Most small and medium sized businesses in the food sector expect their revenues to increase in the year ahead, according to new research by Love Irish Food and PwC.
The 2021 Irish SME Food Barometer found that 75% of companies in the sector are optimistic about their growth prospects.
The findings suggest that there is a wider sense of optimism in the sector, with 65% of companies confident the economy will improve over the next 12 months.
Despite challenges related to Covid-19 and Brexit, that figure is up from just 16% in late 2019.
However, the research shows that 22% of companies believe economic growth will decline in the year ahead.
Owen McFeely, Director of PwC Retail and Consumer Practice, said the research reveals “cautious optimism” for business prospects for Irish food SMEs.
“These organisations have seen major disruption in their businesses for more than a year and, with plans for investment, they are now looking forward to turning a corner,” he said.
According to the survey, the impact of Covid-19 is the greatest threat for the food and beverage sector.
However, Kieran Rumley, executive director of Love Irish Food, said that volatile commodity prices now pose a new and significant threat to companies
“It is unlikely that SMEs will be able to shoulder the burden of these additional costs for long and may eventually be forced to pass these on as consumer price increases,” he said.
“Love Irish Food is working to increase the support offered to companies throughout 2021, with greater retailer support in the interface with the retail grocery sector, as part of its mission to advance the future of Irish food and drink brands,” he added.
The research also indicates that there will be a significant uplift in the levels of capital investment made by food and beverage companies, following a significant stall during the pandemic.
69% of respondents stated that they will not delay investment over the coming 12 months, compared to 62% who said they did delay such investment in the last 12 months.
Meanwhile, 20% of respondents confirmed that they are planning to launch new products or services to drive business growth in 2021, while a total of 11% will enter new markets.
Respondents also indicated that environmental sustainability remains high on their agenda, with 60% of those surveyed stating that the importance of having an environmental sustainability strategy in place has increased this year.