Irish food industry will survive if not triumph in wake of Covid-19

Premium quality products can seize great opportunity to extend global footprint

The Irish food industry has had many challenges throughout its history and Covid-19 is a significant new one. However, opportunities are surfacing amid the economic dislocation caused by the virus and Ireland’s ability to produce food with true high-quality provenance should give it confidence in that context. Combined with management teams that have built successful global businesses, its comparative advantage in producing food should be tapped to navigate a better future.

For now, and like every sector in the economy, the food industry is scrambling to adjust to the economic tsunami that just hit the world. Reports over the past 12 weeks show some distinct patterns. Demand in supermarkets ballooned as consumers opted to stock up with a preference for traditional brands and products. Food service, most visible in the restaurant and hotel sectors, effectively collapsed. Supply chains started to feel the strain of tighter border controls and overall movement restrictions. Manufacturing facilities had to change protocols to keep employees and produce safe.

All of this took place at lightening speed and the industry has, relative to other sectors, performed robustly. Those with a bias towards supermarket sales have done best but most companies and co-ops have shifted their channels to fill retail orders while winding down food service flow. Undoubtedly, revenues and profits will show a marked decline during 2020 but most food manufacturing businesses, especially large ones, are trudging through this crisis with determination. A variety of financial measures have been deployed, including relaxed bank covenants, larger debt facilities and a series of internal cost mitigation actions. We may see further developments in coming months in the forms of mergers and acquisitions as investors and stronger businesses acquire others weakened by the experience. Nonetheless, Ireland should anticipate that a batch of companies and co-ops will emerge from this unprecedented shock seeking opportunity to not only recover but further advance their strategic plans.

Beverage sector

Any debate about the Irish food and beverage sector has to be unpacked into two distinct components. The first relates to the physical production of food and drink on the island of Ireland. The second concerns a set of companies and co-ops that have already built large international footprints in a wide range of product markets. While there are crossovers between both groups, they have different challenges and opportunities in the wake of Covid-19.


The island of Ireland has a unique land and sea mass that offers premium-quality provenance when producing food for global consumers. Its product range remains relatively narrow with a high focus on milk and beef. These products are derived largely from soil of the highest quality anywhere in the world. That product range needs to be advanced adopting practices that deliver a reduced carbon footprint while embracing extensive bio-diversity. The unfolding new version of the Common Agricultural Policy (CAP) will deploy an arsenal of carrots and sticks to support such step change and Ireland should utilise it with relish. Major global consumer markets, including China and other large markets in Europe and the Americas, attach a high premium to food products with genuine provenance, especially post-Covid-19, and Ireland can deliver that in spades. Moreover, Ireland has soil and land qualities that can both support sustainable food output and carbon sequestration measures. Both are invaluable assets in the way food has to be produced and consumed in future.

Leading companies

Another group of businesses, led by Irish executives, see the food industry through a different lens. These are established global corporates that have built an international footprint over a number of years using public and private equity markets together with acquisitions to further their goals. They are strong companies that deliver a diversified range of high-value products around the globe. Kerry, Total Produce, Glanbia, Greencore, Devenish and Valeo Foods are among the companies that have built an international footprint that has a limited dependence on food physically produced on the island of Ireland.

Amid Covid-19, these businesses too have had to adjust to the challenges caused by disturbed supply chains and a deep decline in food service markets. Yet all of them have the balance sheet strength to not only absorb the blows caused by this virus but to advance their scale further. We should expect each of them to selectively move to acquire businesses, probably outside Ireland, to enhance their product range or market reach.

Government has a key role to play as the industry progresses. Its input to CAP reform is critical to how the land and sea resources in Ireland are best optimised for food. Assistance, especially for working capital as food companies spool up their operations as normality develops, would be a welcome benefit for some. Our sovereign wealth fund – the Ireland Strategic Investment Fund – should be fully deployed to embolden the industry in this context and augment the industry’s recovery from Covid.

Ireland has a rich history as a food nation. It has endured many painful economic crises, health emergencies and the Famine. Despite that, it has evolved as an important producer of food that can feed almost eight times its domestic population. Alongside that, it has delivered generations of food executives who have gone on to build international food businesses of merit. That well of knowledge and experience should now help not only overcome the Covid-19 crisis but to further advance the Irish food industry’s breadth and depth.

Joe Gill is director of origination and corporate broking with Goodbody Stockbrokers