Optimism remains high in the Food and Drink Sector but the full force of Brexit has yet to be felt, says Bank of Ireland head of Food & Drink Roisin O’Shea.
Speaking at a Bank of Ireland Sectors webinar this week Roisin O’Shea said that the recent decision by the UK Government to delay the implementation of previously announced border controls from 1 October was no doubt welcomed by the sector.
However, the delay in implementing full border controls is only holding off the inevitable and O’Shea said the industry needs to be prepared for the full impact of Brexit when these controls eventually are put in place. “The companies are in a good position, but it’s one to watch,” O’Shea advised.
“For the Irish food industry, this is a potential opportunity, especially as a number of large UK retailers will be looking for alternative suppliers for Christmas goods at short notice”
“It is really debatable whether Covid-19 or Brexit will have the biggest long-term effect on the industry. As a country we imported as much food from the UK as we exported. Food and drink imports are down from Britain by 50pc, although there’s a bit more coming from Northern Ireland, and that will have lasting changes in how we supply supermarkets on this island. It is also creating opportunities for SMEs to replace those goods brought in from the UK.
“In Britain, which is our biggest trading partner for food and drink, their supply chain is really struggling to cope with Brexit. For the Irish food industry, this is a potential opportunity, especially as a number of large UK retailers will be looking for alternative suppliers for Christmas goods at short notice.
“Brexit has also brought new changes in the retail base. For example, Marks & Spencer’s say that they are delisting about 20pc of their lines in Ireland and they are actively looking for Irish suppliers. Iceland has put off further expansion in Ireland because of concerns about the Brexit supply chain and Sainsburys have put in place a deal with Hendersons to supply their Northern Irish stores.”
A resilient sector
Roisin O’Shea, head of Food & Drink Sector, Bank of Ireland
Looking at the overall performance of Irish food and drinks businesses since the start of the Covid-19 pandemic, O’Shea summed up their performance as “more resilient than most.”
Because of the turbulence in the supply chain, due to Covid and Brexit, long-term growth plans by companies were put on the back burner. But now companies in the sector are dusting down those plans.
The sector faces challenges due to spikes in commodity and energy prices as well as labor shortages. Improving environmental sustainability is now more of a priority than ever due to increased customer and consumer focus. ces
But overall, O’Shea said optimism is high in the sector with the foodservice market making a return and a strong summer performance as a result of consumers enjoying staycations.
“Sectors that had been affected by Covid such as seafood and alcohol have really bounced back this year. Alcohol is up 24pc in exports and is ahead of where it was in 2019. Seafood is up 8pc which is great because they really had a tough year last year.
“So those sectors are coming back, there is a good mood and optimism. But there are also issues to be addressed.”
Read the latest Sector Developments Insights report for September 2021: