Food-linked firms expect growth in earnings

SOME 80 per cent of food-related businesses expect growth in earnings this year, according to the findings of a report to be released today.

Food: The Secret Ingredient to Irish Tourism and Export Growth also found that two out of three businesses surveyed had achieved their earnings expectations last year, despite the recession.

The report by Good Food Ireland and consultant Grant Thornton includes a survey of Good Food Ireland members.

The all-island group, which has more more than 500 members, represents food businesses such as producers, bed and breakfast establishments, restaurants, hotels, pubs, food shops, cookery schools and farmers’ markets.

Just under 20 per cent of those surveyed expected no growth in earnings this year while more than 50 per cent expected growth of up to 5 per cent.

An optimistic 5 per cent expected growth in earnings of 25 per cent or more this year.

Ciara Jackson, head of food and beverage with Grant Thornton Ireland, said the robust financial performance of Irish business versus the international data highlighted the economic opportunity of the link between high-quality food products and tourism.

Almost one-quarter of those surveyed said they were currently exporting and a further 17 per cent had plans to export.

More than half of those who are exporting said they planned to target new markets in the coming year.

Increased operating costs were singled out as the biggest challenge in running a food-related business. Getting access to long-term finance and dealing with red tape and bureaucracy were also high on the list of challenges. Cost was cited as the main barrier to exporting by more than half of those surveyed.

The research highlighted concerns about the labelling of food.

“There seems to be confusion on both the manufacturer and the consumer’s part as to what is the standard definition of particular terms that are commonly seen on food products,” the report said. “What is natural? What is artisan? Home-made? Hand-cooked? Farm-fresh?”

The misuse of these terms and the requirement for transparency was a clear concern for Good Food Ireland members.

“Providers worry the consumer has no way to tell the difference between the genuine claims and the labels that seem to be little more than enhanced marketing.”

Good Food Ireland’s managing director Margaret Jeffares said the report reinforced the importance of local food in delivering economic opportunity through authentic experience.

“Given our current economic situation, I cannot stress enough the importance of buying local, eating local and thinking local when it comes to food and tourism,” she said.

Not surprisingly, 100 per cent of those surveyed agreed that local Irish food should be an integral part of Ireland’s international tourism marketing.

And nine out of 10 said they had increased their purchasing of Irish food over the last three years.

Good Food Ireland members contribute some €50 million to the Irish economy through their purchase of Irish produce, according to the report. They directly employ almost 6,000 people and had a combined turnover of almost €400 million last year.

The research also found that almost 70 per cent of those surveyed did not know they may be entitled to claim tax credits for research and development work. These tax credits could reduce tax bills by up to 37.5 per cent, according to Grant Thornton.

The report said there were opportunities for improvements in cost control for the 33 per cent who said they didn’t prepare monthly accounts and the 24 per cent who didn’t engage in an annual financial planning process.

“The old adage of ‘if you can’t measure it, then you can’t manage it’ certainly rings true,” it said.

Food sector: key findings

* The biggest challenges facing food-related businesses are: increasing operating costs; getting access to long-term finance; and bureaucracy.

* Four out of five people surveyed expected growth in earnings this year.

* Almost one-quarter of food businesses surveyed exported products and half of those had plans to target new markets.

* More than two-thirds of people surveyed did not know that they could avail of tax credits for research and development work.

* Nine out of 10 people surveyed had increased their spend on Irish produce in the past three years.

Source: Food: the Secret Ingredient to Irish Tourism and Export Growth by Good Food Ireland and Grant Thornton.