The Hillshire Brands Company, formerly Sara Lee Corporation, has completed the previously announced separation of its international coffee and tea business – DE Master Blenders 1753 – and has started trading on the New York Stock Exchange.

The Hillshire Brands Company is the US leader in meat-centric food solutions for the retail and food service markets. The company generates nearly $4 billion in annual sales and has approximately 8,500 employees. Hillshire Brands’ portfolio includes iconic brands such as Jimmy Dean, Ball Park, Hillshire Farm, State Fair, Sara Lee frozen bakery and Chef Pierre pies, as well as artisanal brands Aidells and Gallo Salame.

Headquartered in the Netherlands, DE Master Blenders 1753 is an international coffee and tea company. Its coffee and tea products are available in more than 45 countries and with sales of Eur2.6 billion, DE Master Blenders 1753 is the third largest company in the coffee and tea industry.

Sara Lee has chosen Hillshire Brands Company as the new name for its North American business. Sara Lee will become two independent pure-play, publicly-traded companies on June 28, 2012. DE Master Blenders 1753 will focus on international coffee and tea and Hillshire Brands will focus on meat-centric food products and foodservice operations. Hillshire Brands will include several popular, market-leading consumer brands including Jimmy Dean, Hillshire Farm,BallPark, Aidells, Gallo Salame and State Fair. Hillshire Brands will be listed on the New York Stock Exchange.

“As a pure-play company with strong momentum, we needed a name and identity that captures the potential of this new organization,” says Sean Connolly, chief executive officer of Sara Lee North American Retail and Foodservice, who will become chief executive officer of Hillshire Brands. “Hillshire Brands represents our strong heritage in quality and great taste, as well as our ambitions for growing our portfolio of iconic brands in the future.” The Hillshire name was inspired by the Hillshire Farm brand, which Sara Lee acquired in 1971.

Danish Crown, Europe’s largest meat processor, has reported a 1.2% decline in first half profit to DKr733 million (Eur98.6 million), chiefly due to increasing commodity prices. Consolidated revenue increased from DKr24.7 billion in the first half of the previous year, to DKr27.6 billion, reflecting organic growth as well as the acquisition of D&S Fleisch in Germany and Parkham Foods in the UK

”When commodity prices go up, it is our responsibility to ensure that this is reflected in the end prices, but there is a slight delay in the market which means that the price increases do not take place concurrently in the various parts of the value chain,” explains Preben Sunke, chief finance officer of Danish Crown.

The results also reflect increasing earnings by the Pork Division, but in a cautious market. ”We are noting a certain hesitation among consumers in several parts of the world, and although we are largely able to adapt to new trends, for example an increasing demand for inexpensive cuts or different product mixes, we are very much aware of this trend,” he says.

Danish Crown is Europe´s largest pig slaughtering business and the world’s largest exporter of pork. It is also Denmark´s largest cattle slaughterhouse company.

”Together with the uncertainty about future demand, turbulence in the financial markets is also a factor to be reckoned with when engaging in cross-border trading.” Preben Sunke adds: “Given the state of the market and the intensifying competition, the results are satisfactory and testament to Danish Crown’s stability and adaptability, also in response to sudden new developments.”

Despite the difficult economic conditions, Hilton Food Group, Europe’s leading specialist retail meat packing business supplying major international food retailers in twelve countries, made good progress during 2011. The group has reported a 10% rise in profit before tax to £24.5 million as it increased the volumes of meat packed by 6% and revenue by 14% to £981.3 million for 2011. Revenue growth was driven by the start-up of a new packing facility in Denmark and comparatively strong economic conditions in Sweden and Central Europe.

Volume growth of 6.0% reflected the new business in Denmark as underlying volumes were slightly reduced, due to pressure on consumer spending levels in the face of increased meat prices. Continued strong cash generation has enabled the UK-based meat group to maintain a high level of investment in equipment and facilities, to underpin the growth of its businesses over the longer term.

The group has a strong balance sheet, with net debt level at £18.7 million only marginally increased, despite capital expenditure of £25.2 million in 2011, which included £14.6 million on the new Danish facilities. Indeed, over the eight years to December 2011, Hilton has invested over £140 million on developing its packing and storage facilities.

74% of the group’s revenue is now generated outside the UK, with 77% of the volume of meat packed outside the UK, in Northern and Central European countries.

Robert Watson OBE, chief executive of Hilton Food Group, comments:  “Once again I am pleased to report that during 2011 Hilton has delivered a good performance, continuing to demonstrate the resilience of the group’s business model. Revenue growth was strong in 2011 and further success was achieved with new product and packaging initiatives. We have been able to maintain a high level of investment in our modern meat packing facilities across Europe, designed to keep them at state-of-the-art levels.”

UK grocery chain Morrisons has expanded its meat processing operations with the acquisition of a 105,000 sq ft facility in Winsford, Cheshire from Vion UK, part of the Netherlands-based meat co-operative. The site is a centralised fresh pork and lamb retail packing plant which has the capacity to expand into beef products and increase its overall existing production. The acquisition will give Morrisons even greater capacity as it continues to grow and exert greater control over the quality of the meat products sold in store.

Morrisons is the second largest fresh food manufacturer in Britain, employing over 7,000 people, and a central part of its differentiation from its competitors is this vertically integrated model. The food retailer owns a number of bakeries, meat processing facilities and produce packing factories, enabling it to have a greater control over the quality, cost and the supply of fresh food into its 476 stores nationwide.

Over 300 staff at the facility in Winsford will have their jobs secured as a result of the deal, with the potential for further roles in the next year as the business grows. This acquisition is the latest in a number of transactions to strengthen Morrisons’ manufacturing capabilities. Morrisons has pledged to invest £200 million over a three year period to support the growth of the business and acquired Derby-based FlowerWorld last year, a specialist cut flowers business, as part of this.

“Owning the manufacturing sites that produce our fresh food is crucial to Morrisons because it ensures we can control quality and keep down costs for our customers,” explains Martyn Fletcher, group manufacturing director of Morrisons. “As Morrisons continues to grow, it is important we have the facilities to support us. This facility is a high quality, purpose built meat processing factory and will be an ideal addition to the fantastic manufacturing sites we already own.”

The outlook for the EU meat industry in 2012 will be positive for most players, although significant differences exist between the sectors and the various positions along the value chain, according to Rabobank. Supply discipline will be the key success factor for the EU meat industry’s performance.

In the beef sector, farmers are best positioned to benefit from the tight market situation. Processors will need to fight for limited supply, which could affect their margin positions.

In the pork sector, farmers may see margins improve as supply reductions start paying off. Processing overcapacity will further sharpen competition for sufficient animals for slaughter and meat for further processing, which could keep margins relatively low.

In the vertically integrated poultry sector, margins are expected to improve slightly for farmers and processors alike.

However, Rabobank cautions that current market conditions are fragile: feed prices, the economy, export markets and exchange rates could easily shift in 2012, posing significant risk to the industry’s margins at both the primary and processing levels.

British and Irish meat processor Dunbia has expanded its operations through the purchase of English pork business Heathfield Foods. The deal increases the total number of processing facilities in the Dunbia Group to ten throughout the UK and Ireland.

Jim Dobson, managing director of Dunbia, comments: “The strategic location of the Heathfield Foods facility coupled with its strong pork supply base positioned it as a perfect fit for the Dunbia Group. By dovetailing into the existing business operations and infrastructure of Dunbia, the site will further increase our overall pork processing capabilities.”

The Heathfield Foods facility has been renamed to Dunbia (Crewe) and Dunbia production commenced on 24th October. Over the years Dunbia has developed to become one of Europe’s leading suppliers of beef, lamb and pork products for the national and international retail, commercial and food service markets.

Irish food and drink exports in 2011 are expected to reach a record high of €8.9 billion, an increase of more than 12%, or almost €1 billion, on 2010 levels. This follows growth of €700 million in 2010 leaving Ireland’s food exports in 2011 some 25% ahead of 2009 levels. Meanwhile, against a backdrop of strong global demand and high prices, eight out of ten exporters surveyed by Bord Bia rate their prospects as improved or very improved compared with this time last year.

All major categories are expected to show growth this year, led by dairy and meat, which combined account for more than 60% of Ireland’s total food and drink exports. Strong global prices are driving export growth, with the FAO food price index 26% ahead of this time last year, however increased volumes of dairy products, pigmeat, whiskey, cider, confectionery, sauces/soups and mushrooms are also boosting revenues. It is estimated volume growth across these categories will account for up to 30% of the total.

“As world supplies struggle to keep pace with the growth in global demand, the outlook for food exporters for the remainder of the year and into 2012 remains positive,” points out Aidan Cotter, chief executive of Bord Bia.  “The latest surge in world food prices is further evidence that the era of cheap food is at an end, yet while forecasts point to a longer term upward trend, the conditions for volatility in prices remain in the form of weather-related events, fluctuating stock levels, exchange rates and market speculation.”

Figures for the first half of 2011 show some change in the market distribution of Irish food and drink exports. The UK remains the principal export destination, although its share of total exports fell from 44% to just over 40% compared to the same period last year. This reflects the fact that much of the growth in dairy and to a lesser extent prepared foods, beverages and beef has occurred outside of the UK market.

The proportion of exports going to other European markets jumped by two percentage points to 35% for the period as stronger dairy, beef, beverage and prepared food exports boosted trade. International markets accounted for 25%, driven in particular by stronger dairy exports.

While the consumer search for value continues apace, the initial signs of rising consumer prices have emerged acrossEuropeduring 2011. In July 2011, the consumer food price index for the euro area was almost 3% ahead of a year earlier while UK prices were 6% higher than a year earlier.

The ongoing volatility in exchange rates presents a challenge for Irish exporters. Current exchange rates leave the euro 9% stronger against the US dollar and 5% stronger against sterling than September 2010.

The Irish manufacturing sector has improved its competitiveness over recent years with Ireland’s Competitiveness Scorecard for 2011 published by Forfas showing a more productive and cost competitive industry. During the period April 2008 to February 2011, Ireland’s harmonised competitiveness index depreciated by more than 12% in real terms, which is helping the sector’s competitiveness on export markets.

UK meat processor Cranswick has cautioned that rising raw material costs undermined its margins and that operating profit for the first half will be below the corresponding period last year. The company is in discussions with customers about rising input costs but the extent and the time lag in recovering these together with other inflationary pressures will impact its financial performance.

Cranswick, which supplies fresh pork, sausage, bacon, cooked meats, charcuterie and sandwiches to food retailers, food service operators and manufacturers, has also warned that the full year result will be below its original expectation. According to Cranswick, the difficulties facing the UK consumer and the dynamics of the competitive UK market in which the company operates are making the current financial year more demanding than usual.

Cranswick achieved pre-tax profit of £47.1m on turnover of £758m last year. However, the board remains confident, given Cranwick’s sound financial position, of the continued long term success and development of the business.

Cherkizovo Group, one of Russia’s leading integrated and diversified meat producers, has commenced operations at the meat processing plant in the Kaliningrad region, which it acquired in 2010. The first production line is for smoked sausage and has a production capacity of 10 tonnes per day or 300 tonnes per month.

The plant was acquired in September 2010 with the aim of focusing its operations on the production of delicacy meat products. Part of the planned modernisation includes the installation of new equipment manufactured by Italian company, Travaglini. This newly renovated meat plant will produce smoked sausages, using the best Russian and European technologies. Investment in the first stage of the project is $2.9m.

“We will continue the modernisation process at the site and by the beginning of 2012, we plan to launch a second production line for delicacy products and hams,” says Sergey Mikhailov, chief executive of Cherkizovo Group. “One of the most important benefits of this site is its location in the free economic zone, where it receives special customs preferences. This advantageous position will enable Cherkizovo to leverage opportunities for the effective distribution of value added products in the European part of Russia.”

Cherkizovo Group has been restructuring its meat processing business to reduce costs. “Last year’s acquisition of the meat processing plant in the Kaliningrad region was another significant step towards increasing efficiency and securing a strong resource base for this segment,” he adds.

High and volatile agricultural commodity prices are likely to prevail for the rest of this year and into 2012, according to the latest analysis published in the UN Food and Agriculture Organisation’s biannual Food Outlook. The report cites a sharp rundown on inventories and only modest overall production increases for the majority of crops as reasons for continuing strong prices.

The next few months will be critical in determining how the major crops will fare this year, the report notes. Although prospects are encouraging in some countries such as the Russian Federation and Ukraine, weather conditions, featuring too little and in some cases too much rain, could hamper maize and wheat yields in Europe and North America.

“The general situation for agricultural crops and food commodities is tight with world prices at stubbornly high levels, posing a threat to many low-income food deficit countries,” says David Hallam, director of FAO’s Markets and Trade Division.

International food prices, which earlier this year soared to levels seen in the 2007-8 food crisis, dropped a modest one percent in May. The FAO Food Price Index averaged 232 points in May from a revised estimate of 235 points in April but was still 37 percent above May 2010.

Declines in international prices of cereals and sugar were responsible for the slight decrease in the May index, more than offsetting increases in meat and dairy prices.

Current prospects for cereals in 2011 point to a record harvest of 2,315 million tonnes – a 3.5 percent increase over 2010, which marked a one percent drop over 2009.

Wheat

Global wheat output is expected to be 3.2 percent up from last year’s reduced crop, mostly reflecting improved yields in the Russian Federation.

World production of coarse grains is set to climb 3.9 percent, exceeding the record set in 2008. Most of the increase is expected from the Russian Federation and the other members of the Commonwealth of Independent States (CIS).

Although preliminary, world paddy production prospects are for a record harvest of 463.8 million tones – a two percent increase over last year on expectations of improved weather conditions.

World cereals stocks at the close of the crop seasons in 2012 are put at 494 million tonnes, up only two percent from sharply reduced opening levels.

Export Ban Removal

Demand for cereals has also been increasing so that the 2011 crop, even at record levels, is expected to barely meet consumption, providing support to prices. But “the Russian Federation’s announcement that it will remove its cereals export ban from July 2011 could help relieve some of that pressure,” point out FAO’s grain analyst, Abdolreza Abbassian.

In the oilseeds market, supplies in 2011/12 may not be sufficient to meet growing oil and meal demand, implying further reductions in global inventories.

By contrast, the global supply and demand balance for sugar points to some improvements, supported by large anticipated production in 2010/11, which is likely to surpass consumption for the first time since 2007/08.

Record Meat Prices

Regarding meat, high feed prices, disease outbreaks and depleted animal inventories were forecast to limit the expansion of global meat production to 294 million tonnes in 2011 – only one percent more than 2010. The international meat price index hit a new record at 183 points in May 2011 and a combination of strong import demand and limited export availability point to a further firming of prices in the next few months.

Following two consecutives years of low prices, fish markets have rebounded this year. Production in 2011 is heading to a record but prices are likely to be supported by strong demand from the developing countries.

Food Import Bill

In international food trade, the global food import bill is expected to reach a new record of $1.29 trillion in 2011 — 21 percent more than in 2010. Low-Income Food Deficit Countries (LIFDCs) and Least Developed Countries (LDCs) would be hardest-hit since they would likely have to spend respectively 27 and 30 percent more on food imports than last year.

Expenditures on imported foodstuffs for vulnerable countries could account for roughly 18 percent of their total import bills compared to a world average of around seven percent.

The report highlights some of the differences in the way investors behaved in the price surge of 2010/11 versus 2007/08. Much has been done to improve market transparency but more is needed according to guest experts contributing to a Special Feature in Food Outlook.

UK meat processor Cranswick increased pre-tax profit by 8% to £47.1m for the year ended March 31st 2011 on underlying sales ahead by 4% to £758m with volumes up 6%. Operating profit at £48.7m increased by 6% and at 6.4% of sales was 0.2% ahead of the level achieved last year. The increase in operating profit is attributable to a combination of sales growth and improved operational efficiency.

Sales of fresh pork, which benefited from the additional contribution from the CCF Norfolk acquisition, increased by 17%. Sausage sales grew by 7%, bacon by 17% and sandwiches by 13%. Sales of charcuterie products were 14% lower, following the decision by one retail customer to move to a direct sourcing policy. Reported cooked meat sales were 8% lower reflecting the transfer of the Deeside cooked meats business in North Wales into Farmers Boy (Deeside), part of the manufacturing division of Wm Morrison Supermarkets. Adjusting for this cooked meats sales were 8% ahead on a comparable basis.

Martin Davey, chairman of Cranswick.

During the year, Cranswick also moved into pastry products and in particular sausage rolls. Cranswick is well known as a major private label supplier to the multiple food retailers but during the year a brand marketing manager was appointed to drive the sales of branded products.

The major capital project at the Preston site near Hull was completed during the year and capacity has been increased by over 50%. In addition, the introduction of robotics, technology used for the first time in a UK fresh pork facility, has delivered significant efficiency benefits. As part of the plant’s on-going development United States Department of Agriculture (USDA) accreditation has been achieved and will allow the export of specific product groups to the US and enable the business to take advantage of substantial price differentials compared to those available in Europe. Cranswick has invested £100m in developing industry leading processing facilities over the past five years.

“This has been a very positive year for Cranswick. Record levels of sales and profitability have been achieved and substantial investment has been made in the asset base to improve efficiency and to provide the capacity for continued growth,” says Martin Davey, chairman of Cranswick. “That said, the difficulties facing the UK consumer, along with rising raw material prices and the dynamics of the competitive market in which the company operates suggests that the year to 31 March 2012 may be more demanding than usual.”

VION, Europe’s largest meat group, is proposing to re-structure its British sausage processing business which will result in the transfer of all operations currently undertaken at the Sheffield site to the VION Hall’s site at Broxburn in Scotland.

Both the Sheffield and Broxburn sites are under-utilised and operate significantly below capacity, which impacts on operational costs. The Broxburn site could accommodate all of Sheffield’s production, as well as offer the potential for further expansion in the years ahead. As a result of the proposed re-structuring, the VION Sheffield site is at risk of closure, with 205 jobs potentially affected.

The cost of buying and throwing away good food and drink reached £13.7 billion last year, reveals new analysis by the Local Government Association, the voice for local authorities in England and Wales. The analysis, which combined the purchasing price of food which was not eaten with the cost to council tax-payers of sending it to landfill, reveals that households paid an estimated £520 each for uneaten food over the past 12 months.

The LGA is calling on retailers to start making a serious contribution to reducing the amount of food waste discarded from people’s homes, in particular changing the way they promote the sale of perishable goods like fruit, vegetables, dairy and meat. Town hall leaders want to see multi-buy deals, which encourage people to take more food than they need, replaced by discounts on individual products, which offer customers the same value without incentivising over-buying.

“While campaigns like Love Food, Hate Waste are encouraging people to make better use of the food they buy, the source of the problem is not being adequately addressed. With more than five million tonnes of edible food thrown out each year, way too much food is being brought into homes in the first place. Retailers need to take a large slice of responsibility for that,” comments Cllr Clyde Loakes, LGA environment board vice chairman. “Buy one get one free deals, which give consumers a few days to munch through 16 clementines, are not about providing value for money. They are about transferring waste out of retail operations and into the family home. Retailers should scrap multi-buy deals which encourage people to take more than they need and replace them with discounts on individual products which will help reduce excess consumption and increase customer choice.”

The LGA is calling on retailers to set more ambitious waste reduction goals to bring them into line with the big improvements in waste management being produced by local authorities and residents.

Retailers and manufacturers claim that they have prevented 670,000 tonnes of food waste since they entered the voluntary Courtauld Commitment to tackle waste in 2005. The total amount of packaging waste being produced each year since 2005 has remained the same.

In that same time councils and residents have reduced annual landfill by more than 7 million tonnes and almost doubled the recycling rate from 22% of all household waste to nearly 40%. Despite those achievements local authorities will still pay more than £550m in landfill tax this financial year as they put more than 10 million tonnes of waste in the ground.

Exports of UK food and non-alcoholic drinks grew for the sixth consecutive year in 2010 to pass the £10b mark for the first time ever. UK food and drink export figures showed a healthy 11.4% increase on 2009 figures, bringing in a total of £10.83b, and highlighted healthy emerging markets amongst non-EU countries.

Amongst the highest performing sectors were dairy (up 24.6% to £977.1m), fish and seafood (up 13.8% to £1.326.9b), meat (+11.7% to £1.46b), prepared foods including soups, sauces and ice creams (+10.3% to £2.59b) and cereals and bakery (+8.1% to £2.08b).

Amongst the top export countries, Ireland remains the principal importer of UK products followed by France, Netherlands, Germany and Spain. Strong performance was also recorded in Hong Kong (+36.3%), the US (+28.9%) and the United Arab Emirates (+22.7%).

Highly encouraging has been the growth of new markets outside the current top 20 export destinations. South Africa recorded a +60.7% increase with a 70.1% increase in sweet biscuits and 170.6% increase in unsweetened cakes and baked goods. China recorded a 28.5% increase – incorporating a 1633% increase in dairy – and Israel a 38.9% overall increase with a 23.3% rise in sugar confection.

“This is excellent news for British food exporters and for the British economy. These figures show that our products are sought across the globe for their quality and great taste,” says Melanie Leech, director general of the Food and Drink Federation, the voice of the UK food and drink manufacturing industry. “The food and drink industry must be at the heart of the UK’s strategy for economic growth – and we look forward to working in partnership with the Minister and his colleagues in Defra, BIS and across Government to ensure that we maximise the economic potential of our sector and ensure that we play our part in contributing to global food security.”

Premier Foods has agreed to sell its East Anglian canned grocery operations to Princes for £182m. The sale is in line with Premier’s strategy of reducing debt and follows the proposed disposal of its meat-free business.

The canned operations are part of the Premier’s grocery division and have two manufacturing sites in the UK at Long Sutton, in Lincolnshire, and Wisbech, in Cambridgeshire. The business being sold employs approximately 1,600 people and manufactures a wide range of canned foods including baked beans, pasta, vegetables, soup, meat and fruit.

Included in the sale are the Crosse & Blackwell, Farrows, Fray Bentos and Smedley’s brands and certain other minor brands which are used on canned products. Premier has agreed a long-term licence with Princes to enable it to use the Branston brand on baked beans and pasta in cans and the Batchelors brand on vegetables, wet soups and pasta in cans, and a short-term licence to use Hartley’s on canned fruit. The sale excludes Premier’s Ambrosia branded canned desserts operations in Lifton, Devon, which are being retained.

Robert Schofield, chief executive of Premier Foods.

For the year ended 31st December 2010, the disposed business is expected to have revenues of £334.2m, EBITDA of £31.7m and a trading profit of £27.8m. As at 31st December 2010, the gross and net assets being sold were £167.1m. The purchase price represents a multiple of 5.75 times EBITDA.

The sale will reduce Premier’s average debt/EBITDA ratios by around 0.2x, making a further contribution toward reaching the target leverage ratio of below 3.25x.

“We are pleased to have reached an agreement to sell our canned grocery operations. As a predominantly non-branded business, it has not been an area of focus for us. Selling the business simplifies our operations and allows us to concentrate our efforts on our current portfolio of great British brands,” says Robert Schofield, chief executive of Premier Foods.

Combined with the proposed disposal of its meat-free business, Premier will have delivered total gross proceeds of £387m, significantly accelerating the delivery of its financial strategy and easing its debt burden.

“This proposed acquisition is an excellent strategic fit for our group and will enable us to further grow our business in the UK and continental Europe by offering our customers a broader range of ambient food products and brands,” remarks Ken Critchley, managing director of Princes. The transaction is expected to complete in late March 2011.

The world’s largest beef producer JBS Group of Brazil is reported to be preparing an offer of $21 a share for Sara Lee, which would value the US-based food and beverage group at about $13.4b. Sara Lee is believed to have already rejected an offer of about $11b from JBS.

If successful this time, JBS is expected to break up Sara Lee. Private equity group Blackstone is likely to be interested in Sara Lee’s coffee business.

The acquisition of Sara Lee would be in line with JBS’s geographical expansion strategy. The Brazilian beef processor has been expanding by acquisitions in the US and Europe. In North America, JBS acquired meat processor Swift & Co in 2007 and part of Smithfield Foods in 2008. The following year it bought poultry producer Pilgrim’s Pride.

Sara Lee’s North American meat retail business had sales of $2.8b last year, which would be equivalent to 15% of JBS’s total revenue.

Sara Lee recently sold its European personal care business to Unilever for £1b and has been divesting in order to focus on its coffee and meat operations.

Northern Ireland meat processor Linden Foods has opened a new state-of-the-art retail packing and product development facility in Dungannon. The facilities are the result of a £10m investment by the company which will create 85 new jobs over the next three years bringing Linden’s total employment figure to 520. Invest NI has offered assistance totalling £497,000 part funded by the European Regional Development Fund (ERDF).

The new 5,740 sq m premises are located adjacent to the company’s main processing site and include an innovation centre incorporating a development kitchen as well as new preparation, production and dispatch areas. Linden Foods anticipates that as a result of the investment in the new facilities and in new product development the company will be able to increase sales by 32%, most of which will be sold in markets outside Northern Ireland.

“Linden Foods business strategy remains focused on innovation. We are committed to providing our customers with a range of exciting new products that are well ahead of current trends within the food retailing sector,” says Gerry Maguire, managing director of Linden Foods. “This new facility, which includes a dedicated development kitchen where new recipes can be trialled and crafted, is the next natural step for the company’s growth and will allow us to bolster our position as market leader within the meat processing industry.”

Linden Foods is part of the Linden Food Group, which also incorporates Slaney Foods and Irish Country Meats. The group has a turnover of more than £300m and employs 1,100 people across seven sites in Ireland and England.

CAPTION:

Northern Ireland Enterprise Minister Arlene Foster is pictured with Trevor Lockhart, chairman of Linden Foods.

The Republic of Ireland’s food and drink export sales rose by 11% in 2010 to reach €7.9 billion. The increase, amounting to just over €800 million, was supported by a more stable consumer environment, reduced exchange rate pressures, and improved relative competitiveness. It was also boosted by rising global prices for most agricultural commodities.

“The strength of the industry’s export performance is all the more commendable for the fact that it has been achieved in what remains a highly competitive marketing environmentt” points out Dan Browne, chairman of Bord Bia, the trade development and promotion agency for Irish food, drink and horticulture. “All major categories recorded increases, led by dairy, which jumped by more than €300 million or 17%. Meat and livestock exports were almost €200 million higher while beverage and prepared food exports recorded growth of €130 million and €100 million respectively.”

Aidan Cotter (left), chief executive, and Dan Browne, chairman of Bord Bia.

The Irish food and drink industry is continuing to increase its penetration of Continental EU markets. Exports to the mainly eurozone markets increased by 14% during 2010. Continental EU markets now account for 34% of the industry’s total exports of food and drink.

The economy continues to dominate consumer thinking and behaviour throughout many key European markets, where more consumers believe their purchasing power will decrease than increase over the coming two years. The results of the fourth wave of Bord Bia’s Feeling the Pinch survey, completed in late 2010, also shows a high degree of uncertainty remains among Irish and British consumers. Indeed, the only certainty that appears to be emerging is that significant change is unlikely to materialise in 2011 and as the search for value continues, consumers are embracing the ‘new normal’.

Nevertheless, looking ahead to 2011 the prospects for Irish food and drink exports remain positive, helped by strong global demand for commodity products and a relatively tight supply situation in a number of key product categories. “In a year in which the world’s population will reach seven billion, growth in global demand is set to underpin food markets well into the future, albeit with some volatility to be expected,” according to Aidan Cotter, chief executive of Bord Bia. “The challenge for the Irish food and drink industry is to maintain its current momentum, particularly in the areas of cost competitiveness, innovation and marketing.”

Reduced costs and improved results at its foreign subsidiaries were behind an increase in full year net profit from DKr1.16b to DKr1.65b (Eur220m) at international meat group Danish Crown. Revenue advanced from DKr44.76b to DKr45.21b at the group, which is Europe´s second largest pig slaughtering business.

Since May 2009, Danish Crown has been implementing an efficiency improvement programme – DC Future –designed to cut costs, restore competitiveness and improve earnings. The strategy is now starting to pay dividends.

A total of DKr1.32b will be paid out to the company’s owners, the highest level of supplementary payments in Danish Crown’s twenty years history. The supplementary payments will translate into DKr0.75 per kilogram for sow producers, DKr0.95 for pork producers and DKr1.25 for cattle producers.

Danish Crown’s foreign divisions also posted record earnings last year. The Danish group exports over Eur3.4 b of meat annually. This represents 3.9% of Denmark’s total exports and 39% of the country’s agricultural exports.

In recent years, Danish Crown has become increasingly international, and nearly two-third of the workforce is based outside of Denmark. ”This is a natural development for a company which exports approx. 90% of its production. Moreover, a continuous reduction in production costs is needed if we are to remain competitive. Today, 84% of our processing activities take place outside Denmark, and this is a precondition for being able to slaughter Danish pigs in Denmark, and thereby maintain a considerable number of workplaces in this country,” says Kjeld Johannesen, chief executive of Danish Crown.

New guiding principles on country of origin labelling to provide British consumers with clear, accurate information on the origin of their food have been published. The guidance, titled ‘Principles on Country of Origin Information’, has been developed by retailers’ organisation, the British Retail Consortium (BRC), in association with representatives of food manufacturers, commercial caterers and the hospitality trade.

Based on the labelling practices of the best performers in the food chain, it aims to bring others into line to ensure a higher quality and consistency of origin – information everywhere that consumers buy food.

The Principles apply to meat, processed meat products (sausages, bacon, ham etc) and milk, fresh cream, cheese and butter. They have been devised to ensure that the term ‘British’ can only be used for meat from animals born and reared in the UK, and dairy products made from milk produced here. Many British grocers already use this approach to origin labelling, with the overwhelming majority committed to going one step further, providing country of origin information on the meat in all ‘composite’ products – such as soups and ready meals.

“This guidance formalises an approach to country of origin labelling which Britain’s large retailers have already agreed. In fact, many grocers already go well beyond the high minimum standards set out in the document,” points out Andrew Opie, food director of British Retail Consortium. “We have taken leadership on this issue because we believe it’s important that all elements of the supply chain, from food processors and restaurants, right through to the catering firms working for Government and councils, give consumers the information they need to make informed decisions. Supermarkets are making it easy for those shoppers who want to buy British to do so. Other food service providers need to up their game.”

Dunbia, the Northern Ireland-based red meat processor, has stated there is no truth surrounding the recent speculation about an alleged takeover bid by Brazilian company, Marfrig. Dunbia co-owner and group managing director, Jim Dobson says: “Recently there has been media speculation that Dunbia is in negotiations with Brazilian meat company, Marfrig. Dunbia can categorically state that the company is not in negotiations with Marfrig or anyone else for that matter, and any assertion to the contrary is entirely untrue.”

He continues: “Dunbia remains privately owned and we are fully committed to the growth and development of our operations in Ireland and the UK. We have strategic investment plans in place to ensure we continue to meet our customers’ requirements and develop new business opportunities.”

Dunbia is one of the UK and Ireland’s leading meat processors employing over 3,200 people across ten sites, and serves retail, food service and export markets. Marfrig is already a major player within the Northern Ireland and wider UK food industry, having acquired poultry group Moy Park in 2008.

Northern Ireland’s £1.5 billion meat industry must work on strategies that will reduce costs and increase its ability to exploit opportunities that will grow in Europe and other global markets over the next decade. The business opportunities and threats, including rising feed and other costs, as well as consumer trends facing the local industry, which employs over 9,000 people, are highlighted in a major study by GIRA, a leading French consultancy specialising in the global meat industry, commissioned by Invest Northern Ireland in conjunction with the Livestock and Meat Commission (LMC).

Commenting on the 117-page study, ‘Long-Term Strategic Trends in World Meat Markets 2010-2012’, Ian Murphy, Invest NI’s managing director of clients and entrepreneurship, says: “This is one of the most significant documents that we have produced because meat processing is vitally important here in terms of the scale of its contribution to the local economy, especially rural communities, in areas such as exports, new product development and, of course, employment. Currently the industry contributes around 50 per cent of the £3 billion earned by food processing here.”

He continues: “Ensuring its long-term growth, therefore, is immensely important to Invest Northern Ireland and, of course, to the wider community. What this study does clearly and concisely is highlight the opportunities, particularly in Europe, and the challenges our companies will face increasingly from global competitors from South America, China and the US and from rising input costs such as feed stuffs and energy, as well as from the sharpening focus, particularly among European consumers, on food safety and sustainability.

“Our companies should draw great encouragement, however, from a number of points in the study. There is good news for our companies in terms of the protection provided against competition in the EU with its agri-food and environmental policies.

The study also highlights new business opportunities especially in poultry, one of Northern Ireland’s strengths, pigmeat and beef and the good reputation Northern Irish companies enjoy with key retailers which are increasingly developing their international presence. What companies must do is to redouble their efforts to ensure efficiency, productivity and overall, exports, innovation in areas such as higher value added products for niche markets, and overall competitiveness. For instance, the report identifies the advantage that companies that guarantee food safety through greater control have over their supply chain globally.

“Our commitment is to continue to work with local companies to enable them to apply the relevant points in the study, to harness the opportunities ahead and to overcome the challenges especially in key areas such as costs,” he adds.

Among the key points in the study is the projected continuing growth in poultry products. Demand for most meat products will be driven by rising populations.

While other meats will also continue to grow in sales, poultry will gain the most market share. Poultry is described as the cheapest and easiest of the farmed meats to produce. Demand in the developing world, especially China, will increase for most meat products.

EU growth will favour ‘cheaper, quicker growing species’ with chicken continuing to win market share.

Forces driving change in the industry are likely to include – increasing animal welfare concerns which would mean higher costs, higher oil prices, currency volatility, rising costs as sustainability grows in importance, and nutrition concerns among consumers and governments.

Production in some regions will be impacted adversely by issues such as water shortage and land degradation.

UK-based Hilton Food Group, the leading specialist retail meat packing business supplying major international food retailers in Europe, has reported a strong underlying trading performance for the 28 weeks to July 18th 2010, with sales and profits up despite the difficult, pervading economic conditions across the continent.

Volumes grew overall by 11% and turnover increased by 5% to £449.9m, compared to the corresponding period the previous year. The turnover increase is below the level of volume gains, reflecting some reductions in average unit selling prices based on a decrease in raw material costs and product mix changes, together with the fact that the largest volume growth was achieved in Central Europe, where selling prices are much lower than in more mature European economies. The impact from currency translation was less than in previous years, accounting for only 1% of the turnover increase.

Robert Watson, chief executive of Hilton Food Group.

The operating profit margin was 2.7% (2.7% in the first 28 weeks of 2009) compared with 2.6% for the 53 weeks to January 3rd 2010. Operating profit for the first half of 2010, at £12.2m, was 5% ahead of the corresponding period in 2009. Operating profit benefited from the higher volumes, but was moderated by the effect of the lower raw material prices and product mix changes. Profit before taxation was £11.5m, reflecting the increase in operating profit and a reduction in finance charges.

“Despite the difficult and uncertain economic environment across Europe, our trading over the first 28 weeks of 2010 has been encouraging. We have continued to grow our business through new product initiatives, range extension and by achieving growth in developing markets, such as Central Europe, whilst our extensive and consistent capital investment over recent years has enabled us to continue supporting our customers’ growth in our longer established markets,” explains Robert Watson, chief executive of Hilton Food Group.

The new factory in Denmark is on schedule to start production in 2011 and the group is continuing to explore opportunities for further geographic expansion. Capital expenditure in the first half was £6.8m, including robotisation designed to enhance line speeds and throughputs and initial expenditure on equipment for the new facility in Denmark.

The European Commission has cleared the proposed acquisition of Weyl by Vion, two Dutch producers of meat products. The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Weyl is an international beef and calf processing company in bankruptcy. Weyl was founded in 1977 and was the largest producer and processor of beef in the Netherlands. Before it went bankrupt, the company employed well over 600 personnel, of whom approximately 200 were temporary staff.

Uwe Tillmann, chief executive and chairman of the executive board of Vion.

Owned by Dutch farmers, Vion is the leading fresh meat group in Europe. It is active in the purchase and slaughtering of livestock, production and sale of meat products and derived convenience food products and ingredients.

The Commission focused its investigation on the potential competitive effects of the horizontal overlaps for the proposed merger in the area of purchase of live cattle and calves for slaughtering, sale of fresh beef and veal and abattoir by-products. In addition, the Commission addressed the vertically affected markets that is from the abattoir by-products to the sale of fresh beef and veal. The Commission found that the proposed acquisition would not give rise to any competition concerns on these markets.

Netherlands-based VION, Europe’s largest fresh meat group, is creating an additional 250 jobs within its Scottish operations. A multi-million pound investment programme, together with the support and commitment of the workforce, and active partnership with the Scottish Government, Scottish Development International (SDI) and Scottish Enterprise (SE), has delivered a swift and positive return.

Approximately 150 new jobs have been created at VION’s chicken processing business at Coupar Angus, where the investment included the installation of a new finished packing line, enabling VION to offer true ‘Produce of Scotland’ – chickens hatched, reared and processed in Scotland, with the birds grown with feed from its own Scottish mill.

A further 100 jobs have been created at the added value plant at Cambuslang. The investment has allowed the site to grow its business by 25% in 2010.

In addition, 234 jobs at Cambuslang have been safeguarded with the help of a Scottish Enterprise Regional Selective Assistance grant of £650,000.

“This is very positive news and just reward for the tremendous efforts not only of the teams at Cambuslang and Coupar Angus, but also through the wider VION supply chain from our farmers and feed mill operators, through to our production, sales and administration colleagues,” comments Andrew Fisher, VION Poultry’s regional director for Scotland and the Southern Region.

VION’s the UK arm, VION Food Group, produces and processes high quality beef, lamb, pork, bacon and chicken as well as a wide range of convenience products such as sausages, cooked meats and added value cooked chicken. The UK operation has extensive facilities across the Britain from farms and hatcheries to primary production, processing and packing. The business is primarily focused on the UK retail market but also includes important food service and wholesale clients within its portfolio.

The Food Standards Agency in the UK has confirmed that meat from a cloned animal has entered the British food chain and has been eaten. While there is no evidence that consuming products from healthy clones, or their offspring, poses a food safety risk, meat and products from clones and their offspring are considered novel foods and would therefore need to be authorised before being placed on the market.

The European Food Safety Authority issued an opinion in 2008 which stated that: ‘No clear evidence has emerged to suggest any differences between food products from clones or their offspring, in terms of food safety, compared to products from conventionally bred animals. But we must acknowledge that the evidence base, while growing and showing consistent findings, is still small.’

The FSA is continuing its work on tracing the offspring of clones claimed to produce milk for the UK dairy industry. The agency has traced a single animal, which is believed to be part of a dairy herd but at present it cannot confirm that milk from this animal has entered the food chain.

The FSA has reminded food business operators of their responsibility to ensure food they produce is compliant with the law. In order to produce food products from clones or their offspring, a novel food application must be submitted and authorisation granted at a European level before any such food is placed on the market. As the UK agency responsible for accepting novel food applications, the FSA has not received any applications relating to cloning and no authorisations have been made. The penalty for failing to comply with the Novel Foods Regulations is a fine of up to £5,000.

Rectory Foods, the UK-based supplier of poultry, red meat, fruit and vegetables and food ingredients to the food service, wholesale, food manufacturing and retail sectors, has expanded its business in Eastern Europe with the opening of a facility in Lithuania. Established through its UAB Baltreka subsidiary, the new facility will be used to source, store and distribute meat and other ingredients to Baltic countries, and complies with BRC standards.

Eastern Europe has become a significant element of Rectory Foods’ operation since 2003 and now accounts for about 10% of sales. “Eastern Europe has become an important part of our business and it made sense for us to set up a base there,” explains Charles Woolley, chief executive and founder of Rectory Foods. “Some of the biggest food manufacturers and producers in Europe are already among our customers and we are looking to work with companies to source product to meet their individual needs and quantities.”

Baltreka’s main areas of focus are currently poultry cuts, chicken breast fillets, convenience foods, as well as beef and pork products for manufacturing and wholesale, but there are plans to enter the retail market later in the year.