Willie O’Byrne, BWG Foods

There was a lot happening for BWG Foods in 2013. Not only did the company expand its retail network, it was a year of consolidation for its supply chain following the creation of the new Kilcarberry and Kilshane distribution centres.

This gave BWG Foods national ambient and chilled distribution centres which have bedded down well and have performed positively since their inception.

“They are very much part of the retail landscape here,” said Willie.

“There was a significant project when we consolidated our soft drinks business into Kilcarbery in the spring. The whole soft drinks category is a huge one for us and it was a move our retailers would have been watching very carefully. So far we have scored high marks and the retailers are very happy with that.”

On the wholesale side of the business, BWG made significant investment in its Value Centres in Letterkenny, Sligo and Castlebar: Letterkenny was extended to accommodate the integration of Morris Bros; the Castlebar Value Centre was redeveloped following a fire in 2012; and Sligo had outgrown its premises and needed to expand.

Looking at the retail brands, Willie was pleased to announce a return to store growth, total numbers across all brands was over 900 at years’ end. SPAR had its best year since the start of the recession with 32 new store openings. Both MACE and XL also performed well with significant events and milestones.

BWG also hosted the International SPAR Congress in Ireland for the first time in 20 years giving international colleagues an insight into the retail market here. 300 delegates from 34 countries were impressed with what they saw.

All this is positive news and the economic outlook is brighter as we begin 2014, although Willie points out that the retail sector remains fragile.

“One of the things we are seeing is GNP growth in the economy and that is all very positive. That is corroborated by the amount of cars on the road; lengthening commuter times in the greater Dublin area and hard statistics on the number of people at work. These are all positive indicators for the wider economy. However, we are not yet seeing that growth of the domestic economy i.e. GNP, reflected in the retail sector.”

He continued: “The retail sector still remains relatively weak and hasn’t returned to like-for-like volume growth. When I’m talking about growing our network, that’s poor comfort for a retailer depending on his own store sales to recover.”

Escaping the shackles of the EU bailout in December has lifted consumer confidence in the Republic.  The fact that the Budget was held in October was also a positive move for business and the retail sector in the South, but the ham-fisted way property tax payment dates were communicated impacted on November Retail activity.

On the forecourt, BWG Foods continues to be a dominant force with much investment in site developments across the brands.

“The partnership with MAXOL worked well in 2013 and they have been investing in stores and forecourts throughout the past 12 months. The re-build of the MAXOL/MACE sites in Templeogue, Dublin, Skehard Road, Cork and Kingsmeadow in Waterford are great examples of their commitment to invest,” said Willie.

He added: “Our penetration in the forecourt sector goes well beyond the partnership with Maxol. The MACE/Texaco site in Ballinalack is one of the country’s key sites. The O’Reilly’s in Ballinalack are currently investing in the site. We will be working with them and I think it will be one of the signature forecourt developments of 2014. Another great new independent MACE site is Seamus O’Reilly’s in Blackpool Co Cork where Seamus has made a significant investment in 2013.

In terms of the SPAR network, Danny McHugh’s Ballindine site has been a welcome addition as has Noel McIntyre’s Mullingar business among many others.  Willie is pleased to see a number of retail groups investing in the brand – he cited the H2 Group’s new site in Roscrea, Co Tipperary by way of example.

“We have also formed a relationship with the old Tougher Oil business and have two fantastic SPAR sites now in Rathangan and Newhall just outside Naas as well as a number of XL forecourts. Another site is the Campus forecourt in East Wall, Dublin where Philip Dunne is the franchisee. There’s a lot happening in the forecourt market!”

Looking at the wider grocery sector, though the big story of 2013 has been the continued rise of the discounters.

Whilst their first phase of growth would have been network expansion, they have now focused on honing their product offering to local consumers.

“Over the past 18 months, the discounters have certainly flexed their offering to tap in to the Irish market. They can no longer be simply described as a German operation applying almost German rationale to an Irish market and selling on price alone,” commented Willie.

“They are sophisticated operators in the market now and are involved in bakery, fresh and chilled. They are a lot more conscious of provenance and they have been a play-maker in 2013. Whilst we keep an eye on them, our market share performance confirms their rise is more a problem for the multiples than it is for us.”

Looking ahead to 2014, BWG Foods is looking forward with a lot of confidence thanks to growth in 2013.

Willie said: “We are looking to open a further 80 new stores across all or our retail brands.  This ambition is a reflection of the ambition to build on the momentum in the business and will deliver even higher profile for our iconic brands as well as growth in wholesale sales. In partnership with our retailers though, our top priority is to deliver like for like growth.”

He concluded: “We are not over promising; the economy is starting to turn but we don’t believe there is going to be a halo effect in the retail sector just yet.”