Tesco worth €2.5bn to economy - report

Tesco Group is a bigger export market for Irish businesses than France and is worth €2.5 billion a year to the Irish economy, according to a new report commissioned by the retailer.

Economic consultants Indecon found that Tesco's network of more than 2,200 stores outside the Republic are the second-biggest buyers of Irish food and drink, behind the UK and ahead of France, Germany and the US.

Tesco exported €655 million worth of Irish-produced food and other products last year, with exports soaring 86 per cent in the past five years, the report finds. This compares to an increase of 23 per cent in overall food and drink exports over the period. Most of the goods are shipped to the UK, with some meat and alcohol exported to central Europe.

Tesco Ireland also said yesterday that it was hoping to place Irish produce in its new US venture, Fresh & Easy, which opened its first stores earlier this month.

Indecon managing director Alan Gray said Tesco's facilitation of exports was one of the most significant elements of the retailer's contribution to Irish economic performance.

In 2006, Tesco Ireland spent €1.28 billion on Irish-produced goods and services, an increase of 29 per cent on 2004. Tesco Group as a whole spent €1.94 billion on Irish-produced goods and services. Indecon said it created additional "intersectoral" demand of €558 million in the Irish economy.

Tesco Ireland chief executive Tony Keohane said Tesco would continue to reduce prices next year, despite the global pressure on raw material costs, which is squeezing suppliers' margins and forcing up the price of basics such as milk and bread.

"We're not immune to that," said Mr Keohane, "but there has to be commercial negotiations to be made with our suppliers . . . Tesco will have to do its job and make sure that customers can get the best price that they can get."

Tesco's own-label ranges account for 32 per cent of its sales, up from about 5 per cent a decade ago. The retailer does not publish its profit figures for the Republic, but has said its profits are improving. Revenues rose by 8 per cent to €1.29 billion in the six months to the end of August.