SME food companies are optimistic about the growth prospects for their own businesses, but are less certain about the future performance of the economy.

That’s according to the 2019 SME Irish Food Barometer, new research carried out by PwC and Love Irish Food.

The survey was conducted among CEOs and senior managers of 70 Irish SME food companies, members of Love Irish Food and other SMEs.

Very few Irish food companies (6%) expect to achieve price increases in current trading conditions, indicating that margin improvements will be derived from advances in technology and operational efficiencies.

Showing they are confident about the factors within their control, nine out of ten food companies expect revenue growth in the year ahead, of which a third expect this revenue growth to be in excess of 10%.

In Association with

This optimism is reflected when it comes to projected capital expenditure. Almost all respondents confirmed that they are planning some form of capital investment in 2020 in order to develop their business. One in ten said that this would be in excess of €3 million.

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.

Volume Growth

Grace McCullen, senior manager, PwC Ireland Retail & Consumer Practice, commented: “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.

“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.”

Highlighting the need for development into new markets, the survey finds that SMEs value the domestic market as the greatest source of growth (78%) in the year ahead.  24% said that the US was their most important growth market in the year ahead; 12% said this was the EU and just 11% said it was the UK.

Three-quarters of survey respondents are of the view that the Love Irish Food endorsement is of recognisable value to consumers and retailers largely because it clearly identifies that the product is Irish and sets the brand apart from imported products.

Kieran Rumley, executive director, Love Irish Food, said: “There are considerable challenges in areas such as availability of skills across the board, from operational to technical to management, which in turn highlights the need for a greater take-up of available apprenticeships in the industry.

“The survey also suggests that Irish food companies are taking the sustainability challenge seriously with many planning to invest in initiatives to improve the environment.

“However, behind these positive signals there remains the worrying inability of Irish food producers to recover adequate costs, forcing them to continue to operate on even tighter margins.”

Photo: Grace McCullen and Kieran Rumle.