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INDUSTRY
@IrishFoodMag www.irishfoodmagazine.com
44
ISSUE 6 2018
Working with Amárach Research,
200 businesses were surveyed for
this report. These businesses are
overwhelmingly family owned and
operated by entrepreneurs throughout
the country. These businesses make a
significant contribution to their local
community, especially in rural Ireland,
by creating employment, creating
wealth and often by sponsoring and
supporting community initiatives.
Our survey respondents run complex
businesses with lots of challenges from
securing markets, developing sales,
innovating around product and service
offering, finding and retaining the right team,
managing costs, embracing technology,
engaging with a more informed customer
and harnessing market trends.
Here's how food companies in particular feel
at this moment.
Outlook
There is a positive outlook for the future, in
line with a positive outlook for the overall
economy. Across the food companies
surveyed, we see that 78 per cent are
somewhat or very optimistic.
With a positive year on the horizon,
companies are looking to increase
employment, especially bigger companies
and those based in Dublin, which reflects
the demographic of those who have a more
positive outlook.
There is positive news for employment in the
industry with 34 per cent of food companies
intending to recruit. However, finding suitable
candidates is considered a major constraint
with 64 per cent of food companies citing
difficulties with recruitment.
While turnover has increased for the majority
of food companies (58 per cent), so too have
costs with 72 per cent experiencing cost
increases in the past 12 months. This has
impacted on net margins and it came through
strongly in research that a key challenge for
the coming year was managing margins.
Brexit ­ lack of concern?
Exactly half of food companies surveyed
are not worried about Brexit with only 18
per cent very worried. We believe there are
number of key reasons for this, including
the fact that the majority of sales within the
SME market (86 per cent) come from within
the Republic of Ireland. Other contributing
factors include: a lack of knowledge about
what will transpire in March 2019; a belief
that a deal will be done at the last minute;
and, finally, the resources simply not being
available to give time to planning potential
fallout from Brexit.
Businesses that are concerned about
Brexit are focused on increased costs
from tariffs, a north/south hard border on
the island of Ireland, loss of UK sales and
transport disruption.
Among the advice we are giving the
companies who we work with are:
·
Conduct a supply-chain audit;
·
Prepare some sensitivity analysis for a
worst-case scenario;
·
Make sure adequate capital in place for
2019;
·
Prepare for increased shelf life;
·
Engage with your logistics company;
·
Manage currency;
·
Optimise cost base;
·
Continue to diversify to non-UK markets;
·
Access supports from Enterprise Ireland,
Bord Bia (the Irish Food Board), Intertrade
Ireland and the Local Enterprise Board;
and
·
Look for the opportunity to displace UK
food imports to Ireland.
Funding
Most of the food companies who tried to
access bank finance succeeded (79 per cent),
with 48 per cent stating that dealing with the
bank was easy/very easy. Personal savings still
dominate as a source of funding, followed by
State grants, private investment and invoice
discounting. New forms of funding including
microfinance, crowdfunding, venture capital
and Employment and Investment Incentive
Scheme are used very sporadically.
Succession
Almost half (45 per cent) of food companies
are open to selling in the coming five years if
the price is right. This, incidentally, is much
higher than the proportion of agribusinesses
who would consider a sale in next five years.
Only 18 per cent of food SMEs have a
clear succession plan in place. For many,
temperature
The 2018 IFAC Food and AgriBusiness Report set out to test the pulse and sentiment of the Irish food
and agri-business small- and medium-sized enterprise (SME) sector. Food businesses surveyed had
a broadly positive outlook on the future of business. David Leydon, head of food and agribusiness
at IFAC, outlines some of the key highlights from the food industry in this year's report
Taking the
of food SMEs