Irish f&b businesses better prepared for Brexit than other industries
More than half of Ireland’s food and drink businesses are setting up contingency plans for Brexit, with the most common strategy being a focus on markets other than the United Kingdom.
BE READY: Irish food and drink is expected to be one of the most heavily affected industries when Ireland's neighbour leaves the EU
Food Drink Ireland (FDI), the group represents the food and drink sector, has published its quarterly Business Monitor which includes an analysis of food and drink responses to a recent Brexit survey of businesses across Ireland.
According to the report, 59 per cent of food and drink companies had a hedging or pricing arrangement in place (an increase from 51.5 per cent in summer 2016 when the previous survey was published) compared with 35 per cent of businesses generally.
The most common elements of contingency plans for food and drink companies are:
- Focus on new geographical markets outside the UK (50 per cent compared with 32 per cent for all business)
- Diversification of business into new products (33 per cent compared with 25 per cent for all business)
- Alternatives to transit of goods through the UK (28 per cent compared with 25 per cent for all business)
- Sourcing strategies for materials (22 per cent compared with 21 per cent for all business)
From an export perspective 50 per cent of food and drink companies said Brexit would have a negative impact on the value of export sales (an increase from 42 per cent in summer 2016) compared with 28 per cent of businesses generally.
The biggest impacts that the UK leaving the EU would have on respondent’s businesses in the food and drink sector were:
- Cost of customs compliance with procedures with NI/GB (83 per cent for food and drink compared with 45 per cent for all business)
- Exchange rate movements (67 per cent for food and drink compared with 47 per cent for all business)
- Value of export sales (56 per cent for food and drink compared with 29 per cent for all business)
- Volume of export sales (50 per cent for food and drink compared with 27 per cent for all business)
FDI Director Paul Kelly said: “Food and drink companies are actively engaged in Brexit planning. With 35 per cent of food and drink exports going to the UK and further 33 per cent destined for the rest of the EU mainly via the UK land-bridge, it is clear they are more worried than other business sectors even though they are better prepared.
“Government must implement policies to help mitigate the risks facing the sector by addressing cost competitiveness in the economy and helping companies innovate and improve productivity.
“FDI continues to call for Brexit policy measures to support and protect Ireland’s most important indigenous sector including a transition period of sufficient duration; an ambitious EU-UK future trade agreement that avoids tariffs, TRQs and regulatory divergence and no hard border with Northern Ireland. There is also a compelling case for exceptional state aid support to minimise the economic fallout arising from Brexit.”