Angus Woods: Why Bord Bia’s new CEO needs to create a brand that can command a premium price tag in a recession

If you compare this economic environment to the post-Covid era along with the Russian conflict in Ukraine, it is evident that Bord Bia’s new CEO will have a vastly changed role.

Careful consideration needs to be given to who is given the opportunity to lead Ireland’s flagship marketing organisation.

Two months ago, those of us EU citizens living on the western side of the EU trading bloc could hardly have imagined that Vladimir Putin would invade Ukraine and the supply chains would collapse within days, but the EU citizens who… Those living on the eastern side have feared a Russian invasion for years.

While we feared the impact of Brexit, Eastern Europe has been keeping a nervous eye on Putin. We are now looking at a period of high inflation, rising interest rates, fuel shortages and a prolonged period of supply chain disruption. Governments are striving to stabilize their economies and meet voters’ basic needs without causing panic.

As consumers recover from a five-day holiday on St Patrick’s Day, the memory of the Covid lockdown is still on people’s minds. Those lucky enough not to be limited to lamb or calf pens were allowed to let their hair fall. The potential difficulties that lie ahead are unlimited.

Before the Russian invasion, the environmental debate was at the forefront of all food security talks.

Consumers drinking coffee, driving their 4x4s to the supermarket, enjoying holidays abroad and weekend getaways expected policymakers to demand that farmers produce food in a more sustainable way to save the planet.

Quality Assurance (QA) and Origin Green meet supermarket requirements for traceability and environmental sustainability. Bord Bia’s role has never been to sell beef or other food products, and they play no role in pricing.

In the current political difficulties, there is a misconception among farmers that when farm input costs escalate, food price inflation will set in, forcing consumers to pay more for the food we produce. If it just could be that easy.

Supermarkets have multiple goals: increase market share, offer choice to their customers and make profits. When food prices rise, consumers choose the cheaper option.

During the last recession, many consumers who had never shopped at Aldi or Lidl switched in search of value and stayed. Faced with the option of paying higher grocery bills or forgoing some of their luxuries, the grocery store was targeted. Life without the latest cell phone, vacation, Sky TV or Netflix was too hard to imagine. Cheaper food had to be procured.

For previous generations, recessions led to a shift in the types of cuts of meat purchased. Offal and inferior cuts were preferred at the time, but demand for such products in a prosperous and stable Europe was low.

In earlier periods of rapid inflation, products such as liver were common in the Irish diet. How many of us eat liver these days?

Food price inflation creates winners and losers. The potential for significant price increases in beef is only possible during strong economic times combined with beef shortages. When money tightens, consumers could switch to pork and chicken, and the amount of beef sold would then decline.

Cheaper products

If demand falls, supermarkets would switch their promotions to the cheaper products to attract more customers to their stores, and demand for beef mill stocks would fall.

In many of the countries we export to, Irish beef is the second choice to locally raised beef, which puts us in a vulnerable position. As the largest exporter of beef in Europe, alarm bells should be ringing here.

Promoting food based on production standards is far easier in good years than in recessions.

Bord Bia’s new CEO must combine standards with value while trying to create the brand consumers are willing to pay a premium for during a recession. The problem is, if both beef and the other meats are all quality assured, what’s the benefit to beef since it can never win the price war?

Whilst the past five years have seen an ever-growing Bord Bia presence around the world, the old UK and European trusts are still key to the cattle ranches’ income and need to be nurtured.

The new CEO needs to get farmers on board. The constant berating and undermining of quality assurance by farmers is harmful. It must be frustrating to still be telling farmers after so long that there is no ‘Bord Bia bonus’ for beef.

Covid has not affected most farmers in the same way as non-farmers, but so far the Russia conflict has already placed a huge financial burden on productive farmers.

The real crisis will come when a recession hits and consumers cut back on food spending, leaving productive farmers with massive bills to their local agricultural dealer.

It’s unrealistic to think that each new Bord Bia CEO could work the kind of magic needed to protect farmers from major political and economic upheaval. The CAP was intended as a market support mechanism to support productive farmers in difficult times.

In times of economic uncertainty, Bord Bia’s new CEO will need to reconsider how we market our high quality products.

Angus Woods is a drywall builder in Co Wicklow