Brexit, COVID-19 and headwinds in the supply chain are causing inflationary pressures, according to Irish F&B sector

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Aug 09, 2021 — Irish food and beverage companies are under inflationary pressure in most cost categories due to a combination of external macroeconomic factors including Brexit, pressures from COVID-19, constraints supply chain and raw material inputs. That’s according to a new analysis from Food Drink Ireland (FDI), the Ibec group representing the food and drink industry.

FDI surveyed member companies last month to assess the extent and impact of increases in input costs. The survey found that the majority of food and beverage companies have experienced substantial increases in a range of inputs over the past 12 months.

Smaller but significant increases were recorded, of which 37 percent experienced increases of 5 to 20 percent in water / wastewater costs and 30 percent experienced increases of 5 to 20 percent in costs of the work force.

Respondents attributed the input costs to:

  • One hundred percent saw Brexit as very relevant or relevant.
  • Ninety-six percent rated the impacts of COVID-19 as highly relevant or relevant.
  • Ninety-six percent rated global supply chain constraints as very relevant or relevant.
  • Eighty-one percent viewed domestic supply chain constraints as highly relevant or relevant.
  • Seventy-eight percent considered raw material inputs to be very relevant or relevant.
  • All companies operating throughout the pandemic have had to make significant investments to adjust their operations in accordance with public health guidelines.

Click to enlargeThe FDI survey found that a majority of F&B companies have experienced substantial increases in a range of inputs over the past 12 months.Trade barriers
Brexit has dramatically increased trade costs, including transport and logistics and additional administration for trade with the UK and trade with the EU.

Transport costs have also been affected by the severe shortage of drivers affecting this sector. For international trade, the cost of freight containers has exploded since the start of the year.

Food companies are also identifying substantial increases in utility costs, particularly energy and also packaging.

Paul Kelly, director of FDI, said respondents expected inflationary trends to continue in the coming months and would have an impact on margins and competitiveness in export markets.

He called for a series of measures to offset these impacts, including:

  • A rapid deployment in the financing sector of the Brexit Adjustment Reserve.
  • Renewed focus across government on reducing the cost of doing business in Ireland.

Last month, Ireland’s new Food Vision 2030 strategy for the Irish food sector was presented by Charlie McConalogue, Irish Minister for Agriculture, Food and the Navy.

Meanwhile, the Irish agri-food sector is expected to receive more than one billion euros ($ 1.18 billion) from the EU’s Brexit fund in 2021. However, local industry players under FDI called for targeted support measures to help businesses stay vibrant during the transition period. .

Green solutions
Among recent developments, Glanbia Ireland recently pledged to achieve an absolute 30% reduction in carbon emissions from its processing sites by 2030. It will work with its dairy farmers for a similar reduction in carbon intensity by milk production.

With plant-based meat analogues widely recognized as a sustainable solution to reducing the carbon impact of food systems, Irish taste and nutrition company Kerry, based in Ireland, has focused on boosting its taste solutions. salty. The company recently launched VegTec, an aroma delivery system that provides a juicy, succulent mouthfeel in herbal products.

Edited by Elizabeth Green

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