Food SMEs in Ireland are optimistic about growth prospects in the year ahead, while almost one in ten will seek price increases, according to new research by Love Irish Food and PwC.

The findings are contained in the 2021 Irish SME Food Barometer, which is based on a survey of Love Irish Food member firms that was carried out in February and March this year.

According to the report, three-quarters of companies operating in the food sector are anticipating revenue growth in the year ahead. Two-thirds of companies are also confident that the economy will improve during the period, while one in five think that economic growth will decline.

One in five respondents also said that they are planning to launch new products or services to drive business growth in 2021. Almost one in ten (8%) will seek price increases, up from 6% last year.

The impact of Covid-19 (58%) is the greatest threat for the food and beverage sector, according to the SMEs surveyed, fuelled by economic uncertainty, and associated labour issues.

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One in four of respondents said that the UK continues to be their most important market. One-quarter of those surveyed (24%) also stated that more than one-fifth of their company’s revenues in 2021 will come from trade with the UK. Seven in ten consider the Republic of Ireland their most important territory for growth.

Environmental sustainability remains high on the agenda for Irish food and drink SMEs, with 60% of those surveyed stating that the importance of having an environmental sustainability strategy in place has increased this year.

In addition, over half (57%) of companies confirmed that they have a sustainability plan in place to make improvements throughout 2021. Key areas of investment include energy consumption (22%), packaging reduction (18%) and water usage (16%).

“With the prospects of the reopening for our economy over the coming months, the research reveals cautious optimism for business prospects for Irish food SMEs,” said Owen McFeely, director, PwC Retail & Consumer Practice.

“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.”

Kieran Rumley, executive director of Love Irish Food, said that volatile commodity prices pose a new and significant threat to companies. “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.”

Photo: Kieran Rumley (left), Owen McFeely and Emily MacDonnell, PwC Ireland Retail & Consumer Practice (Pic: Maxwell Photography)