Protecting the reputation of an industry worth €9bn in exports
M&A activity in the sector will continue to be vigorous in 2013, where there will be opportunities for businesses with a strong leadership team, and a dynamic business plan.
Vendor price expectations are generally adjusting downwards, making it easier for buyers to take the plunge; and while financing deals remains a challenge, there are signs that access to debt is improving, which is particularly important for private equity participants.
In the future we also see Asia as a growing market for Irish food exports and as a potential source of investors.
Cash-rich Asian companies are likely to take an interest in Irish food businesses whose operations may be thriving, but where balance sheets are stretched by ill-judged property investments made in the boom.
According to Bord Bia, the region is targeted for further expansion in 2013, after a 25 per cent rise in exports in 2012.
While growth in Irish F&B exports to international markets has undoubtedly been driven by the performance of large corporates, what’s exciting is the range and variety of Irish businesses seizing the export opportunity in emerging and growth markets.
Glenisk has a partnership with Gorta to develop a dairy processing plant in Kenya’s Rift Valley; Asian sales account for 20 per cent of Rosderra Meats; and Silver Hill Foods is successfully exporting duck to the Far East and China.
It’s not just the meat industry that’s looking to Asia. Jade Ireland Seafood, a joint venture between four Irish seafood companies, is an attempt to collaboratively establish a presence in the lucrative Chinese seafood market. The demand for premium Irish shellfish has grown solidly in China and is expected to be valued at more than €1 million in the coming 12 months.
This range and variety of company looking overseas is one of the factors that give Grant Thornton optimism for the F&B industry in 2013.
The robust and rapid response to recent supply chain controversy will hopefully ensure that confidence in the quality of Irish produce is maintained, and that the sector remains an ongoing focus for deal makers over the next 12 months.
Ciara Jackson is head of food at Grant Thornton
*A copy of the report Smart Money in Food and Beverage: Tracking Growth in Turbulent Times is available to download at grantthornton.ie