Majority of Irish food companies confident about growth despite being threatened by rising input cost and inflationary pressures – 2023 Love Irish Food and PwC SME Food Barometer finds
- 95% of Irish food businesses confident about growth prospects despite challenges
- 50% of food producers list labour shortages as a continuing threat
- Sustainability is a win-win and has tangible benefits
Rising input costs and inflationary pressures are a top threat for 70% of Irish food businesses, according to new research published by Love Irish Food and PwC today. The 2023 SME Food Barometer reveals that despite the challenges, 95% of Irish food businesses are feeling optimistic about their growth prospects.
Irish food companies are positive about the economy. 74% of respondents are of the view that economic growth will either improve or stay the same. Of these respondents, 33% believe it will improve, up from 24% last year.
The survey signals that Irish food SMEs believe that they have strengthened their business models with enhanced measure to control costs.
Other top challenges mentioned in the survey are greater economic volatility at 56%, down from 86% last year, and supply chain issues at 51%. Half also said that labour shortages are a key threat for future business growth.
Irish food companies are taking action to tackle the challenges head on. Achieving operational efficiencies (63%) is a number one area for investment in the year ahead for Irish food and drink companies, followed by launching new products and services (51%), building people skills (49%) together with building brand trust (49%). Clearly rising costs are top of mind but according to the report, respondents are predicting very low levels of investment in cybersecurity.
Sustainability is a win-win and has tangible benefits
Separately, sustainability measures are at the fore front of Irish food businesses. Over half (57%) reported to have embedded sustainability into their overall business strategy. For example, the top areas for investment to deliver better sustainability outcomes are energy consumption (45%), packaging reduction (37%) and plastics reduction (37%).
A large majority (72%) reported that embedding sustainability has tangible benefits with 45% believing it is the right thing to do from a societal viewpoint. The benefits include: it leads to greater brand trust (42%); and enhanced reputation (37%). It is clear that the key areas of focus (i.e., energy, packaging and plastics) have environmental benefits but they also help the business manage costs in a period of high inflation.
Despite commitments to sustainability efforts, only 15% of companies have made a carbon-neutral commitment in the last year. However, half are working towards making this commitment with the majority (73%) having pledged to be carbon neutral by 2030.
Owen McFeely, Director, PwC Retail & Consumer Practice, commented: “Irish food and drink companies are upbeat about the future and are confident about their organisations’ abilities to innovate and tackle the challenges ahead. Sustainability is clearly a priority – being seen as not just the right thing to do but also delivering real potential for efficiencies in their businesses. Integration of sustainability into core business strategy is the way forward and it’s encouraging to see organisations making progress in this area. With growing consumer expectations in the area of sustainability, those businesses who proactively invest are best placed to enhance brand trust and their reputation whilst at the same time reducing their carbon footprint.”
Kieran Rumley, Executive Director, Love Irish Food added: “While Irish food producers are facing major challenges with inflation, supply chain issues, labour retention, and energy costs, there has been a noticeable improvement since last year and it is promising to see the confidence and resilience these businesses are demonstrating in their growth prospects. Pressure remains to recruit and retain staff adding to the cost of labour. The food manufacturing sector contributes significantly to building a resilient and sustainable national food base. It is hopeful to see businesses continuing to make investments in new products and activities as they navigate these challenges.”
About the survey:
The survey was carried out in March and early April 2023 by PwC and Love Irish Food, among 76 Irish food SMEs.