Boston, MA -- (SBWIRE) -- 01/22/2013 -- BMI View: Domestic demand in Ireland is set to remain subdued on account of falling house prices, fiscal austerity, double-digit unemployment and high household indebtedness. We therefore continue to expect that the Irish economy will contract by 0.5% over the course of 2012, with activity undermined by soft eurozone demand for Irish exports. Only a tepid recovery is expected in 2013, when we forecast the economy will expand by 0.8%.

Headline Industry Data (local currency)

- 2012 per capita food consumption -1.1%; forecast to 2016 +3.7%
- 2012 alcoholic drink sales +0.5%; forecast to 2016 +7.7%
- 2012 soft drink sales -0.9%; forecast to 2016 +8.8%
- 2012 mass grocery retail sales +2.6%; forecast to 2016 +15.1%

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Key Industry Trends & Developments

Glanbia Divests Stake in Dairy Ingredients Business: Ireland-based cheese manufacturer Glanbia Foods announced plans to divest a 60% stake in its domestic dairy ingredients division - Dairy Ireland - as the firm shifts its focus to more attractive parts of its business. The firm intends to enter a joint venture, Glanbia Ingredients Ireland, with its largest shareholder Glanbia Co-operative Society to operate one of the largest dairy ingredients suppliers in Ireland. Glanbia said the deal would help it direct 'financial resources ... towards business segments that deliver the highest return on capital for all shareholders'. According to Glanbia MD John Moloney, the agreement on the dairy ingredients arm will create 'an exciting new business model for post-quota growth in Irish dairy processing'.

Beer Sales Starting to Flatten Out: In August 2012, the Irish Brewers Association reported that sales of beer in Ireland fell by 2% in 2011. This was hailed as positive news for the sector, which has witnessed more severe declines in recent years. Despite the slowdown in the rate of decline, we do not envisage a return to growth in the sector with volumes expected to continue on a gradual downwards path to 2016. In terms of value, we expect beer sales to increase by about 5% in local currency terms between 2011 and 2016, although consumers are likely to turn to economy brands with the recession undoing the premiumisation trend that had begun to take hold.

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