Prepared Consumer Foods Sector
The Prepared Consumer Foods (PCF) sector continued to show its resilience in 2023 with the value of exports up 7% to reach €3.1 billion.
Value increases were seen across the core categories, most notably meal solutions at €600 million up 11%; bakery at €315 million up 10%; drinks (carbonated and juice) at €285 million up 10% and confectionery (chocolate and sugar) at €430 million up 12%. In a clear nod to market conditions and the cost-of-living crisis experienced in priority markets, especially the UK, volume growth was muted.
Performance in 2023
Foodservice faced many of the same issues as the retail channel such as lower skills, labour shortages, higher wages, and unprecedented inflation and uncertainty. Foodservice consumers continued to eat out but traded down and found other ways to manage their spend such as reduced order
sizes. The landscape was especially competitive as operators competed with each other and with retailers to capture market share via portion sizes, discounts, technology, delivery and superior customer experience. Therefore, while Irish exporters held value as best as possible, volumes came under pressure.
The 2023 performance was ultimately defined by constrained consumer spending and a competitive environment putting pressure on companies to manage margin and volume. Those companies that aligned and partnered with customers to respond to the market have seen, and will continue to see, growth pathways.
Trends by Key Products
Bakery (bread, sweet bakery and biscuits)
At a macro level, bakery had a strong 2023 in terms of export growth, with much of the opportunity coming from the UK market, which continues to account for over 90% of Irish bakery exports across bread, sweet bakery and baked goods.
Values were up by an estimated 10% to €315 million, while volumes saw a mid-single-digit rise. This was driven by a combination of new business and range extensions with existing customers. However, margin pressures endured throughout the year with uncertainty around flour prices, and increases in sugar, slowing the appetite for new business.
Meal Solutions
Meal solutions, now worth 19% of total PCF exports, saw an increase of 11% to reach an estimated €600 million, primarily driven by higher prices. The UK market, particularly the retail frozen channel, is the most significant destination for meal solutions, accounting for almost 70% of exports.
The frozen channel in the UK, albeit in slight volume decline, performed strongly versus other categories and continues to appeal to consumers seeking affordable, long-lasting items.
Carbonated Drinks and Juices
Given the rise in cost of key inputs such as fruit, sugar, and packaging formats, especially glass, the beverage sector has shown particular resilience. Export values were up by an estimated 10% to €285 million, while also showing some volume growth.
The beverage portfolio represents one of the more diversified of the PCF categories, with 48% of exports going to non-UK destinations. Competitive offerings for the retail channel as well as steady growth for Ready to Drink (RTD) have seen growth in the continental markets.
Chocolate and Sweet Confectionary
Combined chocolate and sugar confectionery was valued at €430 million and represents 14% of total PCF exports. The performance of the category was mixed in 2023. Sugar confectionery reached €135 million, an increase of 16% on 2022, while also showing strong volume increases. This is a robust performance for the sector considering the price inflation on key ingredients. It reflects solid innovations made by the sector that have carved out enduring differentiation and strong better-for-you claims in a category that is coming under increasing regulatory pressures.
The performance of chocolate confectionery was more muted with value up 10% to reach €295 million, while volume was static. The soft launch of High Fat Salt or Sugar (HFSS) regulations amongst key customers in the UK market, has reduced visibility of chocolate at key selling points on the calendar. However, exporters continued to find new business and growth in more premium and speciality channels.
Value-Added Meats
Value-added meat exports were estimated at €880 million in 2023, an increase of 3%. The subcategory is split 48%, 29% and 23% respectively for pigmeat, beef and poultry.
To read more about value-added pigmeat, beef and poultry, please see our 2024 Export Performance and Prospects report.
Prospects for 2024
Looking to 2024, it seems likely that the sector will continue to be challenged by uncertainty in ingredients and energy costs. The resilience demonstrated by the sector over recent years will be required again as further price adjustments are likely at a consumer level.
Attracting talent at all levels will continue to be front of mind for consumer food companies. While the sector pays well above the minimum wage, the increase in minimum wage (and other benefits) will put further pressure on the sector to attract staff.
