Bank of Ireland’s head of Food & Beverage Sector Lucy Ryan says inflation will linger while producers pivot to private label and nutrient dense innovation.
It was a record year for Ireland’s Food & Beverage Sector, despite it being a bit of a hard slog.
Irish food and drink exporters closed 2025 with sales of €19 billion, up 12% on 2024 as dairy and meat led the charge and prepared consumer foods rose to become the third largest subsector.
“A continued focus on export opportunities, and further development of food tourism within Ireland, will cultivate more food and beverage opportunities for the island”
Price inflation helped lift values, but the year also tested managers with higher input costs, staffing pressures and geopolitical uncertainty.
“The sector continued to face macroeconomic pressures, global instability and elevated costs,” writes Lucy Ryan, head of the Food and Beverage sector at Bank of Ireland, in the bank’s new half‑year insights and outlook.
She adds that food inflation at the end of 2025 stood at 4.1% in the Republic, 4.5% in the UK and 2.7% across the EU.
Automation to keep plants running
Producers responded to tight labour markets and rising wages by bringing outsourced production back in house and accelerating investment in packaging lines and robotics.
Existing teams were upskilled to run the equipment, a shift Ryan frames as both a cost hedge and a way to protect service levels.
“Exploring how AI can simplify processes and support the development of practical automated systems can free teams to spend more time on higher value, strategic work,” she writes.
Staffing costs remain a fault line. Ireland’s minimum wage increased to €14.15 per hour in January, while pension and PRSI changes are adding to the wage bill. “Staffing costs remain a big focus for the sector and will affect Ireland’s global competitiveness if not carefully managed,” Ryan warns.
Winners, laggards and the power of own‑label
Dairy and meat together accounted for more than 64% of exports and posted value growth of 14% and 18% respectively in 2025. Prepared consumer foods rose 9% to €3.6 billion. Spirits held about €2 billion in export value as distillers diversified into ready‑to‑drink lines, new blends and alternative packaging to reach Canada, India and Mexico.
At home and in the UK, shoppers traded toward value. Private label captured 52.3% of UK grocery lines in late 2025, pushing manufacturers to work more closely with retailers across cereals, bakery, ready meals and salads.
“Rising private label penetration has led producers to increase collaboration with retailers to meet demand,” the report notes.
Christmas tills rang as cocoa cooled
The Irish grocery market posted a strong festive period with €1.5 billion in December sales. In the UK, 12‑week sales to December 28 grew 3.5% to a record £13.8 billion, with Tesco extending its lead.
Commodity pressures began to ease in places. Cocoa prices fell sharply into early 2026 following improved West African weather, while Brazil’s outlook suggests relief ahead for coffee.
GLP‑1 diets reshape product pipelines
A looming change in what people buy is already influencing NPD roadmaps.
“The advent of GLP‑1 appetite‑suppressing drugs is evolving consumer diets towards nutrient‑dense foods,” Ryan writes, pointing to moves by several UK grocers to curate ranges that fit the trend.
Expect a faster cycle of reformulation and portion innovation as brands chase satiety, protein and fibre claims without sacrificing affordability.
Rules to live by
Compliance is tightening. The EU Anti‑Deforestation Regulation has been delayed by a year and will now apply from December 2026 for large and medium operators, and from June 2027 for small and micro firms.
It will require proof that products such as beef, leather, coffee, cocoa, palm oil, soy and wood are not linked to deforested or degraded land after December 31, 2020. Packaging reforms under Regulation 2025/40 are also in train and will apply from August 2026, bringing stricter waste and labelling standards that will force range‑wide packaging changes.
The seafood industry faces a tougher 2026 after deep quota cuts for key species. New EU‑UK quotas include a 70% reduction for mackerel and 41% for blue whiting, changes that will ripple from trawlers to processors. While export values in seafood rose 9% last year to €635 million, volumes rose faster at 22%, masking price pressure.
M&A redraws the map
Corporate activity continued to reshape shelves. Valeo Foods bought three European confectionery and sweet bakery businesses and sold New World Foods to Kepak, which gains a high‑protein snacking platform.
Greencore acquired Bakkavor’s UK prepared foods business. Dawn Meats took a majority stake in New Zealand’s Alliance Group to secure year‑round grass‑fed supply.
“A continued focus on export opportunities, and further development of food tourism within Ireland, will cultivate more food and beverage opportunities for the island,” Ryan writes.
What to watch for in H1 2026
Ryan warns that inflation will not vanish overnight.
“Food inflation will likely remain elevated in early 2026. Whilst some commodity prices are lower, costs remain high and will continue to impact consumer prices,” Ryan writes.
Beer prices are set to rise after major brewers signalled increases in February. The Government has raised the R&D tax credit from 30% to 35%, which Ryan says should help sustain the pace of innovation..
Her guidance for operators is pragmatic. “It can be valuable for businesses to keep a clear focus on their core strengths, using innovation to enhance ROI while managing costs in a balanced, disciplined way,” she writes.
She also urges producers to put long‑term decarbonisation plans in place and to expand into new channels and markets without losing sight of margins.
Bottom line
Ireland’s food industry enters 2026 with momentum and scars.
Automation and retailer collaboration are becoming core capabilities. New diet trends and regulatory deadlines are accelerating change.
Ryan’s message is steady and practical. Control what you can, invest with purpose, and keep finding growth where consumers are moving.
Read the full report:
Top image: Photo by Justus Menke on Unsplash
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