Patrick Coveney at The First UK-Ireland Food Business Innovation Summit

I'm absolutely delighted to be here. I think this is a fabulous event, not before time. And I think there are a few reasons for that, many of which have been touched on today. The first is just the sheer scale of the trading relationships that we have in food. Everyone in Ireland recognizes the size of the trading relationship and the exporting base that we have into the UK. But it's actually much less known that Ireland is the biggest food exporting country for Britain. And it's that two-way scale that makes this topic so important. The second reason that today's session is so apt is the global trends that are going on in food. This is undoubtedly one of the growth areas of the global economy for the next 10, 20, 30, 40 years, where the demographics in terms of population growth and the size of the emerging middle class in Asia are going to make food and value-added food enormous growth sectors, while at the same time putting enormous pressures around sustainability and land use and lots of really tricky philosophical debates about where science can play in facilitating all of that. The third reason, which we live every day in our business, is that the skills we have in Ireland and the skills we have in Britain are different and quite complementary. There's a really live opportunity to put them together and drive growth in third countries, not just in the developing world, but also in other developed world countries as well. I'll touch on that in a while.

So, what I thought I would do is cover two topics. The first is how we think about what the big themes for innovation are likely to be over the next 20 years. Some of them are nuanced and reflect our own experience in Greencore, and some might be a slightly different slant on themes that have been discussed already today. Then I wanted to talk specifically about what some of the near-term and longer-term areas of collaboration might look like between Britain and Ireland and what we as industry participants can do against each of those.

The first thing I wanted to talk about was the theme of value. In all the understandable desire to talk about value-add, specialist brands, premium brands, people lose sight of the fact that for the vast majority of the human race, value is the most important criteria when selecting food. That is not just a developing market phenomenon; it's a developed market phenomenon as well, and it's become more so. If you look over the last 5 years in Britain, you've moved from about 38% of consumers that actively shopped for promotional deals to over 50% today. Shopping behavior has changed around that area. One of the biggest growth areas in UK retailing today is cash dispensing. The reason is that for shoppers on a budget, the only way they can hold themselves to account is by going to the cash point first, taking out £40 or £50, and that is all they spend. That is the world for so many consumers. The second change driven by consumers' desire for value is that consumers are shopping more now than ever before. They're shopping more frequently, in more formats, partly because the only way they can convince themselves they're getting the best value is by doing it themselves. So you're seeing a proliferation of smaller stores, more specialist store formats, discounters, online shopping, and so forth. That's the world in which the developed markets are. As we think about innovation priorities, we have to drive product innovation that delivers to that value need. That's a big priority for us. As a business, we have somewhere between 40 and 50% of our revenues every year in products that we innovate that year. That's the scale of the refreshment we drive to capitalize on the changing needs of our shoppers.

The second theme I wanted to touch on was convenience. The big insight we think we have is that what people are consuming is not changing very much, but how they're consuming it and how they're buying it is changing rapidly. A lot of the focus of innovation for a business like ours, and we think for the food industry more broadly, will be facilitating changing meal occasions for consumers at home and changing shopping behavior when they access that food. There is a caricature of human consumption focused around a daily family meal between 5 and 7 in the evening. If you take a long-term historic view, there have only been about 25 to 30 years in human history where that has been a common consumption occasion, flowing from the end of the Second World War up until about 1980. The proliferation of meal occasions now is actually a return to the fact that consumers for centuries chose to eat in a much more fragmented way. So a big part of what we're trying to do is find ways of getting product to meet the different meal occasions consumers want. That's why all forecasts for where food will be sold over the next 5 to 10 years show 30 to 50% growth in convenience stores, 2/3 growth in hard discounters, 100% growth in discounting, and large supermarkets flat in volume. The way that particular format and the role it played in shopping behavior is changing, and the requirements of those channels in terms of innovation, shelf life, labeling, bundling, promotional support, looks and feels very different.

The third thing I wanted to talk about is trust. Clearly that's a topical area in light of what's happened over the last four or five months. As we see it, trust between shoppers and brand owners, be they retailers or manufacturers, has been damaged quite seriously in the last four months. We'd be quite hopeful about what can be done to address that. As we talk to consumers, what continues to be played back is that this was, in their words, a food scandal, not a food scare. So while they're angry with industry participants, they're not fundamentally afraid of the food. That's helpful when talking about what's necessary to drive a recovery. It came about through a coincidence of circumstances: pressure on value, fraudulent behavior arbitrage on the difference between protein prices between beef and horse, scientific advances running ahead of regulation, and a serious erosion since 2008 in trust in all things large – large companies, large retailers, large manufacturers, government regulation. Increasingly, consumers trust what's local and small and what their friends tell them, and distrust pretty much everything else. The consequences have been damaging: erosion in consumer trust in brands, weakening of confidence within the global food supply chain, and significant volume hits in many product areas. The response has been quite impressive, though not shouted about. There's joined-up regulation at government level, changes in the supply chain, permanent use of testing, changes in manufacturing practice concentrating and narrowing the customers served out of individual sites. What will unfold in packaging, consumer communication, and provenance – a double-edged sword – will all play to rebuild consumer trust over time. It's important to view this in context. The cumulative outcome of tests was that this was not a pervasive problem – between half and three-quarters of 1% of contaminated product at low levels. Never in human history has food been safer, the supply chain more transparent, and consumers got what they want safely and effectively delivered. Yes, there are lessons to learn and a challenge to rebuild trust, but the foundations are in place.

The final thing I wanted to touch on, and I promise I'll be brief, is the theme of sustainability and some of the big macro factors that need to underpin food innovation. My request here, echoed by both ministers, is that we all need the best and brightest people coming out of universities to focus on the macro challenges of the food industry – resource allocation at a macro scale, balancing the scientific advances that have underpinned food productivity for 100 years. We need that to increase, not be held back. We have to confront the philosophical debates necessary, often with people who have no empathy for the value needs and protein needs of the vast majority of the world's population, who require us to find continuous and more efficient ways of driving up yields and protein availability while optimizing for climatic shocks. That's very important and not easy.

In the context of all that, there are four areas which create real opportunity but, unaddressed, create barriers to Ireland and Britain moving forward together in capturing the opportunity in the global food industry. The first area is skills and training. The challenges are changing all the time, and we need more and different people to come into our industry. Our business has 50 vacancies for food technologists today, and we've had that for 3 or 4 years. It's really hard to fill those roles. The food and drink sector skills group Improve says that of the 9,000 identified food technologist roles in Britain, 25% are currently vacant. There's a challenge to line up those needs with education providers, including vocational skills and apprenticeships for the 21st century, and more joined-up thinking between retailers and manufacturers. There is a significant gap between the skills we need and what's available, which, given the economic challenges both countries face, is both an opportunity and an imperative to address.

I wanted to touch very briefly on regulation. I say this in the context that regulation has largely worked for food in Britain and Ireland. You are less likely to die of food poisoning here than in any other developed country, almost 10 times less likely than in America. The Food Safety Agencies have done a pretty good job. But it's precisely because of that that it's frustrating for multi-country businesses like ours that the FSA and the FSAI are fighting with each other post the horse meat scandal. It's frankly an outrage the way Alan Riley was treated when he was summoned to and chose to attend the House of Commons Select Committee hearing last month. That shouldn't be happening, and it's not consistent with us being joined up and driving our business forward together.

The last thing I would say is the opportunities for trade. Britain is brilliant at food retailing, and Ireland is very good at food manufacturing. When we combine those capabilities in a complementary way, the opportunities to build new businesses together in other geographies are very high. That's what we're trying to do with our convenience store business with 7-Eleven and Starbucks in the United States right now, and there's an opportunity to do much more of that. With that, I'm happy to answer questions in the Q&A. Thanks, sir.