Irish food exports strong, domestic pressures remain
last year, though domestic pressures still exist.
Bord Bia, the Irish food agency, put the sector's strong performance overseas down its ability to exploit emerging trends such as functional food, strongly branded drinks and the increasing importance of the Asian market.
As a result, the value of exports is estimated to have increased by €756 million, or 10 per cent, significantly outperforming growth in total merchandise exports.
"Irish food and drink exporters delivered an exceptional performance in what remains a very competitive market environment," said Bord Bia chief executive Aidan Cotter.
"The scale of the achievement, with all major categories contributing to export growth, highlights the capacity of the industry to meet changing consumer needs and its potential to remain a significant driver of growth in the Irish economy."
The importance of brands in underpinning industry success is reflected by the fact that the top two performing grocery brands in the British retail sector last year were Irish. In addition, exports to Asia are expected to exceed €300 million for the first time, driven by growth in exports to the China market, while the dairy sector, where exports grew by 6 per cent, is set to benefit from its role as a platform for functional foods.
The growth in beverage exports of 26 per cent, adding €284 million to export values, was also spurred on by growth in the liqueur and spirits categories where the rapidly developing Asian market promises further new opportunities.
The strength of Irish food exports compares favourably with the domestic situation however. The sector has experienced a price-cost squeeze for the last five years, as higher costs, particularly of energy, have combined with a failure to recover these costs through price increases.
"Over the last year, the trading environment on the domestic market would appear to have deteriorated compared with export markets," said Cotter.
Bord Bia said that the sector's capacity to successfully address this challenge would be critical to its future development.
"The challenge facing Irish food and drink exporters in 2007 will be to continue to invest in the development of new products and routes to market which will allow them to compete successfully in what are likely to remain difficult trading conditions," said Cotter.
"Bord Bia's survey of Irish food and drink companies reveals an increasing focus on innovation, with 30 per cent of sales last year generated by new or reformulated products, up from 27 per cent in 2005. Moreover, 68 per cent of companies have indicated they will develop new products over the next 12 months, with 49 per cent saying they will reformulate existing product lines."
It would appear that the prime motivator for both new products and reformulations is based on nutrition, health and wellbeing. Other motivators include a focus on more natural ingredients, premiumisation, diet and convenience.
The agriculture and food industry remains Ireland's largest indigenous sector, providing employment to 155,000. It accounts for over half of Ireland's indigenous exports and represents almost one tenth of the Irish economy.
Total turnover of Irish food and drink is estimated at almost €20bn for 2006 with a relatively low import content.
