The Trump tariffs have sent a chill wind through Ireland’s exporting sector, with many businesses facing into a loss of competitiveness and significantly eroded margins in the key US market.
One response advocated is diversification into new markets, but that is easier said than done in an increasingly uncertain global economy.
An alternative is premiumisation, which offers the prospect of breaking the link between the cost of production and the market price of a branded product.
Ireland already has a number of global premium brands including Kerrygold, Guinness, Baileys and Jameson. But how useful a strategy is it for other Irish exporters to follow?
RM Block
As managing director of Avoca, a premium fashion and homewares retailer, Brian Handley works with some of Ireland’s top-drawer brands. As well as exporting around the world online, Avoca collaborates with such high-end international retailers as Icicle, with which it has developed a range of accessories.
Before joining Avoca, Handley held senior roles at Harvey Nichols and de Bijenkorf Amsterdam, partnering with brands such as Chanel, Dior, Louis Vuitton and Gucci.
His experience has given him enormous insights into brand management. Any business currently considering whether or not to reposition itself as premium must tread carefully, he cautions.
“Whether you’re setting up a brand or moving a brand to become more premium, there has got to be real value in it and a real reason why you consider it premium. What is the core ingredient, the core story? Yes, brands can be different in different markets but now, with the internet and social media, where anyone can look at anything, what you can’t do is just take a brand and reposition it differently in different markets where there is no story to it and it’s not believable,” he says.
“Equally you can’t just put your prices up and say that you’re premium, because you risk losing your existing customers.”
There have always been tariffs and costs involved in selling into different countries, he points out.
Core values
“If you’ve got a good product, and a good story, there’s no reason why, in a different market, you can’t charge a slightly higher price because customers understand the costs of doing business in different markets. They understand it has to be imported. Customers are not stupid. So if you’re all of a sudden 5 per cent more expensive in a particular market than you were, if you’ve got a good product, with a good story, and a core set of values, customers will still buy it,” says Handley.
It is also possible, though challenging, to have different brand profiles in different markets.
Handley points to Fisherman’s Friend lozenges as a case in point. “Here, it’s known as something your grandma might force on you if you started to cough. But if you go to Asia, Fishermen’s Friend is marketed with really young, glamorous models and floral-design packaging and is more of a cool, younger product that sells to a different audience. It has done a fantastic job of going into a market and saying we won’t change the core product or the core values, but we might introduce different flavours and we might adapt our marketing, while staying true to the core narrative.”
Bring customers with you
Avoca is launching three new collections this year, Heritage, 1723, and Warp, the marketing of which harks back to the story of the Wynne sisters who developed Avoca’s mill, which still produces its textiles today.
“It’s believable, it’s our history, it’s our past,” Handley explains. It also answers customer demand for finer mixes and more premium blends, including cashmere. The fact that Avoca recently bought the entire clip of wool from native Irish Galway sheep will also inform part of its future marketing.
“In the end a brand can change its positioning and it can change its mindset but there has to be truth in the narrative,” says Handley. “It’s why I always advise businesses to look inwardly. If you can’t find that truth there then you’ve either got to create sub-brands or new products. But you can’t say, oh, tariffs have gone up so we’re adding X per cent to the price and are just going to say we’re more premium, because it doesn’t make sense.”
In some cases the best option will be to create a new, premium range. That’s particularly the case for food brands, says development chef and food business mentor Brian McDermott.
It’s a sector that is already challenged by rising ingredients costs, as well as overheads such as energy.
Having a two-tier model can help but he too stresses the need for caution. “You can’t just flip your business and become a premium brand straight away. You’ve got to bring your customers with you,” says McDermott.
“At the end of the day there are only two types of customers: new and repeat. Perception will help you get the new customer but it is the product itself that will get you the repeat. Premiumisation only works if you deliver it. If you get it wrong, you’re going to damage your current business model.”
Relief and relaxation
Former PwC consultant David Hartigan has already nailed his export ambitions to the mast with his cannabidiol (CBD) brand Hemp Heros, which he sells through health stores such as Holland & Barrett.
CBD is derived from the hemp plant but does not cause a high, is not addictive and is often used for pain relief and relaxation. As well as a full range of products for people, it includes a fast-growing range of products for pets which can help reduce joint pain or anxiety in dogs and horses, for example.
“Placebos have no effect on pets. Products either work or they don’t,” says Hartigan, whose ambition is for “Hemp Heros to be a global brand, the Kerrygold of CBD”.
He has already set up a company in the US to manage sales of its pet products there.
“We didn’t know what was going to happen in relation to tariffs but, given that the US is such a big market, it just made sense to have operations there,” he says.
The US CBD pet supplements market is already well established and, as such, highly competitive. Hemp Heros is going in as a premium product, backed up both by its organic ingredients and its B Corp sustainability status.
The fact that it undertakes its own manufacturing, when the vast majority of its competitors are contract manufactured, also supports its premium positioning in the market there, he believes.
“In-house manufacturing is a huge benefit to us because we know exactly what goes into every product. It’s a much more authentic story,” says Hartigan.
He’s currently at the market education stage, attending US trade shows, talking to buyers and commissioning third-level research to assess its efficacy claims independently. “So, we can really back up the quality of our products,” he says.
Premium skincare
In September, Niamh Hogan, founder of premium Irish skincare brand Holos, was caught up in tariff trauma. A consignment of product which would normally have cleared US customs in two days had been delayed for nine. While still waiting for an outcome, she received word an additional tariff would be applied because her packaging included (recycled) aluminium.
It’s all adding to the cost of exporting for the brand, which recently launched in upmarket stores such as Dalya NYC and Atlas in San Diego.
Holos has had a dedicated US platform since 2023
The product already retails for 25 per cent more in the US than it does here, simply to cover the additional costs. “Americans are willing to pay a little more for European skincare brands anyway. They are very much trusted, because of the stringent regulations the EU puts them through,” says Hogan.
That said, with any pricing strategy there is always a tipping point.
“We ship our product to Illinois, where we have a fulfilment centre, and our customers order from our US website. Because we basically export to the US – as in, we don’t have people importing our product, we have to foot the bill for the tariffs, which is tough,” she says. “It’s a balancing act.”
