Bank of Ireland’s 2026 Food & Beverage Outlook shows resilient Irish producers navigating export pressures, rising costs, AI adoption and market shifts.
Ireland’s food and beverage sector entered the second half of 2026 facing a more challenging trading environment, with export growth easing, cost pressures persisting and weather-related disruptions affecting supply chains.
That’s according to the latest Food and Beverage Sector Insights and Outlook report from Lucy Ryan, Head of Food & Beverage Sector at Bank of Ireland.
“Despite ongoing market uncertainty, operators have adapted to changing conditions”
The report found that food and beverage exports were valued at €9.1bn during the first six months of 2026, representing a 3% decline compared with the exceptionally strong performance recorded in 2025. While prepared consumer foods maintained export levels, shipments across dairy, meat, beverages, seafood and horticulture all recorded declines.
Pressures on business
Despite the softer export performance, inflationary pressures have moderated. Food inflation stood at 0.6% in Ireland in June, compared with 1.7% in the UK and 1% across the EU. However, rising operating costs and weather-related challenges continue to place pressure on businesses throughout the supply chain.
“While annual food inflation eased in June 2026 to 0.6% in Ireland, 1.7% in the UK and 1% in the EU, high input costs and weather-related supply pressures mean food prices will remain elevated,” said Lucy Ryan, Head of Food & Beverage Sector at Bank of Ireland.
The report highlighted research showing that 91% of food businesses experienced an increase in the cost of doing business during 2025, while 85% expect costs to rise further during 2026. Extreme heat and low rainfall across Western Europe this summer have also raised concerns about harvest yields and the availability of raw materials, with implications for food and beverage production costs in the months ahead.
Geopolitical uncertainty is also influencing business strategy. Trade tensions between major economic blocs are encouraging exporters to seek new international markets and reduce dependence on individual destinations. According to the report, diversification is becoming an increasingly important component of long-term growth strategies for Irish producers.
Businesses are also accelerating investment in technology. The report noted growing adoption of automation, robotics and integrated production systems as companies seek to improve productivity, manage labour shortages and strengthen operational efficiency. Artificial intelligence is moving beyond experimentation and is being used across quality control, predictive maintenance, production planning and supply chain management.
Retail performance has remained encouraging. In the Republic of Ireland, grocery sales increased by 6.3% during the four weeks to 12 July, supported by warm weather and major sporting events that encouraged at-home celebrations. Lidl recorded sales growth of 10.8%, increasing its market share to 14%, while Dunnes Stores remained the country’s largest retailer with a 23.7% share of the market.
Regulatory landscape
The sector is also adapting to an evolving regulatory landscape. New EU packaging regulations that came into force this month introduce additional recyclability, labelling and reporting requirements, while the EU Deforestation Regulation will bring greater traceability obligations for companies selling commodities such as cattle, cocoa, coffee and soy into European markets from December.
Merger and acquisition activity remains active. Among the notable transactions highlighted in the report were Swedish poultry group Scandi Standard’s €127m acquisition of Glenhaven Foods in Co Wicklow and the €75m acquisition of Irish functional drinks brand VITHIT by London-listed Nichols plc. Dublin-based Cobblestone Brands also continued its expansion through acquisitions in the international spirits sector.
Looking ahead to the remainder of 2026, the report said businesses are expected to maintain a cautious approach to investment while continuing to prioritise productivity, sustainability and resilience.
“Despite ongoing market uncertainty, operators have adapted to changing conditions and are expected to maintain a cautious approach to investment, prioritising opportunities that deliver greater efficiency and enhance competitiveness,” said Ryan.
The report identified several priorities for operators over the coming months, including tighter cost control, investment in automation and AI, advancing sustainability initiatives, diversifying export markets and strengthening supply chain resilience.
The overall outlook remains cautiously positive. According to findings from a joint Love Irish Food and Bank of Ireland survey conducted in the second quarter, 62% of food and beverage operators said they remained positive about business opportunities despite broader economic uncertainty.
As Irish producers navigate a complex mix of cost pressures, regulatory change and shifting international demand, the report concludes that innovation, operational efficiency and market diversification will remain central to maintaining competitiveness and supporting future growth.
Read the full report:
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