Private Innovation in Irish Agri-Food. Jens Bleiel CEO, FHI IIEA Conference A FLAVOUR OF THE FUTURE Dublin, July 5, 2011
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3 Private Innovation in Irish Agri-Food Jens Bleiel CEO, FHI IIEA Conference A FLAVOUR OF THE FUTURE Dublin, July 5, 2011
4 What am I going to talk about? What s on in the global food industry? Global mega trends What is innovation and why is it necessary? Examples How to innovate in Ireland? A potential model for success
5 % of value added agriculture of GDP over the years % Million Tonnes Agriculture volume has increased during the last 40 years but value has decreased Vol. World Agriculture India Ireland France US Source: UN
6 % of food expenditure on total income of average family over years USA 28% 13% UK 31% 10% IRE 38% 13% Food has become very cheap
7 Profit Margins on Milk milk quota 2015 India becoming biggest milk producing country Costs 29c/l Sells for 30c/l In the NL: Costs 30c/l Production Packaging Logistics Sells for 52-65c/l Costs 52-69c/l Logistics Sells for 60-78c/l Very little money to earn Costs 60-78c/l Logistics Other Vat Price 114c/l Price 75c/l
8 Conclusion: Global mega trends Food has relatively become very cheap Agri commodities will remain under strong price pressure Global demand is probably increasing, but so will global offer Commodity products will not deliver higher margins in the future Requirement to add value to food through innovation
9 Types of innovation Quality, productivity sustainability.and there is many more Innovation Types Innovation Functional benefits Recipe / quality / taste Price Marketing Strategy Packaging Business model
10 Does innovation pay off? Standard vs. Strengthens the resistance Standard vs. Reduces cholesterol Standard vs. Weight control 0.89 / L 9.14 / kilo 1.15 / L 0.84 / L 4.48 / L 6.98 / L / kilo 6.23 / L 10
11 . even in Ireland!
12 But: There are more failures in functional foods than successes In some product categories, the failure rate among new product introductions is as high as 90%... Sciencedirect, 2008
13 Nestle Health Science Nestle investing SFr mio in total in fundamental research in health areas at the borderline between food and pharma
14 Conclusion innovation examples Innovation allows higher value, higher prices and higher margins There are many failures in the market we need to continuously learn and try again Big, blue chip food companies are heavily investing in food innovation Although expensive, difficult and long term, innovation is the name of the game
15 How to innovate in Ireland? Just work together!
16 Advantage factor Ireland: 1) Quality of Irish milk Infant milk formula most delicate food product
17 Advantage factor Ireland: 2) Quality of Irish science Top 5 ranking World Universities 1 University of Cambridge - UK 2 Harvard University - US 3 Yale University US 4 University College London UK 5 Massachusetts Institute of Technology (MIT) - US 52 Trinity College Dublin Ireland Inc : Which ranking could we achieve if Irish Universities were counted together? 114 University College Dublin 184 University College Cork 232 National University of Ireland, Galway 330 Dublin City University University of Limerick (QS World Universities Rankings, 2011)
18 Advantage factor Ireland: 3) Global network of Irish dairy Together 100 % access to top 300 global food and beverage companies Exports to over 80 countries. Plus many, many Irish dairy SME Global outreach
19 Advantage factor Ireland: 4) Food for Health Ireland Maybe not very modest... but a unique model in the global food industry Credits to
20 What is FHI? Partnership between: Public Research Organizations Irish food industry Funded by Enterprise Ireland and Industry partners Total budget 22,5 mio Industry-led research agenda: Identified health pillars Stipulated dairy based Strong market position, scale-up and manufacturing capabilities of industry partners One centre aimed at developing, manufacturing, marketing and selling functional food products to improve peoples health and wellness
21 Four competitors working together?? Competitors in the market, precompetitive research together World class research requires collaboration World market is huge: different market channels, strategic focus Better service for customers: Access to world-class research (Ireland Inc.) Intensified partnering Efficient up- scaling of new ingredients
22 Success factors for cooperation between universities and industry Years Development of new ingredient Food Ingredient companies innovation horizon How to bridge the gap? 1 Public sector to initiate dialogue, start funding, help and support 2 Translate, use, apply competencies of universities to existing products or processes of companies in the meantime ( Low hanging fruits ) 3 Continuous dialogue and learning process
23 Conclusion innovation in Ireland Ireland is very well positioned for innovation in the food area Bringing all elements together is crucial FHI maybe a role model The public sector does have an important role in initiating innovation in the food industry Ireland can do it
24 Contact us Food for Health Ireland Headquarters (UCC) Room 3.54 Food Science Building University College Cork T: F: E:
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