Brexit could be a catalyst for innovation and investment in Ireland’s prepared consumer foods (PCF) sector, according to a new Brexit report from Grant Thornton.
Ireland’s PCF sector is dependent on the UK, with 65% of exports from the sector going there.
However, unlike beef and dairy where Ireland exports more than 85% of its produce, the sector has a greater reliance on the domestic market, the report found.
Figures show that the domestic market has a trade deficit of €796m (up from €700m in 2013) – largely as a result of imports from the UK.
The PCF sector accounts for the vast majority of Ireland’s total food and beverage imports from the UK.
There is an opportunity for the PCF sector to create value-added products.
For many years Ireland has been exporting top-quality ingredients to the UK (and other markets), only for those ingredients to undergo further processing and be imported back to Ireland (or exported further afield) as value-added consumer foods.
Brexit may force the Irish food sector to indigenise the entire value chain.
Grant Thornton experts have said that, instead of exporting top-quality ingredients and importing prepared consumer foods, there is an opportunity to shift secondary processing to Ireland.
This would involve:
- Irish producers selling to (or vertically integratting with) Irish processors who would add value through innovation, brand development and marketing.
- As a nation Ireland would continue to export the majority of its agricultural produce, but such exports would be prepared consumer foods instead of raw material ingredients.
Looking at the Kerrygold brand, the report found that through tailored marketing and business development Kerrygold has established itself as a premium-branded butter in markets such as Germany, the US and South Africa.
At the time Kerrygold was launched in 1962, it took significant time and resources to fully understand market dynamics and consumer preferences.
Today the PCF sector can leverage resources like Bord Bia’s recently-launched Centre for Consumer Insights and Origin Green or Enterprise Ireland’s Export Assistance Programme to develop and market brands that meet consumer needs.
Instead of divesting of consumer foods divisions now may be the time for the Irish agri-food sector to invest significantly in new product and brand development in order to create a premium, value-added industry, according to Grant Thornton.
The current uncertainty surrounding Brexit creates an opportunity to revolutionise the Irish food industry, it said.
It found that the industry can transition from a high-quality raw material supplier into a global powerhouse for food and beverage brands.