Irish food SMEs are optimistic about their growth prospects, according to new research by Love Irish Food and PwC, which found that 75% of companies operating in the sector are anticipating their revenues to increase in the year ahead.
The 2021 Irish SME Food Barometer revealed that this optimism is echoed by a favourable outlook for the Irish economy with 65% of companies confident the economy will improve over the next 12 months, despite challenges related to COVID 19 and Brexit. This is up from just 16% in late 2019.
The survey was carried out between 22 February and 26 March amongst the member firms of Love Irish Food, representing Irish food SMEs having 68 participants.
However, some caution is in the air as these positive economic growth forecasts are tempered by 22% of companies who believe economic growth will decline in the year ahead.
The research also indicates that there will be a significant uplift in the levels of capital investment made by food and beverage companies, following a stall during the pandemic. Underlining the growth agenda for Irish Food SMEs, 69% of respondents stated that they will not delay investment over the coming 12 months, compared to 62% who said they did delay such investment in the last 12 months, representing a dramatic turnaround.
Furthermore, 20% of respondents confirmed that they are planning to launch new products or services to drive business growth in 2021. A total of 11% will enter new markets. Other activities to drive business growth include implementing operational efficiencies (19%) with a further (11%) aiming to achieve growth by investing in digital strategies.
Almost one in ten (8%) will seek price increases, up from 6% last year, highlighting the ongoing challenge for many Irish companies who are grappling with tight margins and cost competitiveness. The growth of volume at the expense of value continues to place huge pressure on the food manufacturing sector.
Speaking at the survey launch, Owen McFeely, Director, PwC Retail & Consumer Practice, said: “With the prospects of the re-opening for our economy over the coming months, the research reveals cautious optimism for business prospects for Irish food SMEs. These organisations have seen major disruption in their businesses for more than a year and, with plans for investment, they are now looking forward to turning a corner.”
Commenting, Kieran Rumley, Executive Director, Love Irish Food, said: “Notwithstanding a difficult trading environment, it is encouraging to see evidence of optimism amongst food sector SMEs regarding the potential for their own company’s performance in the sector, reflecting factors they feel a greater degree of control over. As anticipated, Covid-19 related issues remain the greatest concern for companies operating in the food and drinks industry.
“However, volatile commodity prices now clearly pose a new and significant threat to companies, especially in the context of Covid-19 related costs imposed on such businesses more recently. It is unlikely that SMEs will be able to shoulder the burden of these additional costs for long and may eventually be forced to pass these on as consumer price increases. Love Irish Food is working to increase the support offered to companies throughout 2021, with greater retailer support in the interface with the retail grocery sector, as part of its mission to advance the future of Irish food and drink brands.”