REFORM CAP - FOOD INDUSTRY

Knowledge Driven Agri-Food Sector

Rural Development Fund

Market Required Food Products

Essential

• Environmental Quality• Food Safety• Animal + Plant Diseases/Health

(€1.2B/annum - Post 2005)

• Food Safety + Quality• Animal Welfare (Diseases)

Decoupled Farm Subsidies

Single Payment –x--- Production

2.

1.

Food Industry

Food Industry

ECONOMIC ENVIRONMENT

Sustained International Competitiveness More Liberal - Global Markets Higher Levels of Food Regulation Substantially Greater Requirements

•Assured Food Safety, Consistent Quality•Nutritional Attributes, Animal Diseases/Welfare•Quality of the Environment

Increased Corporate Alliances•Suppliers + Manufacturers + Retailers

Rapidly Changing Lifestyles Population Becoming Older Shrinking Household Size Women in the Workforce Two Income Families LESS Time Shopping + Cooking More Leisure Demands

IMPACTS - FOOD INDUSTRY

• Convenience - Easy to Prepare

Meals

- 30 Minute Dinners• Functional Foods

- Neutraceuticals• Food Service Sector Supermarkets

Market Developments

• Accelerated Innovations in Agri-Food Sector• Ubiquitous Application of IT + Biotech!!

• Knowledge Driven Agri-Food Sector

Requirements

56%

65%

71%

78%

0% 20% 40% 60% 80%

Easy to Prepare

SomethingEveryone Likes

Satisfy Appetites

Meal Tastes Great

Important Factors When Preparing Meals

15%

20%

65% Base Products

5%

20%

45% Base Products

30%

Current product portfolio mix 2015 product portfolio mix

Value addedingredients

Consumerproducts

Functional andorganic foods

Dairy Product Portfolio - Direction of Change

Promar International

Economic Performance Comparison1992 - 2000

Ireland Denmark Netherland

Economic Value Added 1.56 2.16 1.66

(EVA)

Relative milk Price 100 114 108

Current Beef Grading/Quality Systems

• Depends on human judgement

•Difficult to demonstrate objectivity

•Producers lack confidence

•Difficult to agree quality based payments

New Instrument Grading Systems

•Already some adoption by industry in US and EU

•Recent regulations by USDA and EU likely to increasethe rate of uptake

•Potential for further developments and improvements -fat class (EU), palatability

•Familiarity with benefits of VIA (objectivity, consistency,

MIS) - lead to greater adoption

NEXT STRATEGIC STEPStep Change - Food Innovation

Serious + Sustained €M - R&D

+ +Technological Absorptive Capacity

Food Companies - SMEs

+Business Partnerships

Public Research OrganisationsUniversities + Applied Research Organisations

Market-Led Innovative Food Products + Processes__________

Japan - Functional Foods 50-500 R&D Personal/CompanyFinland - Tekes €50m R&D Program Functional Foods, Food Chemistry + Biotechnology

New Food Product DevelopmentHigh Costs + High Risks

+ 90% Failure - 1 Year Market

Imperative - Reduce Risks

Understanding + Quantification

Issues

Farming Consumers Attitudes to Food Products

Denmark MAPP Institute

Food Related Lifestyle Consumer Model

Applied Ireland

Segmentation of Irish consumers according to their food-related lifestyles

Conservative21%

Pleasure28%

Adventurous8%

Moderate13%

Enthusiastic14%

Uninvolved16%

Protection of Consumer Food Choices

FUNCTIONAL FOODSFOOD PRODUCTS

Specific Health + Nutritional Attributesespecially

Infants, Adolescents + the Elderly

Functional Foods

PROBIOTICS NEUTRACEUTICALS

(Life Organisms)

Lactose IntoleranceDiarrheaDisease ResistanceHealthy Gut

(Chemical Ingredients)

OsteoporosisHearth DiseaseCancerDental Caries

Ingredient Potential Heal AttributesCalcium Prevention of Osteoporosis

Promotes healthy bones and teethProtective against hypertension

Folic Acid Protective against neural tube defectsVitamin E Protective against Heart Disease

Protective against CancerIodine Protective against GoitreImmuno-peptides Protective against CancerCasein Phosphopeptides Promotion of Calcium Absorption

Lactoperoxidase Prevention of dental cariesLactoferrin Prevention of dental caries

Prevention of gastro-intestinal infectionLeukaemia therapy

Modified β_ Lactoglobulin Prevents milk protein allergies

Lactic Acid Bacteria Promote a healthy gutImmunoglobulins Prevention of dental caries

Prevention of gastro-intestinal infectionLowering of Cholesterol

Functional Foods: Potential Health Attributes of Food

Functional Foods and Their Potential Market ScaleP

oten

tial

Mar

ket

Scal

e

Large SmallFeasibility/Approvability

Small

Large

SOME MARKET PROJECTIONS

All Functional Foods

Global Market

1994 $6.6 Billion ~ 50% = Japan

2000 $17 Billion

Longer Term $ 87 Billion

Probiotic Dairy Products - Most Active Area

- 65% European Functional Food Market (1997)

1997 $889 Million

1998 >250 Million Kg

UK, FD, Sp, B, Nl, DK, F, S

Longer Term ~ $30 Billion

FOOD SAFETY

Chemical Residues

Microbiological Contaminents(Pathogens)

BSC - Prions

Mycotocins - Fungi

Viruses