Over 80% of Irish food SMEs are expecting to grow their revenue in 2020, according to a newly released survey conducted by PwC and Love Irish Food.
The 2019 SME Irish Food Barometer survey was conducted in September/October 2019 amongst CEOs and senior managers of 70 participating Irish SME food companies, members of Love Irish Food and other SMEs.
The respondents were optimistic about the growth prospects for their own businesses, but are less certain about the future performance of the economy.
Yet only 6% of those surveyed expect to increase their prices during the year, indicating that revenue growth will primarily come from either cost cutting or product innovation.
Showing they are confident about the factors within their control, over eight out of ten (88%) Irish food companies expect revenue growth in the year ahead, of which a third (34%) expect this revenue growth to be in excess of 10%.
This optimism is reflected when it comes to projected capital expenditure. Almost all respondents (96%) confirmed that they are planning some form of capital investment in 2020 in order to develop their business. One in ten (10%) said that this would be in excess of €3m.
However, just 16% are of the view that economic growth in Ireland will improve in the year ahead; 50% say it will remain unchanged and 34% say it will decline.
The growth of volume at the expense of value has placed huge pressure on the food manufacturing sector. With a price sensitive consumer, retailers’ opportunities to grow margins must now lie in the innovative use of emerging technologies to better understand shopping habits and to create brand loyalty.
Key challenges curtailing growth prospects include: availability of labour (43%), trade wars and tariffs (37%), operational costs such as energy, insurance and rates (28%), volatile commodity prices (21%) and embracing the sustainability agenda (17%).
Speaking at the survey launch, Grace McCullen, Senior Manager, PwC Ireland Retail & Consumer Practice, said: “The survey highlights optimism about the future growth potential for Irish food companies. They are also keen to seek operational efficiencies through innovation and technologies to improve margins, cost competitiveness and satisfied consumers.”