Food and drink manufacturing performing well but costs are a concern

• Food Drink Ireland publishes Manufacturing Report
• Broadly positive sentiment in sector but expected to weaken slightly in the months ahead
• Three major challenges - the cost of labour, the cost of materials and the regulatory environment
• Programme for Government must support Ireland’s largest indigenous manufacturing sector

Food Drink Ireland (FDI), the Ibec group representing the food and drink sector has today released its Food and Drink Manufacturing Report 2025, “Appetite for Growth”, a sectoral extract of the overall Ibec “Manufacturing in Ireland” report. There is a broadly positive sentiment in the food and drink sector, with 58% rating the manufacturing environment in Ireland as good or very good. However, this is lower than the 70% positive response rate across all manufacturing sectors. Food and drink manufacturers’ sentiment also weakens slightly when asked about the months ahead.

The most widely expected cost increases will be in the areas of wage growth (76% of respondents), investment in sustainability (76%) and the cost of raw materials (76%), followed by investment in digitalisation (62%) and cost of transport (62%).

The largest challenge facing businesses in the sector is cost of labour, where there was a similar response rate to the wider manufacturing sector at 71%. The next two challenges were much more sector specific - the cost of raw materials (62% vs 45% for all manufacturers) and the regulatory environment (62% vs 37% for all manufacturers).

The report also found that food and drink manufacturers are expecting (or planning) for increased export sales (52% of respondents), domestic sales (38%) and profitability (43%) in the months ahead. Improving profitability remains the single greatest priority with greater emphasis on developing new markets in 2025 amongst food & drink enterprises.

52% of food and drink respondents expect an increase in productivity in the coming months. This focus is coupled with 48% planning to adopt or enhance existing AI initiatives, primarily with a view to enhancing efficiency and productivity.

Paul Kelly, FDI Director commented:

“Food and drink manufacturing accounts for half of direct expenditure by the entire manufacturing sector in the Irish economy (payroll, Irish materials and Irish services). Its extensive regional footprint means it is directly linked to the performance of the whole economy and is also at the heart of the social fabric of rural Ireland. Food and drink exports reached a record value of €17 billion in 2024.

As deliberations continue on the Programme for Government, it is critical that policy can support the sector address its competitiveness challenges and harness opportunities for further growth”.

FDI’s priorities for the Programme for Government include:

• Help manufacturers develop strong talent pipelines by ensuring greater industry engagement as the National Training Fund is unlocked.
• Reduce energy costs by developing a new national energy and industrial strategy and in the short term introduce a significant annual subvention to offset system charges and the PSO levy.
• Protect companies from rising costs by introducing a PRSI rebate for exposed companies.
• Put better regulation back at the centre of policy making objectives and reduce the overall regulatory burden on business.