Food and Agri businesses make a significant contribution to their local community, especially in rural Ireland, by creating employment, creating wealth and often by sponsoring and supporting community initiatives.
Our survey respondents run complex businesses with many challenges from securing markets, developing sales, innovating around product and service offering, finding and retaining the right team, managing costs, embracing technology, engaging with a more informed customer and harnessing market trends. Here’s how they feel at this moment.
Across both food and agribusinesses, there is generally a positive outlook for the future, in line with a positive outlook for the overall economy.
With a positive year on the horizon, companies are looking to increase employment. Bigger companies, those based in Dublin and in the food sector are particularly increasing employee numbers. This reflects their more positive outlook about the coming 12 months. Despite the desire for companies to recruit, finding suitable candidates to run companies is proving difficult with a lack of skilled candidates available a major constraint.
While turnover has increased for the majority of companies, so too have costs which is impacting on net margins. Key challenges for the year ahead include maintaining margins, managing staff and generating sales.
49% of the companies surveyed are not worried about Brexit with only 21% very worried. This is possibly a function of the majority of their sales, 84%, coming from within the ROI and lack of knowledge about what will actually transpire in March 2019.
Just over two-thirds of companies are investing in Research and Development (R&D) at varying levels. Company resources play a key role in determining who invests with medium sized companies and those in the food sector more likely to invest in R&D. With constantly changing consumer trends and a need to differentiate, R&D is an important element of business improvement.
Only 28% of SMEs have “perfectly sufficient” broadband for their business while only 7% are doing a significant level of online trading. With the ubiquity of mobile communication and the rise of e-commerce, Irish food and agribusinesses must stay alert to the opportunities online can offer. From an online marketing and promotion perspective, Facebook continues to dominate. It is the most popular and effective social media channel by quite some distance with 83% stating Facebook is the most effective platform they use.
Contrasts between food businesses and agribusinesses
Food businesses are certainly more optimistic and more likely to be hiring which may be related to the food sector being more likely to have experienced increased turnover in the past 12 months when compared to the agribusiness sector. Companies involved in the food sector are also more likely to invest in R&D.
Food companies are more open to selling their business in the next five years than agribusinesses. This may be linked to the fact that a greater percentage of agribusinesses are family run. Food businesses are more likely to have better broadband available for their businesses, they are more likely to trade online and social media is of greater importance in their marketing efforts.
Micro, Small and Medium size contrasts
Looking at the year ahead, levels of optimism increases with company size, as does the likelihood of employing more staff in the next 12 months. The issue of salary expectations heightens as company size grows. Those working for bigger companies have greater salary expectations.
The bigger the company, the more likely that business turnover increased in the last 12 months. However, cost of sales also increased with company size. As company size increases so does the likelihood of considering selling the business in the next five years. While only 24% of larger companies have a clear succession plan in place, they are more prepared than micro and small companies.
Social media is equally as important to small and medium-sized companies, less so for micro.
Keep in touch
We would be delighted to hear about your experiences in the sector, what trends are impacting on your business and how ifac can support you as you grow and prosper.
Our team of sectoral specialists along with our tax, accounting, financial solutions and audit teams can work with SME businesses as a trusted partner who understands the sector and will engage with you in an ongoing and meaningful way.
So keep in touch – follow us on Twitter, @ifac_FoodAgri, and across Facebook and LinkedIn or simply drop me an email to be included on our mailing list – email@example.com.