Inflation is the leading threat to most Irish food businesses, according to a new survey, which also shows the industry struggling with labour shortages.
However, almost all Irish small and medium-sized businesses involved in food manufacturing are confident about future growth prospects, says the study published on Tuesday.
Seven in 10 participants highlighted “rising input costs and inflationary pressures” as the top threat to their businesses this year.
Kieran Rumley, executive director of Love Irish Food, the industry body that sponsored the research, noted that producers faced challenges with inflation, getting supplies, keeping workers and energy costs.
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However, he added that “there has been a noticeable improvement since last year” with businesses more confident about their prospects.
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“Pressure remains to recruit and retain staff, adding to the cost of labour,” he confirmed. Half of those surveyed said they were struggling to hire workers and warned that labour shortages threatened their businesses’ future growth.
At the same time, Mr Rumley said that businesses surveyed continued to invest in new products and activities even as they grappled with inflation and labour squeezes.
The 2023 Small and Medium-sized Enterprise Food Barometer found that 95 per cent of the 76 companies surveyed this month and last for the study were optimistic about the future. Three-quarters said economic growth would either improve or remain the same this year
Researchers found that small Irish food companies had strengthened their businesses by taking extra steps to control costs.
“Greater economic volatility” remained a key threat for 56 per cent of those who took part, but this was down from 86 per cent in 2022. Some 63 per cent of them plan to spend money on making their companies’ operations more efficient over the year ahead, making this the number-one area for investment in the industry.
Slightly more than half intend to launch new products and services this year, with a similar number planning to spend money on improving their workers’ skills.
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Most companies believe improving their businesses’ sustainability will benefit them, mainly by boosting their image with consumers and cutting costs. About 42 per cent said that it led to greater brand trust while 37 per cent believed it enhanced their reputations.
The survey notes that while cutting energy use and packaging do benefit the environment, these steps also aid businesses in reducing costs. Few companies pledged to become carbon-neutral over the last year, but 73 per cent of them intend doing so by the end of this year.
Owen McFeely, director retail and consumer with accountants PwC, which worked jointly on the research with Love Irish Food, said businesses that invested in sustainability were “best-placed” to boost their reputations. “Irish food and drink companies are upbeat about the future and confident about their organisations,” he added.
