The Consumer and Professional division is focused on the commercial sales and marketing of heating solutions and horticultural products across Ireland, the UK and Europe, providing innovative product and supply solutions to meet customer needs. Bord na Móna is the market leader in both the solid fuel and horticultural categories in many of the markets where we trade. The business is continually evolving and has developed an ambitious plan to lead the market to a more carbon free and smokeless fuel environment, whilst also expanding our portfolio of horticultural products and services. In exports, the company’s strength is in the provision of technically strong growing media solutions for the professional markets in Europe and the Middle and Far East.
An internal review of the business, conducted over the year examined the challenges faced by Consumer and Professional. As a result of the review we decided to divide the business into separate fuels and horticulture businesses entirely focused on their own distinct strategic objectives.
Consumer and Professional generated annual sales of €143.7 million in fiscal year 2015.
After two particularly strong years the heating market experienced significant challenges. Heating oil prices dropped by 20%, plentiful supplies of private firewood and turf reduced demand for traded solid fuel and the real impact of the imposition of carbon tax on both coal and briquette took hold. The ongoing challenge of non-compliant fuel imports, chiefly from Northern Ireland, was accentuated by the disparity of treatment of solid fuel taxation in the two jurisdictions. Overall peat briquette volumes reduced by circa 13% year on year, while coal, which suffered more from carbon tax and non-compliant imports, reduced by 18%.
The UK growing media business continues to perform well with growth of 2.9% in 2014. Our strategic partner B&Q experienced strong growth year on year due to favourable weather conditions and strong commercial implementation at store level. The smaller garden centre sector delivered its third year of double digit percentage growth.
The professional horticulture business planned and implemented key strategic initiatives during the year to support achieving €19.8 million in sales across Europe. We strengthened our market position with the introduction of new differentiated peat types and enhanced our quality peat brand by achieving the industry recognised, independently certified, RHP quality mark.
Despite the competitive imports of competing peats and alternative ingredients traditional markets such as Holland, Italy and France all performed ahead of budget.
In a challenging market in Ireland, the Consumer and Professional business continued its investment in Sales & Marketing with the introduction of the Customer Partner Programme, working closely with trade customers via localised promotional activity, the provision of signage and point of sale and improved staff training programmes. Our innovative display units significantly expanded the range of solid fuel available in the multiple retail channel. Reflecting the company’s movement toward lower carbon solid fuels Bord na Móna introduced a high-quality range of firewood products, including Kiln dried firewood, kindling in a variety of sizes and new wood pellet products.
Bord na Móna supported Waterford Stanley’s successful heat week promotion and also introduced a new Stove log product which is being rolled out across key retailers this year. Attendance at the Ploughing championship, which saw record crowds, the Ideal Homes events in Dublin and a variety of local and national trade show events also ensured strong trade visibility.
Our continued commitment to quality and sustainability in the growing media sector was highlighted when the largest independent consumer body,’ Which?’ awarded their top accolade ‘Which? Best Buy’ to three of our products.
The year also saw the establishment of peat exports to Taiwan supplying the first Potting soil factory in the region and new exports to Saudi Arabia, Oman and Qatar.
The solid fuel industry is at a point of significant challenge from a number of areas. In particular the challenge brought by the expanding range of legislative pressures on the business. The imposition of carbon tax on solid fuel has added significantly to the retail prices of coal and briquette products (up to 20% over the last two years). This impact is being felt disproportionately by those at risk from fuel poverty and is impacting adversely on sales of these products.
The low level of visible enforcement of carbon tax, specifically related to imports from Northern Ireland is encouraging non-compliant behaviour and putting the Irish solid fuel industry at serious risk. This year Bord na Móna became responsible for an Energy Efficiency Obligation - one of just two ROI solid fuel suppliers to be so responsible. The impact of this will be to increase the challenge on Bord na Móna in an increasingly competitive marketplace.
In the UK growing media market, there is a continued focus on helping our expanding customer base meet the regulatory drive for peat dilution and sustainably sourced growing media. This activity is being undertaken with a continuing focus on remaining competitive in the face of additional feedstock costs and freight charges.
We are committed to moving towards a more sustainable future. Bord na Móna is the market leader in solid fuel today and will lead the market in the transition to renewable home heating.
In relation to growing media, Bord na Móna continues to develop sustainable and peat diluted products to meet market demands. There is continued focus in the UK on helping our customers meet the regulatory drive for peat dilution and sustainable products while remaining competitive.
As the largest producer and importer of solid fuel products in Ireland, the Consumer & Professional business is committed to developing alternatives to traditional fuels that are not only compliant but also market-leaders in the provision of effective, sustainable and competitive solutions.
New product innovation is also a critical component of our overall commitment to moving towards a more sustainable future. In the past year we have made good progress on strategic projects to deliver smokeless and renewable products to meet future market demands and consumer needs.
The business is committed to marketing innovative growing media solutions, from consumer products through to professional grower products, which are sustainable and cost competitive. By investment in product development that is compliant with sustainability criteria, we will help our customers in the UK, Europe and beyond to continue to strengthen their business with solutions that are effective, compliant and profitable for them in whatever market sector they trade. Above all, the business will continue to support our customers as we have always done to help grow and develop their businesses for our mutual benefit.