Why Internationalisation?
Exporting has always been important for our large food companies and co-operatives. Some agri-engineering companies have also made a significant impact internationally. Already, two thirds of respondents to our survey are exporting. However, there is now a need to accelerate exporting efforts, especially for small and medium companies.
For SMEs in the agri sector, the scaling and growth of the dairy sector over the past decade was very welcome and created an attractive growth market. However, this has now plateaued, and for many agribusinesses, orientating for export is a key priority.
For food businesses, considering that the Irish market is smaller than the combined Manchester/Liverpool/Birmingham market in the UK highlights the potential for accelerated growth if the product-market fit is correct.
While the challenge of developing an export business should not be underestimated, the potential rewards are substantial and include:
Increased revenue from a larger market.
Accelerated innovation as a team considers new customers and new products.
Diversified risk especially for those companies working in a number of international markets.
New long-term growth opportunities as capacity builds in the business.
Increased support from Government agencies, particularly, Enterprise Ireland.
Key Themes
Other key themes which emerge in this year’s ifac Food and Agribusiness Report:
Optimism: 64% of respondents are optimistic about their business outlook for the next 12 months.
Cost challenges: 81% report rising input costs, impacting areas like cocoa for food producers and steel for agribusinesses.
Cashflow issues: 38% face short- to medium-term cashflow challenges, a top priority for these companies.
Innovation: Launch of new products and services (50%) and investment in R&D (23%) are considered opportunities for growth among food and agribusinesses.
Artificial intelligence: Only 16% of business leaders feel confident that they have a good understanding of applicability of AI for their business. Further piloting is also needed where the business case is strong.
Succession planning: Only 23% have a clear succession plan in place.
Sustainability: 90% are taking some form of climate action, mainly focused on energy and waste reduction, with growing requests for sustainability data.
Some key advice shines through from our case studies and team of specialists, including:
Conduct thorough research and visit the market you intend to enter so you can spend time on the ground. Simply put, get on a plane.
Dedicate time to finding the right distributor. This will be a key determinant of success in new export markets.
Although easier said than done, those Irish exporting businesses who “quote in euro, invoice in euro and get paid in euro” are in a strong position.
Having a proactive pricing model in place will help protect margin and profitability. Understanding costs and margins for each product line or SKU is critical in this regard.
The Loughran Brewing case study case study, on page 27, has an excellent takeaway on the finance they saved through a detailed study of every document in an international acquisition.
Be prepared for significant travel and time away from home.
Finding the right team for international expansion is a challenge, with salary expectations the main issue reported.
Engaging with Enterprise Ireland is important. The cost of establishing an export-orientated business is high – maximise all funding and manage cashflow carefully.
There is a closer look at two jurisdictions: The United States (page 15) and France, as part of a taxation case study (page 28). Both show that key advisors will be essential as you enter each new market.
Finally, on page 34, there is an overview of Ireland as an agrifood exporting powerhouse with an additional point that agrifood imports were over €13bn in value in 2023. The opportunity to displace some of these imports can play a role in a company’s growth strategy.
Our export ready checklist is worth spending time on. While it may seem daunting, many businesses have shown the way. If the product-market fit is right, you put in the effort on the ground and build the team, then a world of possibility awaits. We wish you very well and look forward to supporting you on your internationalisation journey.
