust development programs to build a deep bench of global talent. I have no doubt that with his long tenure, tremendous leadership qualities, and global perspective, Mahesh will continue to drive growth and brand momentum while nurturing our culture and our people. I look forward to partnering with him as he prepares to assume his new responsibilities.”

Bacardi also announced that, as part of the leadership succession plan, Paolo Perego, currently regional president of Europe, BMBV, will depart to pursue other opportunities. Alex Ouziel, a seven-year veteran of Bacardi and currently vice president & managing director of Eastern Europe, has been promoted to regional president of Asia, Middle East & Africa, based in Dubai, succeeding Madhavan. Ouziel will also join the global leadership team. Oksana Pevtsova, a 10-year veteran of the company, has been promoted to vice president & managing director of Eastern Europe, based in Moscow, replacing Ouziel.

The Bacardi brand portfolio comprises more than 200 brands and labels, including BACARDÍ® rum, GREY GOOSE® vodka, DEWAR’S® Blended Scotch whisky, BOMBAY SAPPHIRE® gin, MARTINI® vermouth and sparkling wines, CAZADORES® 100% blue agave tequila, and other leading and emerging brands. Bacardi manufactures its brands at 29 facilities and sells in more than 160 countries.

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PepsiCo to Close UK Snacks Plant

PepsiCo is considering closing its Walkers crisps factory at Peterlee in County Durham, England, in an effort to improve the efficiency of its UK snacks manufacturing operations. The closure would impact 380 jobs.

“Peterlee has been an important site for our business but the changes we are proposing present significant productivity and efficiency savings crucial for ensuring the long-term sustainable growth of our business in the UK,” says Tracey Foster, manufacturing director at PepsiCo UK.

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Nestlé and The Coca-Cola Company to End Beverage Partners Worldwide Joint Venture

While the Beverage Partners Worldwide (BPW) joint venture has performed well for more than 15 years, Nestlé and The Coca-Cola Company have agreed to dissolve the 50-50 ready-to-drink tea joint venture as of 1 January 2018. Created in 2001, BPW offers ready-to drink tea, in particular NESTEA, in Canada and Europe. The ready-to-drink tea market has evolved, and Nestlé believes the time is right to develop Nestea independently.

As part of this agreement, Nestlé is granting the Coca-Cola Company a license to manufacture and distribute NESTEA in Canada, Spain, Portugal, Andorra, Romania, Hungary and Bulgaria. In other countries that are currently part of the joint venture, The Coca-Cola Company will no longer produce or distribute NESTEA.

Through its Nestlé Waters division, Nestlé already manages the NESTEA brand in several countries, including the United States. Following this new agreement, Nestlé Waters will also manage NESTEA in all the European countries that are not concerned by the licensing agreements.

The consumer trend of the ready-to-drink category is evolving towards healthy hydration. Delivering on consumers’ changing needs in a rapidly expanding US$4.5 billion ready-to-drink tea category, NESTEA already unveiled its new brand proposition for the US on 30 January.

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Halewood Enters UK Brewing Industry

Halewood Wines & Spirits, the UK-based family-owned drinks business, is entering the brewing industry by taking a controlling interest in Hawkshead Brewery, the independent brewer based in the Lake District, of Northern England. Hawkshead Brewery currently produces around 120 barrels (20,000 litres) of beer a week, delivering widely throughout the North. It also operates a bar at the brewery site.

Under the partnership, Hawkshead will build a new brewery, expand production and gain new routes to market. The specific terms of the deal have not yet been disclosed.

Alex Brodie, founder of Hawkshead Brewery, comments: “Demand for our beers exceeds our ability to supply. We have gone about as far as we can on our own. This partnership with Halewood will allow us to grow and fulfil our potential.”

“I am convinced that Halewood share our values,” he adds. “We have had a long negotiation and I believe that this deal gives Hawkshead a way of getting significant investment without being absorbed into ‘big beer.’ Halewood sees small, craft and premium as the future. And they are Northern. I like that.”

Stewart Hainsworth, chief executive of Halewood Group, says: “Hawkshead Brewery will continue to operate independently of the Halewood Group, under Alex’s leadership, with Halewood as its main distributor and investor. Hawkshead brews great beers. We are delighted to help them carry on doing what they are so passionate about.”

Alex Brodie will continue as managing director, and Hawkshead’s existing team will carry on running the brewery as a stand-alone business, within a small group of North West craft drinks-makers, under the Halewood umbrella. The group includes another Lakeland company, mineral water producer – Willow Water, Liverpool Gin distillery and North Wales whisky distillery, Aber Falls, which is due to open later this year.

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WTO Confirms Russian Pork Ban is Illegal

The WTO’s Appellate Body has confirmed that Russia’s import ban from 2014 on live pigs, pork and other pig products from the EU violates international trade rules. The ruling concerns a ban imposed by Russia because of the outbreak of African Swine Fever in areas in the EU close to the border with Belarus.

In August 2016, a WTO panel acknowledged that the Russian measures are not based on the relevant international standards and violate WTO rules. The ruling confirms this finding, thereby sending another strong signal to Russia and all WTO Members on their obligation to respect international standards and, in particular, the principle of regionalisation, which would allow trade from individual areas of a country which are recognised as pest or disease-free, independent of the health status in the rest of the country.

The EU has one of the world’s most efficient animal health and food safety systems, including high detection levels and stringent risk management rules. EU products from disease-free areas are safe, and there is no need for any country to maintain unjustified import restrictions. The EU calls on Russia to withdraw its unjustified measures and allow EU companies to resume normal business with their Russian partners.

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Leading Stevia Producer Set to Double Production

PureCircle, the world’s leading producer of high-purity stevia ingredients for the global food and beverage industry, has completed a $42 million expansion of its stevia plant in Malaysia. This major expansion of PureCircle’s facilities will enable the company to double its production capacity and focus on even more efficient extraction and processing from sustainably grown stevia leaf and purification for its next generation of pioneering stevia ingredients.

Innovations that have been incorporated into the new facilities include a dedicated line, specifically designed for PureCircle’s Zeta Family ingredients – these are comprised of the most sugar-like steviol glycosides, such as Reb M and Reb D, and allow for the deepest calorie reductions by food and beverage companies.

This investment will ensure that PureCircle remains at the forefront of innovation to deliver the best tasting products, at a scale that fits with the needs of global brands, as well as benefiting farmers and their communities. The fully automated expansion in Enstek, Malaysia, will bring the employment of the full facility to almost 600 people.

PureCircle’s Group CEO Magomet Malsagov comments: “PureCircle is committed to a substantial ongoing investment programme to ensure that our customers – global food and beverages brands – have year-round access to the highest quality stevia leaf extract that is consistent, sustainably grown and made from the best tasting stevia plant varieties. The expansion of our extraction and processing operations will benefit not only of our customers but also our employees, the farmers and communities we work with, and our end consumers around the world.”

PureCircle has a deep commitment to making stevia a mainstream ingredient and is the only company that has this type and scale of production facility in the stevia industry.

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Approval For Acquisition of AB InBev’s Central and Eastern European Business by Asahi

The European Commission has approved under the EU Merger Regulation the acquisition of sole control over the business currently owned by AB InBev in Central and Eastern Europe by the Asahi Group of Japan. The AB InBev CEE Business comprises certain beer brands and assets formerly owned by SABMiller and currently belonging to AB InBev in the Czech Republic, Hungary, Poland, Romania and Slovakia. These brands and assets had to be divested as a condition for the approval of the AB InBev/SABMiller transaction.

The Asahi Group is a beverages and food company with its core business on beer. The Commission concluded that the acquisition would raise no competition concerns because of the very limited increment brought by the transaction and the presence of several beer competitors in the markets in question. The transaction was examined under the normal merger review procedure.

The €7.3 billion acquisition by Asahi encompasses businesses in five countries in Central and Eastern Europe relating to the Pilsner Urquell, Kozel, Tyskie and other brands, together with intellectual property rights associated with Pilsner Urquell, Kozel and Tyskie brands (excluding intellectual property rights associated with Pilsner Urquell, Tyskie and Lech in the US and Puerto Rico; Miller brands in the five countries in Central and Eastern Europe; and Redd’s brand except in the five countries in Central and Eastern Europe).

Asahi had already purchased a strong business platform in Western Europe in October 2016, comprising Italian, Dutch, UK and other related assets from SABMiller, including global premium brands such as Peroni and Grolsch, for €2.55 billion.

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Parmalat Strengthens Position in South America With €100 Million Acquisition

Parmalat, through its subsidiary La Vaquita Holding, has acquired some companies in Chile that specialize in the cheese sector. The acquired companies include four production facilities with about 600 employees. The brand portfolio includes, amongst other, ‘La Vaquita’ and ‘Kümey’ brands.

In 2016, the acquired businesses generated net revenue of about €95 million. The enterprise value of the acquired businesses is about €100 million.

The acquisition strengthens Parmalat’s presence in South America by expanding geographically in a country where it operates through a licensing agreement. Parmalat is controlled by the Lactalis Group of France.

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Green Light For New Scotch Whisky Distillery

Inverclyde Council has approved plans for a new £12 million distillery and visitor centre on the Ardgowan Estate near Inverkip, 30 miles west of Glasgow in Scotland. The council green light means the Ardgowan Distillery Company can now advance its proposal to build a world-class lowland malt whisky distillery and visitor attraction on the estate, with plans to be operational in 2019.

“The lands around the estate have been occupied nearly continuously for over 4,000 years and the history of my family at Ardgowan stretches back over 600 years. In that time, Ardgowan has played its part in the story of Scotland,” says Sir Ludovic Shaw-Stewart, the 12th Baronet and owner of Ardgowan Estate.

Work on the £12 million distillery will begin this year, and will see the construction of a state-of-the-art facility on the site of an old sawmill on estate land near Inverkip.

Martin McAdam.

“Our goal is to produce a truly outstanding seven year old lowland single malt,” says Martin McAdam, the distillery’s chief executive. “In the coming weeks we will commence detailed design and procurement work for the construction of the distillery, and this will give us the opportunity to engage with local businesses and the public in order to develop our plan and start to employ the staff that will be engaged during the construction and operational stage.”

The distillery recently announced the appointment of former Macallan managing director Willie Phillips as company chairman, and the addition of ex-Bruachladdich and Diageo veterans Gordon Wright and Michael Egan in commercial and product engineering advisory roles.

The new distillery will resurrect the name of the Ardgowan Distillery, which was founded in 1896 and located in Baker Street, Greenock. After a few years of whisky production, the distillery was used to make grain spirit and industrial alcohol until it was destroyed in the May Blitz of 1941.

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Danish Crown Buys Foodservice Business in the UK

Danish Crown has acquired Nottingham-base Leivers Brothers for an undisclosed sum to double the revenue generated by the international meat group’s UK foodservice business. Foodservice has been part of Danish Crown’s business in the UK since 2014. Danish Crown has succeeded in establishing a stable base in and around London and Manchester and this is now being further expanded in the Midlands with the acquisition of Leivers Brothers.

“Wanting to get closer to the end-users of our products is part and parcel of our 4WD strategy. This is by no means a major acquisition, but it is an important step in our efforts to create the right conditions for our UK foodservice business to be able to grow organically,” explains Jais Valeur, group chief executive of Danish Crown.

Founded in 1880, Leivers Brothers has been a supplier of bacon, fresh meat, cheese, sausages and cold cuts to butchers, restaurants and canteens for many decades.

“This is a very exciting step for the UK. While foodservice is a new business area for us, in which our pioneering spirit has brought us far in a relatively short time, next on the agenda is the integration of Leivers Brothers with the rest of our business. The synergies are obvious; I would go so far as to describe this as a major development for our foodservice division,”  says Lars Albertsen, chief executive of Danish Crown UK.

Danish Crown is taking over Leivers Brothers with immediate effect as the acquisition does not require the approval of the competition authorities.

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Lovemore Foods is ‘Winner of Winners’ at Welsh Business Awards

Lovemore Free From Foods has scooped the top gong at the South Wales Chamber of Commerce Welsh Business Awards and was named ‘Winner of Winners’. After securing the ‘Success Through Overseas Trade’ title for the second consecutive year, the dedicated gluten and wheat free company beat off strong competition to win the overall award for best business in Wales.

The Welsh Business Awards showcase the very best of Welsh businesses and recognise the contribution they make in driving the economy forward.

Lovemore Foods’ creator Welsh Hills Bakery is one of the very few world class dedicated gluten, dairy and wheat free production facilities in the UK. 20% of the company’s total sales comes from its export business and award judges praised them for the links built across the globe including America, Australia, Spain, Norway, Sweden, Portugal, Republic of Ireland, Hungary, the Middle East, the Netherlands, Malta, Finland, France and Germany. Following an invitation by the China-Britain Business Council, Lovemore recently attended ‘Wales Week’ in Wuhan, which introduced the company to the Chinese market. Discussions have also begun with a Japanese retailer, and Lovemore looks set to begin exporting to the East Asian countries in 2017.

Lovemore also supplies Spanish airline, Vueling, and Tesco Europe with its free from baked goods, and is set to appear on a national Morrisons TV advert in the UK later in the year.

The complete Lovemore range includes shortbreads, cookies, pies, tarts and slices which, with dedicated new product development and onsite testing facilities, are produced to taste exactly like the ‘real thing’.

CAPTION:

Paul Haines and Julian Cruttenden of Lovemore.

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Additional €124 Million Paid Out to Arla Farmers

Arla Foods’ Board of Representatives has decided to distribute a total of 124 million to the farmer-owners as the annual supplementary payment, also known as the 13th payment. On average, that amounts to one eurocent per kilo of milk supplied by each farmer.

At the meeting in Halmstad, Sweden, the Board of Representatives debated and decided how much of Arla’s annual profit for the 2016 financial year should be paid out as supplementary payment and how much should be consolidated into the Arla Group for further investments in new strategic growth opportunities for the company.

Total net profit of the Arla Group in 2016 grew 20.7 per cent to €356 million, of which the profit share of Arla Foods amba is €347 million, corresponding to 3.6 per cent of group revenue.

Excluding the profit from divestments, which remains in the company for re-investment, the available annual result for allocation for 2016 was €227 million. Of this, the Board of Directors had proposed that €124 million would be paid out directly to Arla’s farmer-owners, with €103 million being retained in the company (partly as individual retainment that each farmer-owner can take with him/her when their membership ends, partly as common retainment that remains in the company as equity and for strategic re-investing).

This means that Arla’s annual result for distribution to owners is allocated as follows:

* €124 million for supplementary payment (averaging 1.00 eurocent per kilo milk plus interests)

* €30 million for individual retainment (averaging 0.28 eurocent per kilo milk)

* €73 million for common retainment (averaging 0.54 eurocent per kilo milk)

* €120 million from the divestment of Rynkeby retained for strategic re-investing.

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FrieslandCampina Considers Disposal of Fruit Juices and Fruit Drinks Business

International dairy group Royal FrieslandCampina is investigating the sale of Riedel, the market leader in the field of fruit juices and fruit drinks in the Netherlands. The brand portfolio of Riedel includes familiar brands, such as Appelsientje, CoolBest, DubbelFrisss, Taksi and Extran. Riedel is located in Ede and has its own production and packaging facilities.

Riedel is market leader in the Netherlands with a broad product range of both ambient and chilled fruit juices and fruit drinks. The product assortment is marketed in the Dutch and Belgian markets and sold in supermarkets, catering establishments, canteens, petrol stations and vending machines amongst others.

Riedel’s consolidated net sales of fruit juices and fruit drinks for the year 2016 amounted to approximately €125 million. Riedel employs 200 people and the company is currently part of the business group FrieslandCampina Consumer Products Europe, Middle East & Africa.

Roelof Joosten, chief executive of Royal FrieslandCampina, comments: “Following the update of our company strategy ‘route2020, in which we increased the focus on the dairy portfolio, we are investigating the sale of our fruit juices and fruit drinks activities. Since the early nineteen seventies, our fruit juices and fruit drinks manufacturer Riedel has developed itself to become market leader in ambient and chilled fruit juices and fruit drinks in the Netherlands. Its professional and committed employees have been instrumental in achieving that success. FrieslandCampina wants to ensure Riedel is best positioned to anticipate and respond to changing customer requirements and consumers habits. Therefore we believe it is important for Riedel to take the next step in its development.”

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EU Agri-food Exports Reach Record High in 2016

The annual value of EU agri-food exports in 2016 reached a new record level with total exports reaching €130.7 billion, up €1.7 billion on 2015. The biggest increases in annual exports were to the USA (up €1.26 billion) and China (up €1.06 billion).

At the same time, the value of EU agri-food imports went down 1.5% to €112 billion. This leads to an increase of the EU agri-food trade surplus to €18.8 billion, up from €15.3 billion in 2015.

The agri-food sector accounted for 7.5% of total EU exports in goods in 2016; and 6.6% of all imported goods are agri-food products. With a surplus of €18.8 billion the agri-food sector is also a major contributor to the overall surplus of the European Union in merchandise trade, which stood at €39.3 billion in 2016.

Throughout last year, EU producers have successfully increased exports of non-commodity primary products (pigmeat, vegetables). Also export values for processed agricultural products (wine, olive oil) and food preparation increased by 4 to 5% in average, while export values for commodities (wheat and other cereals, milk powder) and non-edible products went down.

This month’s report focuses on agri-food trade with Canada. The EU is a net-exporter of agri-food products to Canada, with a surplus of about €1.25 billion in 2016. Main EU export products are value added processed products, food preparations and beverages, with wine, spirits and liqueurs, confectionery, beer as well as pastry and biscuits being the most important product categories.

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Greggs Continues Transformation From Traditional Bakery to Food-on-the-go Brand

Greggs, the UK’s largest retail baker, increased total sales by 7% to £894.2 million in 2016 as underlying operating profit grew by 8.6% to £78.1 million and pre-tax profit (including exceptional items) rose by 2.9% to £75.1 million. Greggs is the leading bakery food-on-the-go retailer in the UK, with over 1,750 retail outlets throughout the country.

“In 2016 we delivered another strong performance as we continued on our journey to transform Greggs from a traditional bakery business into a modern, attractive food-on-the-go retailer,” says Roger Whiteside, chief executive of Greggs. “Our product offer is evolving to meet the changing needs of our customers and our shop estate and service levels have benefited from significant investment.”

He continues: “The UK consumer outlook is more challenging than we have seen in recent years, with industry-wide pressures emerging in commodities as well as labour costs. However we are confident of making further progress as we implement our plan to grow Greggs as a contemporary food-on-the-go brand.”

Greggs has embarked on a major £100 million investment programme, announced in March 2016, designed to increase capacity and efficiency in shop distribution to support substantial shop growth alongside improved quality and efficiency in the group’s bakery manufacturing operation by centralising production.

Roger Whiteside, chief executive of Greggs.

During 2016, Greggs opened a new distribution centre in Enfield and closed both its Twickenham and Sleaford bakeries. Good progress was also made with the extension of its bakery in Glasgow, which will facilitate the closure of the Edinburgh Bakery in the second quarter of 2017. Greggs has also undertaken detailed planning for the subsequent investment phase across its remaining bakery sites. Greggs expects that it will take approximately two years to implement the transformation of the use of space and equipment across its bakery network.

“Once implemented this new supply chain platform will substantially improve product quality, our competitiveness and, alongside system investment, will complete our transformation from traditional bakery to food-on-the-go,” explains Roger Whiteside. “This is our largest ever investment in our supply chain, reaffirming our strategic commitment to the competitive advantage offered through vertical integration and delivering an attractive return on investment.”

Greggs aims to increase its estate to substantially more than 2,000 shops. In 2016 it opened 145 new shops (including 56 franchised units) and closed 79, growing the estate to 1,764 shops trading as at 31 December 2016.

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‘Snackification’ of Mealtimes is Now Widespread Among Millennials

Most American Millennial snackers eat a snack in place of a standard meal at least once a week, a new survey reveals[1].

Researchers in the US questioned snackers between the ages of 18 and 35 about their snacking habits and preferences. When asked how often they eat a snack instead of having breakfast, lunch or dinner, 92% of them said they do so a minimum of once a week. Furthermore, half of the respondents said they replace a meal with a snack at least four times a week, while more than a quarter (26%) said they do so at least seven times a week.

The online survey of 300 male and female American Millennials who snack regularly was commissioned by Welch’s Global Ingredients Group, the supplier of FruitWorx real fruit pieces and powders, and was conducted in January 2017 by independent market research company Surveygoo. The findings shed light on the true scale of the ‘snackification’ of mealtimes among Millennial snackers, an often-reported but rarely measured phenomenon.

This trend could be a reflection of American Millennial snackers’ busy lives. They are snacking both at home and on the go, with 48% of Millennial snackers consuming snacks at work and 34% in the car. When asked why they snack, 39% of Millennial snackers said they do so when they are too busy to eat a proper sit-down meal, while 17% admitted to doing so when they ‘can’t be bothered to cook a meal’.

When respondents were asked which factors are important in guiding their choice of snack, the three most important were taste (80%), nutrition and health (52%) and convenience (49%). They also said they are looking for whole food ingredients, such as wholegrains (43%), real fruit (42%) and nuts (39%). Besides valuing real fruit, American Millennials who snack also prefer to know the origin of the fruit in their snacks. In total, 68% of survey respondents said it was important for them to know where the ingredients in their snacks, including the fruit, had come from.

Wayne Lutomski, Vice President International & Welch’s Global Ingredients Group, says: “The survey quantifies and expands on what we already suspected: the replacement of mealtime with snacktime among Millennial snackers is widespread. These consumers need their snacks to be convenient for their busy lives and contribute to their daily nutrition needs. Our survey findings tell us that there is an opportunity for snack products that can check all of the boxes – taste, convenience and natural nutrition.”

True American Superfruit
The findings from the survey highlight the importance of using specific ingredients when creating snack products. Key learnings point towards demand for those that deliver excellent taste, convenience and authentic nutrition, with a preference for whole food ingredients that offer a strong story around provenance.

FruitWorx inclusions by Welch’s Global Ingredients Group are real fruit pieces for snacking and baking products that satisfy all of these criteria. They are made from the Concord grape, a distinctive, dark purple grape variety with a sweet, bold flavor grown in North America by Welch’s nearly 1,000 family farmers. In combination with an exceptional flavor profile, it delivers natural plant nutrients called polyphenols.It is a true American superfruit.

Concord FruitWorx pieces provide the same bold flavor and polyphenols as the fresh fruit from which they were made. In fact, Concord FruitWorx delivers more than twice the polyphenols as the leading brand of sweetened dried cranberries, and three times as many polyphenols as the leading brand of raisins.

Now available to food manufacturers throughout the USA, FruitWorx real fruit pieces are made using a unique technology called ultra-rapid concentration (URC®), which was developed by Taura Natural Ingredients.

Wayne Lutomski concludes: “With URC®, Welch’s Global Ingredients Group is able to deliver the goodness of the Concord grape in a format that’s perfect for a multitude of snack applications, and which taps into the trends highlighted by our survey. As we have found, American Millennial snackers are looking for their snacks to deliver great taste and authentic nutrition benefits. With FruitWorx pieces, snack manufacturers have an opportunity to meet the exact needs of this consumer and bring winning products to the marketplace.”

[1] Survey of 300 male and female snackers in the US aged 18-35, commissioned by Welch’s Global Ingredients Group and conducted independently by Surveygoo in January 2017

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Spirit Drinkers Keen to Experiment With Novel Flavours But Crave Authenticity

As global spirit drinkers become more experimental, with at least 39% of them actively trying new varieties within each category, craft distillers are presented with an opportunity to diversify their product portfolio. This can be done by adding unique ingredients, trying unusual ingredient combinations, and using innovative processes, according to research and consulting firm GlobalData.

The company’s latest report states that consumers are moving away from mass-produced brands towards spirits made with craftsmanship, and optimistic distillers are looking to emulate the success of established craft breweries, with innovative and quirky flavors being one way to do this.

Emma Wright, Consumer Analyst for GlobalData, explains: “Out of all the spirits, consumers are most likely to try new or different varieties of whiskey, followed by vodka and liqueurs, so craft distillers should look to increase the number of products within these categories. Some unique flavors are already being seen in the craft spirits industry, including savory combinations such as chipotle whiskey and ibérico ham mezcal.”

In order attract potential consumers to such unusual flavors, manufacturers should introduce offers such as taster packs by subscription, to facilitate experimentation at an affordable price. Indeed, spirits tend to be the most expensive alcoholic beverages, so consumers tend to be cautious in their purchasing decisions. Not only are craft spirit brands relatively unheard of, but they also come at a premium, which may deter custom from risk-averse consumers. GlobalData believes that tasting samples may help mitigate this risk.

Emma Wright continues: “Another risk manufacturers should bear in mind is that words such as ‘craft’ and ‘artisan’ can be construed as gimmicks, with 41% of global consumers agreeing that such buzzwords are merely an excuse for manufacturers to charge extra. This is largely down to the fact that manufacturers can use words such as ‘craft’ without actually being a craft distillery, undermining the term. In this way, craft companies should emphasize their authenticity in order to gain consumer trust. This might include events, tasting rooms, and distillery tours help to distinguish ‘craft’ from mass-produced brands.”

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Dawn Farms to Invest €25 Million in Innovation

Dawn Farms, one of Europe’s leading suppliers of cooked and fermented meat ingredients to international foodservice chains and food manufacturers, has announced plans to create 150 new jobs over the next five years. The investment by Dawn Farms which will amount to over €25 million over the period is focused on enhancing the company’s R&D capabilities at its Meat Science & Innovation Centre in Naas and is supported by the Department of Jobs, Enterprise and Innovation through Enterprise Ireland.

Larry Murrin, chief executive of Dawn Farms, comments: Developing new products to meet changing consumer tastes has been at the heart of the growth of this firm for over 30 years. Our Meat Science & Innovation Centre at our Naas headquarters is the innovation hub where we support our customers in over 40 markets worldwide.”

Larry Murrin, chief executive of Dawn Farm Foods.

He continues: “Great ingredients make great food and great ingredients come from outstanding food innovation.  Consumers’ tastes are constantly evolving.  We are passionate students of the marketplace and closely monitor consumer trends.  We are seeing more demand for home-style authentic meats, new flavours and new snacking options as well as on-going interest in health and wellness across the range of meats that we cook.”

The investment will enhance Dawn Farms’ capacity to research trends, to develop new products and exciting new production technologies while ensuring that the highest standards of food safety and security are upheld.

Julie Sinnamon, chief executive of Enterprise Ireland, says: “Enterprise Ireland’s strategy is to support Irish companies to build scale and to expand their reach into international markets and we are delighted to support Dawn Farms as they enter into this new phase of growth and expansion.  Enterprise Ireland has been working with Dawn Farms since its establishment and we’ve witnessed first-hand the company’s growth and evolution, deepening their presence in the UK as well as diversifying into new markets in the Eurozone region. Dawn Farms is an inspiring example of a company that demonstrates global ambition when it comes to its market export potential and is sending a very positive message to every Irish agri-food business, that it is possible to build an innovative and scalable company that can compete at the highest levels internationally.”

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Bonduelle to Acquire US Leader of Single-serve Salads Bowls

Bonduelle, the world leader of ready-to-eat vegetables, present in canned, frozen, fresh cut and delicatessen, is acquiring Ready Pac Foods, the US market leader in single serve salad bowls.

Based in California, Ready Pac Foods is the number one producer of single-serve salad bowls in the US through its Bistro Bowl® suite of products and its legacy of innovation and culinary expertise. Ready Pac Foods is also a producer of fresh-cut produce, offering packaged salads, fresh-cut fruits, and mixed vegetables to its retail and foodservice customers. With 4 production facilities located in Irwindale (CA), Jackson (GA), Florence and Swedesboro (NJ), and employs about 3,500 full-time employees. Ready Pac Foods generates approximately $800m of revenues, with a national presence in the U.S. and a wide customer base.

This milestone transaction is a key step in Bonduelle’s strategic ambition ‘VegeGo! 2025’ of being “the world reference in ‘well living’ through vegetable products”. This acquisition will strengthen Bonduelle’s international footprint and dramatically change its profile, making the US the largest country of operations, continuing a longstanding track record of successful acquisitions in North America, in particular Aliments Carrière, Canada, in 2007 and Allens, USA in 2012, and the fresh category, its first business segment.

Bonduelle, a family business, was established in 1853. Its vegetables, grown over 128,000 hectares all over the world, are sold in 100 countries under various brand names and through various distribution channels and technologies. Equipped with 58 company-owned agricultural production and industrial sites, Bonduelle produces in the best growing regions, as close to its clients as possible.

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Telepizza Acquires Pizza Blitz in Switzerland

Telepizza, the world’s largest pizza delivery company outside of the USA, has acquired Pizza Blitz, Switzerland’s original pizza delivery brand. The additional 10 stores bring Telepizza’s global network to an impressive 1,352 stores, supporting the brand’s aggressive growth plans which aim to triple market share over the next three years.

Pablo Juantegui Azpilicueta, chief executive and chairman of Telepizza, comments: “At Telepizza, we are proud of introducing our brand in new markets. For us, Switzerland represents an exciting step for the brand. We have taken into account Swiss people’s distinctive features for adapting our recipes to their taste, always keeping our brand essence: the secret is in dough.”

Headquartered in Madrid, Spain, Telepizza currently operates in more than 15 countries through a network of own stores, franchisees and master franchisees. It recently posted €506 million in chain sales and €63.4 million in EBITDA.

Including its US-based competitors, Telepizza is the fourth largest global player in pizza delivery in terms of number of stores. Telepiza is the market leader in its core markets by number of stores (number one in Spain, Portugal, Chile and Colombia and number two in Poland).

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UK Market For Scotch Whisky Grows in 2016

The UK market for Scotch whisky continued to grow in 2016 – a clear sign of a reversal of declining demand experienced in recent years. But the current level of tax of 77% on an average priced bottle of Scotch is still too high and more support from government is needed, according to the Scotch Whisky Association (SWA).

The SWA is calling for the Chancellor to ‘Stand up for Scotch’ in the UK Budget on 8 March by cutting excise duty on spirits by 2% to help underpin the domestic market for whisky, as well as jobs and investment within the Scotch whisky industry and its UK supply chain. The SWA pointed to the importance of supporting the industry at a time when there remains uncertainty following the UK’s vote to leave the EU.

The most up-to-date figures available from HM Revenue and Customs (HMRC) reveal the number of 70cl bottles of Scotch whisky released for sale in the UK in the first three quarters of last year totalled 57.2 million, up 5.6% from 54.2 million in the same period of 2015.

The positive trend builds on growing demand in 2015 – the first period of growth in the UK since 2010. However, fewer bottles were sold in the first nine months of last year than in the same period ten years ago, with 62.6m bottles released for sale in the first nine months of 2006.

The SWA says that moves towards a fairer and more competitive excise regime in recent Budgets have helped to support the industry. Last spring, excise on spirits was frozen, following a cut of 2% in 2015 – only the fourth time in the last century that duty on Scotch has been cut – and a freeze and a scrapping of the alcohol duty escalator in 2014. A 2% cut next month would give a further confidence boost to a strategically-important British industry, says the SWA.

Julie Hesketh-Laird.

A fair tax for whisky is also likely to boost spirits revenue to the Treasury. Following the 2% cut in 2015, spirits revenue in 2015/16 increased by £123 million to £3.15 billion. Spirits revenue is now £155 million a year higher than when the duty escalator was ended in 2014.

A strong UK market is particularly important for new entrants to the industry – including the 14 Scotch distilleries opened since 2013 and the eight set to start producing this year. Up to 40 new projects are at various stages of planning and development.

And Scotch whisky is vital to the entire Scottish and UK economies, adding £5 billion in value each year, supporting more than 40,000 jobs and exporting £4 billion of Scotch annually to almost 200 markets.

Julie Hesketh-Laird, Scotch Whisky Association acting chief executive, says: “A strong UK market is vital, particularly for new entrants to the industry. In the last few years, 14 new distilleries have started production in Scotland and a further eight are set to open this year. They need a strong domestic base to grow from. The UK is one of the biggest markets for Scotch in the world, but it is fragile and competitive, particularly so in the context of the historic change Brexit will bring. That’s why we want the Chancellor to support our strategically-important industry by cutting duty.”

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Glanbia to Create New €1.5 Billion Turnover Irish Dairy Business

Glanbia plc, the global nutrition group, has agreed to sell a 60% interest in its wholly-owned Dairy Ireland segment to Glanbia Co-op, Ireland’s largest and most valuable co-operative with 14,773 members, for €112 million. Dairy Ireland is comprised of two business units, Glanbia Consumer Foods Ireland and Glanbia Agribusiness.

Glanbia Consumer Foods Ireland is the leading supplier of branded consumer dairy products to the Irish market, as well as an exporter of long-life dairy products. Glanbia Agribusiness supplies inputs to the Irish agriculture sector and is the leading purchaser and processor of grain and the leading manufacturer of branded animal feed in Ireland. Dairy Ireland also has holdings in a number of associates involved in primary manufacture and distribution of farm inputs.  All of Dairy Ireland’s manufacturing operations are based in the Republic of Ireland.

In 2016, Glanbia’s Dairy Ireland segment delivered revenue of €616.2 million, EBITA of €30.7 million and an EBITA margin of 5.0%. Dairy Ireland accounted for 10.1% of Glanbia plc’s wholly owned EBITA in 2016.

Glanbia plc and Glanbia Co-op intend to form a new entity, ‘Glanbia Ireland’, which will encompass Glanbia Consumer Foods Ireland, Glanbia Agribusiness and Glanbia Ingredients Ireland, an existing joint venture between the two partners. The ‘Glanbia Ireland’ strategic joint venture will be 60% owned by Glanbia Co-op and 40% owned by Glanbia plc.

A 60:40 joint venture between Glanbia Co-operative Society and Glanbia plc, Glanbia Ingredients Ireland is the largest dairy processor in Ireland, processing a total of 2.2 billion litres of milk per year with approximately 700 employees and sales revenue of over €836 million in 2016. Its products, the large majority of which are exported to more than 60 countries, include milk powders, butter, cheese, whey protein, milk protein and casein. Its customers include many of the large global food and infant formula manufacturers as well as more regionally focused players across Europe, Middle East, Africa and Asia.

Siobhan Talbot, group managing director of Glanbia, comments: “The creation of Glanbia Ireland makes strategic sense for the shareholders of both Glanbia Co-op and Glanbia plc. It brings together in a single structure the ownership, operations and objectives of Glanbia’s Irish dairy and agri-businesses. With €1.5 billion of annual revenue and a 2.4 billion litre milk pool, it will be a large scale, efficient business with a high quality supply chain and the strength and diversity to face the future with confidence. Glanbia plc will continue to focus on its global nutrition strategy through the platforms of Glanbia Performance Nutrition (GPN), Glanbia Nutritionals (GN) and strategic joint ventures for the benefit of all shareholders.”

There are currently plans for a strategic investment programme in Glanbia Ireland of between €250 million to €300 million in the period between 2017 and 2020. This investment programme will increase capacity to support the stated growth ambitions of the Glanbia milk suppliers and optimise value adding opportunities. The financing of the investment will largely be sourced from dedicated bank facilities in Glanbia Ireland.

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New Geographical Indication From the United Kingdom

The European Commission has approved the addition of a new product from the United Kingdom to the quality register of Protected Geographical Indication (PGI). The ‘West Wales coracle-caught salmon’ is salmon which has been caught using the ancient Welsh traditional method of coracle fishing. Due to its wild nature, this salmon does not contain any artificial additives and/or colourings.

It is fished in the rivers Tywi, Taf and Teifi in West Wales. Both the Tywi and Teifi rivers have been classed as Special Areas of Conservation (SAC) under the European Habitats Directive. Coracle fishing is an old craft and skill, recorded in the 11th century, that has survived into the 21st century — ‘a living tradition’.

Although coracles were once used extensively throughout Wales, they are now exclusive to the Taf, Tywi and Teifi. These three rivers are the only places in Europe where coracle fishing is still practised. The new denomination will be added to the list of over 1,380 products already protected.

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Arla Foods Achieves Strong Branded Growth in a Volatile Market

Although group revenue declined by 6.8% to €9.57 billion, as a direct result of lower sales prices in the global dairy market, Arla Foods continued to improve the quality of its sales by moving more milk from bulk to brands, and managed to increase net profit grew by 20.7% to €356 million for its 2016 financial year. Indeed, Arla Foods delivered a solid business performance throughout 2016 and made a strong start to the delivery of its strategy, ‘Good Growth 2020’, despite highly volatile milk markets.

In the second half of the year Arla introduced increases in its prepaid milk price to farmers by nearly 30 per cent and expects annual revenue and performance price to improve in 2017.

In a year with extreme volatility in raw milk production and farm gate prices, Arla delivered financial results above its targets on most measures, with net profit at 3.6% of sales, a strategic branded volume driven revenue growth of 5.2% and a growth in brand share to 44.5%. Leverage was 2.4.

During the first eight months of 2016, the dairy industry was characterised by low global milk prices due to a period with an over-supply of milk, particularly in Europe. European milk supply then declined significantly in the second half of the year, supporting a significant milk price rally.

Peder Tuborgh, chief executive of Arla Foods.

In the last four months of 2016 Arla delivered four consecutive increases in the on-account milk price – representing close to a 30% increase. This is the most rapid increase in the prepaid milk price that Arla has ever recorded, and this very positive development has continued for the first months of 2017, delivering a total increase of over 40% in the milk price to Arla’s farmer owners.

“Our 2020 strategy has guided our business in 2016 as we sought to mitigate the impact of the extremely volatile market in Europe. We are more focused than ever on brand and category development as well as our geographic markets, and we succeeded in building our market shares in many of our strategic growth regions outside the EU,” says Peder Tuborgh, chief executive of Arla Foods.

He elaborates: “The year was very tough for our farmer-owners, as they were not immune to the sustained period of low milk prices in the global dairy industry for the last two and a half years. Consequently, the multiple increases we were able to deliver in Arla’s prepaid milk price during the last four months of the year were much-needed.”

Net profit of the Arla Group in 2016 grew 20.7% to €356 million, of which the profit share of Arla Foods amba is €347 million, corresponding to 3.6 per cent of group revenue.

The 2016 performance price decreased 8.3 per cent to 30.9 EUR-cent/kg, compared to 33.7 EUR-cent/kg in 2015. The performance price reflects the ability of the company in any given market situation to add value to its owners’ milk through innovation, brands, cost-saving programs, global growth, and other strategic and operational efforts.

The performance price is a key element in measuring Arla’s relative performance versus its peers, which is done consistently through a peer group index. The preliminary peer group index for 2016 is 105. The strategic ambition is to deliver a peer group index of 103 to 105 as stated in Arla’s strategy, Good Growth 2020.

Increasing Branded Sales Volumes

Despite lower overall milk supply in 2016, Arla managed to move more than 340 million kg of milk from trading into the more profitable retail and foodservice sales channel. Arla’s strategic brands all gained growth momentum in 2016 and delivered increased strategic branded volume driven revenue growth, which is defined as revenue growth associated with growth in volumes from strategic branded products while keeping prices constant:

* Arla® grew 4.5 per cent (up from 2.5 per cent in 2015)

* Lurpak® grew 7.7 per cent (6.1 per cent in 2015)

* Castello® grew 3.0 per cent (0.1 per cent in 2015)

* Puck® grew 10.6 per cent (9.9 per cent in 2015).

Expectations For 2017

In 2017, Arla expects group revenue to grow significantly due to a continued growth in the company’s branded business as well as higher prices in the market globally. Arla targets a net profit share for 2017 in the range of 2.8 to 3.2 as the company continues to focus on paying out the largest possible share of profit via the prepaid milk price to farmer-owners.

Arla expects 2017 to be another year of improvement in financial leverage within the stated long-term target range of 2.8 to 3.4.

“We are confident that the improved quality of our business as well as our Good Growth 2020 strategy put us in a favourable position and will ensure that we are ready to capture the full potential of the market as it continues to evolve and globalise in 2017. You will see Arla take an even stronger position in the market as an innovative dairy company that provides natural and healthy food to consumers and customers worldwide,” says Peder Tuborgh.

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Glanbia Delivers Seventh Year of Double-digit Earnings Growth

Glanbia, the global nutrition group, increased total group revenue (including its share of joint ventures and associates) by 0.8% to €3.697 billion (up 1.3% at constant currency) and total group EBITA by 12.6% to €349.8 million (up 12.8% at constant currency) for the financial year ended 31 December 2016. Total group EBITA margin was 9.5%, up 100 bps (constant currency and reported). Adjusted earnings per share for the year were 87.66 cent, up 11.2% at constant currency (+10.8% reported).

Glanbia’s Performance Nutrition (GPN) business increased EBITA by 20% at constant currency over the prior year to €162.6 million (up 19.9% reported). Glanbia Nutritionals (GN) achieved EBITA of €111.8 million, a 4.5% increase on prior year at constant currency and up 4.9% on a reported basis.

Capital expenditure during 2016 amounted to €89.5 million of which €57.1 million was strategic capital expenditure which was focused on GPN and GN. The majority of the capital spend related to enhancing the group’s innovation capabilities, finalising additions in its high-end cheese and whey facilities at Idaho in the US, and various systems implementations.

Siobhán Talbot (pictured above), group managing director, says: “I am pleased that Glanbia had a strong group-wide performance in 2016 delivering our seventh year of double-digit earnings growth coupled with strong cash conversion. It has been an exciting start to 2017 with a number of key strategic initiatives progressing which will shape the future direction of the group.”

Since the start of 2017, Glanbia Performance Nutrition has made two acquisitions within the plant based nutrition category and direct to consumer channel further expanding its channel and consumer reach. Glanbia is also in advanced discussions to form a new joint venture in the US to build a large scale cheese and whey facility. At home, Glanbia is planning to sell 60% of its Dairy Ireland segment to Glanbia Co-operative Society for €112 million.

“All of these initiatives demonstrate a desire to play to our strategic strengths and are aligned to our vision to be one of the world’s top performing nutrition companies,” she adds.

Looking ahead, Glanbia expects the adjusted EPS of the continuing group to grow between 7%-10% constant currency in 2017 on a pro-forma basis. The Dairy Ireland transaction is expected to be 5%-7% adjusted EPS dilutive in a full-year.

Growth in 2017 is expected to be more evenly balanced across Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN). GPN growth will be driven by organic brand development and innovation as well as a contribution from recent acquisitions. GPN expects like-for-like branded revenues to grow in the mid-single digit range with EBITA margins expected to be in the mid-teen range. GN expects EBITA growth in 2017 to be driven by continued growth in the value added portfolio of Nutritional Solutions.

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