Irish SME food companies are optimistic about the growth prospects for their own businesses, but are less certain about the future performance of the economy.
This is according to the latest Love Irish Food/PwC Irish Food Barometer. The survey was conducted in September/October 2019 amongst CEOs and Senior Managers of 70 participating Irish SME food companies, members of Love Irish Food and other SMEs.
The survey found that 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.
Over eight out of ten (88%) Irish food companies expect revenue growth in the year ahead, of which a third (34%) expect this revenue growth to be in excess of 10%. Most of this growth is expected to be organic (rather than from external factors such as a merger or acquisition), with the key drivers being new product development and growth of exports in addition to operational efficiencies.
This optimism is reflected when it comes to projected capital expenditure. Almost all respondents (96%) confirmed that they are planning some form of capital investment in 2020 in order to develop their business. One in ten (10%) 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. As a small open economy, PwC say this is not surprising given external uncertainties.
Just 6% of respondents are expecting a price increase to drive revenue in the year ahead – an ongoing challenge for many Irish companies who are grappling with tight margins and cost competitiveness.
The survey confirms that Irish SMEs value the domestic market (the Republic of Ireland) as the greatest source of growth (78%) in the year ahead. Twenty four percent 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.
Speaking at the survey launch, Senior Manager at PwC Ireland Retail & Consumer Practice, Grace McCullen said, "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."
She added, "With the domestic market being the priority for growth prospects, expanding into new markets and new products should not be ignored. The UK will exit the EU at some point and that will give rise to new opportunities for manufacturing food products in Ireland that may have been supplied from the UK."