Supermarket group Aldi has this week announced a new contract with Dawn Meats, to the value of €25m annually for the next five years. This will add six new product lines to the Aldi range, increasing Dawn’s supply to Aldi by 35% and the creation of 15 new jobs. This contract has also “provided Dawn Meats with the confidence to accelerate a €5m expansion plan for the facility in Waterford”.

Aldi has been present on the Irish retail market for 25 years and has 161 stores across the Republic of Ireland, employing 4,650 people.

It doesn’t have a presence in Northern Ireland.

Aldi plans to expand its store network with a further 30 new stores and an investment of €400m over the next five years, creating 1,000 new jobs in the process.

Dawn Meats is one of the two largest beef and sheepmeat processors in Ireland and across all the UK regions, and has 8,000 employees spread across 12 countries.

Importance of supermarkets

Dawn meats says that its businesses contribute approximately €2bn to rural economies in Ireland and the UK, so in the context of the Dawn business, this new Aldi contract is a building block in its portfolio of customers for beef and lamb. Aldi, like Lidl the other German discount supermarket that opened in Ireland around the same time 25 years ago, has been steadily increasing its share of the Irish grocery market, holding 11.6% of the total in Kantar’s most recent 12-week period.

Dependence on export markets

As is common with all retailers, they tend to lean heavily on supplies from the local market. While there is Irish product on Irish shelves, it is what happens in export markets that really drives farmgate value, given that 90% of our agri food production is exported.

With more Irish beef consumed in the UK than in Ireland, access to UK stores for Irish beef would be particularly welcomed by Irish farmers, but Aldi, like seven of the other top 10 UK retailers, has a UK-only sourcing policy for beef.

Supermarkets have become the dominant route to the retail market for beef and lamb sales, as the number of independent butchers has declined. Farmers have no insight as to how the value is apportioned along the supply chain after the farmgate, so while supermarkets are important customers, their real value to farmers remains unknown. Perhaps the agri food regulators office will be able to shed some light on this in the Irish market.