Food for thought on the economy

Sitting in his funky office on Fitzwilliam Place, Michael Carey’s relaxed mood belies his busy schedule.

Carey runs The Company of Food, an angle investment vehicle that he set up last year after the merger of Jacob Fruitfield, where he was the largest shareholder, with other food brands to form a €300 million-plus turnover company called Valeo Foods.

The Dubliner is also the chairman of Bord Bia, where the focus is helping to drive Irish food exports to new highs in the coming years. And he chairs the Soul of Haiti charity and Traidlinks, a private-sector, non-governmental organisation in Uganda.

In addition, Carey is a member of the advisory board of the Smurfit Graduate Business School, a judge on the Ernst & Young Entrepreneur of the Year competition (he is a former category winner), and a member of the Clinton Global Initiative.

Most recently, he was recruited as a non-executive director of Dublin-based public relations company Drury Communications.

The Company of Food is looking to invest in Irish food brands with “high growth potential”. Carey and his wife Alison Cowzer, who also worked for Jacob Fruitfield, aim to bring their brand expertise to bear with these young companies.

“We have identified five or six companies with potential for growth and I’d hope to make our first investment shortly,” he says.

Typically, these investments will amount to between €250,000 and €500,000 and probably involve funding from Enterprise Ireland. He expects to take stakes of between 15 and 30 per cent for that amount of equity.

He is scouting companies with turnover of about €2 million that could rise to €20 million, either with a “brand or with brand ambitions. There are very few mid-sized food companies in Ireland at the moment,” he notes. Having reportedly earned €15 million from the Jacob Fruitfield/Valeo deal, as well as taking a significant shareholding in the enlarged entity, Carey is in the fortunate position of being able to take his time over any investments.

The Company of Food has also invested in a portfolio of about 20 publicly-quoted food businesses from around the world, including our own Kerry Group, Glanbia and Greencore, and global brands such as Diageo and The Kellogg Company, a former employer of his.

“That portfolio is doing very well. In the past four months, food shares have jumped by 25 to 30 per cent,” he explains.

His role as chairman of Bord Bia is the one with the highest profile. He’s roughly half way through a three-year term. He doesn’t accept any fee for the role and pays his own way on Bord Bia trips or trade missions that require his presence. “It genuinely is an honour to have this role and to be able to help shape policy and strategy for the food industry,” he says.

Carey has an impressive track record to draw on. His father ran a sweet shop in Cabra, giving the young Carey his first exposure to the world of commerce and selling food. A BComm and Master’s followed in UCD with Carey forging his career in the food industry.

He is a former marketing director with Clonmel-based drinks group C&C, and was a managing director of Fox’s biscuits and the Evian and Volvic water businesses in the UK. In 2001, he was headhunted by cereal maker Kellogg’s to run its business in the UK and Ireland.

Carey is the first to admit that this role didn’t work out but the payout he received on leaving the business helped fund his equity investment in Jacob Fruitfield, which has led him to where he is today.

Irish food is on a roll at present. Exports last year hit a record high of €9 billion, up 2 per cent on 2011. These exports have grown by €2 billion over the past three years alone and have been one of the success stories of the Irish economy since the crash.

What about the prospects for food manufacturing in Ireland? On the day of the interview, the multi-million investment by Glanbia Ingredients Ireland in a new dairy plant on the border of Kilkenny and Waterford led the business pages in the morning newspapers.

In his near decade at the helm, Carey closed Jacob Fruitfield’s two manufacturing facilities in Tallaght and outsourced the production to other parts of Europe. Carey says those operations simply weren’t competitive for a variety of reasons but argues that food manufacturing of a certain scale is not “impossible” to do in Ireland.

“Glanbia. . . that will be competitive,” he said.

But some things have to change for Ireland to become truly competitive again. Professional fees are “still crazy” and energy costs are prohibitive, he argues.

He then proceeds to list off the positives of the Irish food industry at present. Like how we’re producing about 12 per cent of the world’s baby infant formula, how beef exports continue to grow (up 2 per cent to €1.9 billion last year), and how exports of Irish whiskey are soaring right now, led by strong demand from the US.

“There are 11 investment projects going on in whiskey at present,” he says. This would include an expansion of capacity in Midleton, Co Cork, by the Pernod Ricard-owned Irish Distillers (which owns Jameson), and Scottish drinks group William Grant’s decision to build a distillery for Tullamore Dew in its home town in Co Offaly rather than sourcing whiskey from other parties.

Sugar production is another potential area of growth, if the country decides to re-enter the market, having departed some years ago with Greencore exiting the business and Ireland surrendering its quota to the EU.

“If we can justify the investment it will happen,” Carey says.

Carey also cites fish farming as a potentially big growth opportunity for Ireland. “In 2012, there was 12,000 tonnes of farmed fish here. It’s nothing compared to the scale of the opportunity. Norway does about 1 million tonnes of farmed fish a year.”

A number of new licensed fish farms are being planned for the west coast of Ireland, which could generate more exports and jobs, he argues.

Bord Bia is constantly trying to work the angles to improve the image of Irish food abroad and to open doors for exporters to new markets.

Carey says a sub-committee has been formed to look at the opportunities for the dairy sector post the ending of quotas in 2016. Last year, these exports were worth about €2.6 billion to Ireland.

“We want to make sure that the opportunity [post quota] is properly identified,” he says.

There is a feel-good factor around the food and agri sectors at present, especially with much of the rest of the economy struggling for growth. However, there is no doubt that our reputation took a knock earlier this year over the horse meat scandal.

Carey argues that the crisis was “well managed”. We were the first to identify the problem and we worked hard to get on top of the problem, he says.

“It was a short-term setback,” he explains, noting that there is probably now greater emphasis from consumers on high-grade cuts of meat rather than cheap processed products.

“Irish exports of beef are primarily high-quality beef cuts and that part of the market has gained from concerns over processed meats,” he says.

Has he ever eaten horse meat? “Not knowingly, no.”

Would he eat lasagne again? “Yes,” he chuckles.

Bord Bia plans to raise Irish food exports to €12 billion by 2020. It’s an ambitious target, requiring growth of 33 per cent in sales over an eight-year period.

Put another way, Ireland is currently producing enough food to feed 35 million people, about eight times the level we require to be self sufficient.

Bord Bia’s goal is to raise this figure to 50 million by the end of the decade.

These targets will stretch beyond his term in office but Carey is confident that the target can be met. “Given the scale of the opportunities and the capability of the companies involved, I think that target should be achieved.”

He believes Asia offers “huge potential” for Irish exporters although the level of investment will be significant. “It takes gradual growth . . . it won’t happen overnight.”

To this end, Bord Bia, with funding from the industry, is seeking to recruit 10 young marketing executives to work promoting Irish food exports in developing markets, such as China and Africa. It’s a €1 million programme developed in conjunction with the UCD Michael Smurfit Graduate Business School.

“They will work on behalf of the food industry here to develop the reputation of Irish food abroad. They’ll effectively be brand ambassadors for Irish food with a commercial focus. This is definitely an area of huge opportunity for the country.

“Food used to be the Cinderella of Irish industry for many years as people went into finance or property. But that’s changed now. There are now waiting lists for food courses in colleges. Something is obviously going right and I think we should be incredibly proud of what has happened in Ireland in the past few years.”