Tuesday, October 20, 2020

Majority of Irish F&B producers make Brexit preparedness progress despite COVID

Over 91% of Irish food and drink companies have made progress in relation to Brexit preparedness over the past twelve months, according to a new report from Bord Bia.

For Irish companies continuing to operate in the UK, 55% said that growing sales within the UK market will be a priority while the remaining 45% of companies plan on maintaining sales. This is up from 36% and 41% respectively in 2019.

Findings from the ‘2020 Readiness Radar’ report also show an evolution of Brexit preparedness.

Last year the majority of Irish food and drink companies said they had developed contingency options for holding stock in response to Brexit, and while stockpiling is still an important factor, 2020 results show that customer relationships have progressed to more commercially-focused conversations focusing on future contract arrangements in the post-transition period, custom duties and the importer of record being identified.

“Covid-19 has been the catalyst for Irish food and drink companies to realise how robust their plans are for Brexit, with 91% of food and drink companies showing continued preparedness,” said Shane Hamill, Bord Bia’s Strategic Projects Manager.

“What is clearly evident is the resilience and determination of the Irish food industry to meet market challenges, with an increased eagerness to evolve conversations with UK customers on key issues relating to supply chain logistics.”

37% of Irish food and drink is exported to the UK, amounting to trade worth £4.95 billion in 2019, as it continues to be the single most important market across almost all food categories.

He added: “We share this trusted partnership with the UK because of a long standing, interdependent relationship that goes back centuries. Valuable skills in risk management have been learned by the Irish food, drink and horticulture industry as a result of Brexit.

“There’s evidence that the industry has been better able to manage the impact of Covid-19 because of the intensified focus on strategic planning that was implemented to manage Brexit over the past three years. In fact, the data shows that there has been an increase in optimism in the industry towards the impact of Brexit compared to 2019.

“While companies are proactively preparing for Brexit and working towards mitigating risk and reducing the potential impact to their businesses, there is no doubt that their future trading relationship with UK customers should continue to be addressed as a priority.”

In March this year, Bord Bia launched the Readiness Radar, an online risk diagnostic tool developed to assess industry thinking and performance around a number of priority challenges, which include Covid-19, Brexit, Challenges to Market Diversification, Sustainability Pressures, Consumer Insights & Innovation, and Talent Management.

Average industry preparedness for Covid-19 was reported at 46% by respondents, an impressive figure given the speed at which the pandemic hit.

In all, 45% of respondents reported having formally embedded continuity plans, while a full 72% have carried out identification and assessment of critical single source suppliers. 69% had undertaken vulnerability assessments of their most critical suppliers.

All sectors have focused their attention on supply chain, which may have been driven by Brexit, as the data highlights a high level of investment by the industry in identifying and assessing critical single-source suppliers.

A number of facilitated interviews were undertaken by Bord Bia as part of the Readiness Radar, and through these it was noted that Covid-19 may have aided collaboration in the supply chain, as producers and customers worked together to navigate the myriad of complex issues that the pandemic has led to.

As Ireland begins to emerge from lockdown and faces into a different post-Covid-19 world, it is clear that existing risks in relation to Brexit – not least Ireland’s geographic island location at the edge of Europe – have not gone away. 80% of respondents, however, have recorded high or moderate confidence in their ability to manage customs processes.

In terms of importance, Covid-19 was ranked top on the risk registrar by all respondents, followed by Market Diversification and then by Brexit. This suggests that a broader, more holistic response to risk is taking shape in our industry, supplanting the more compartmentalised approach that would have been pervasive just a few years ago.

When companies whose turnover is less than €1 million (32% of total respondents) are removed from the data, Brexit is revealed as a higher priority. This could be due to smaller manufacturers having less exposure to the UK market, or less maturity in terms of their ability to develop and implement a Brexit management strategy.

“Overall the data shows higher levels of confidence and preparedness for Irish food and drink manufacturers,” said Bord Bia GB Manager, Donal Denvir.

“The fact that Irish companies are pushing to continue to grow sales in the UK while managing Brexit, and also feeling confident with diversifying to new markets, shows the strong impact that three years of customs, currency and supply chain preparedness training has had on the industry.”

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