Inflationary pressures impacting Irish food and drink

Brexit, Covid and supply chain constraints as well as raw material shortages have all played a role in Irish food and drink businesses experiencing inflationary pressures across most cost headings.

 

These have been due to a combination of “macro external factors” according to Food Drink Ireland, the Ibec group representing the food and drink sector.

FDI surveyed member companies last July to assess the extent and impact of input cost increases.

27 members responded to the survey which was carried out in the first half of July.

It found that the majority of food and drink companies experienced substantial increases across a range of inputs over the last 12 months including:

Lower – but still significant – increases were experienced for other inputs including 37% of survey respondents experiencing cost increases of 5% to 20% for water/wastewater and 30% experiencing cost increases of 5% to 20% for labour.

Respondents were very clear in the main factors they attributed the input costs to:

• 100% considered Brexit ‘very relevant’ or ‘relevant’
• 96% considered Covid impacts ‘very relevant’ or ‘relevant’
• 96% considered global supply chain constraints ‘very relevant’ or ‘relevant’
• 81% considered domestic supply chain constraints ‘very relevant’ or ‘relevant’
• 78% considered raw material inputs ‘very relevant’ or ‘relevant’.

All businesses operating throughout the pandemic have had to make significant investments to adjust operations in line with public health guidelines.

 

Brexit

Brexit has added significantly to trading costs including transport & logistics and additional administration both for trade with the UK but also for trade with the EU using the UK land-bridge.

Transport costs have been affected by the major driver shortage impacting that sector too and for international business the cost of freight containers has exploded since the beginning of the year.

Food businesses also identify strong increases in utility costs in particular energy and packaging.

The FDI respondents expect a continuation of inflationary trends in the months ahead and that this will impact on margins and competitiveness in export markets, said FDI Director Paul Kelly who called for a range of measures to offset these impacts including a rapid roll-out to the sector of funding from the Brexit Adjustment Reserve and a renewed focus across Government on reducing the cost of doing business in Ireland.