Vol. 567 No. 3
7 Mr. Penrose asked the Minister for Agriculture and Food his views on reports (details supplied) that 90% of all new food and drink products fail to survive more than a year in the market; the steps he is taking to ensure that this figure is lessened considerably; and if he will make a statement on the matter. [13980/03]
The Food Agency Co-operation Council, which was established in 2000 under the aegis of the Department of Agriculture and Food to promote the fullest practical co-operation between the State agencies involved in the food industry, last month published a guide entitled Market Led New Product Development in the Food and Drink Industry. The publication's objective is to provide guidance to food and drink companies regarding best practice in new product development and how to improve the new product development success rate, reduce the risk of failure and set out how State agencies can provide services to support the industry in new product development.
Studies examining the industry's track record in new product development have found that as many as 90% of all new food and drink products fail to survive more than one year in the marketplace. Among the main reasons for that high failure rate is the fact that the majority of companies engaging in new product development do not have an explicit new product development strategy and do not approach it in a market-oriented fashion. The research highlighted the fact that many companies engaging in new product development are company rather than market led, focusing on internal capability rather than market and consumer demand.
The key message emphasised in the guide is that new product development will succeed nowadays only if food and drink companies fully understand the consumer and the nuances of the marketplace. The easy-to-read guide offers a structured approach to the hazards of developing new products and sets out what assistance State agencies can provide at each stage of the process. The guide sets out in a user-friendly way the key tasks that companies should undertake in the new product development process, and two case studies are included to give insights into the experiences of companies in the area. The importance of having a formal, market-focused new product development system to manage all stages of the process actively is emphasised throughout.
At the launch of the guide on 1 April, I emphasised the importance of disseminating it, and the approach to new product development set out therein, to the widest possible audience. In addition to a mail shot to all food and drink companies by the Department, the various State agencies involved in the Food Agency Co-operation Council held, or are planning to hold over the coming months, a number of events at which the guide will be rolled out to target audiences. Judging from feedback received to date and demand from companies for additional copies, I am satisfied that the guide has been well received as a useful and practical initiative. I am confident that the excellent advice and guidance provided in it, along with the renewed emphasis by our Department and the state agencies on the importance of approaching new product development in a structured fashion, will assist in improving the success rate of Irish companies involved in new product development in the food sector.
I thank the Minister of State for that detailed and comprehensive review. The cost of developing a new product must be enormous. While I do not have any figures, I presume it would vary significantly from one product to another. There is clearly a huge waste of resources. Some of that is to do with privately owned companies, in which case the cost will presumably be carried by such companies. However, there is also significant State investment in the development of new products. Why is it that ten or 15 years ago we had a number of extremely successful brand leaders with new products developed in this country? What has happened since? We have dipped so far down the scale that a high percentage of new products fail on the market.
There are a number of reasons for this. Ireland has low domestic consumer demand. Almost 90% of all production in Ireland must be exported because there is only the capacity here to consume about 10% of the products created. Based on the fact that the domestic market is small and that some companies may go to the domestic market without having carried out sufficient research, companies may find themselves in a situation where they fail.
While we have had brand leaders in the past, companies are now subject to serious competition within the European and global marketplace. In the macro-markets in particular, the bigger companies have the capacity and resources, and can afford the expertise, to create new products and new processes. Nonetheless, we have had brand leaders in the past and still have some, particularly on the drinks side. I am confident that with the current attitude in the corporate food sector in Ireland, there is a strong commitment to research, development and innovation. I hope we will have new brand leaders on the market, perhaps this year.
Does the Minister agree that the time is right to invest more in research and development for food product development? We are cutting research budgets in the food area. Would it not be more productive to invest more in that area?
The Minister mentioned the comprehensive guidance available. I have encountered a constituent who has put a number of years and virtually all of his income into the development of a food product. Is there assistance the Department could give to such an individual? I am aware that he has received some funding from his local enterprise board.
To return to Deputy Upton's point, I do not accept that the research budget is being cut. We have increased the resources for research massively in recent years. I was delighted recently that University College, Cork, in conjunction with Teagasc, the food research centre in Moorepark and a number of international corporations, was able to secure massive funding for food research and food technology from Science Foundation Ireland.
We are prioritising the resources available. We want to become more focused. There cannot be research for its own sake. For too long, we have continued to carry out research and produce reports when only those involved in the production of the reports knew of them. We must ensure that the products researched and the reports produced have a commercial focus, particularly in the food area.
In response to Deputy Timmins, assistance and guidance is available from the county and city enterprise boards. There are major feasibility study grants available from Enterprise Ireland and Bord Bia. If a particular company has a product or project which we would support, the Department would be delighted to consider it.
