Ireland’s food and beverage sector faces a challenging second half of 2026, according to Bank of Ireland’s latest report. Export growth has slowed, with a 3% decline in the first six months compared to 2025’s strong performance.
The report, authored by Lucy Ryan, Head of Food & Beverage Sector at Bank of Ireland, highlights persistent cost pressures and weather-related disruptions affecting supply chains. Despite these challenges, operators have shown resilience, adapting to changing market conditions.
Export Decline and Cost Pressures
Food and beverage exports reached €9.1 billion in the first half of 2026, a 3% drop from the previous year. While prepared consumer foods maintained their export levels, other sectors like dairy, meat, beverages, seafood, and horticulture experienced declines.
The report notes that inflationary pressures have eased, with food inflation at 0.6% in Ireland in June, compared to 1.7% in the UK and 1% in the EU. However, rising operating costs and weather-related challenges continue to impact businesses across the supply chain.
Adapting to Change
Irish producers are handling a complex environment, with geopolitical uncertainty influencing business strategies. Trade tensions between major economic blocs are prompting exporters to diversify and reduce reliance on individual markets.
The report highlights the growing importance of technology adoption. Businesses are investing in automation, robotics, and integrated production systems to improve productivity, manage labor shortages, and enhance operational efficiency. Artificial intelligence is also gaining traction, moving beyond experimentation to practical applications in quality control, predictive maintenance, production planning, and supply chain management.
Retail and Regulatory system
Retail performance remains positive, with grocery sales in the Republic of Ireland increasing by 6.3% in the four weeks leading up to July 12. Lidl saw significant growth, with sales rising by 10.8% and market share reaching 14%. Dunnes Stores retained its position as the country’s largest retailer, with a 23.7% market share.
The sector is also handling an evolving regulatory system. New EU packaging regulations introduce stricter recyclability, labeling, and reporting requirements. Additionally, the EU Deforestation Regulation will impose greater traceability obligations on companies selling commodities like cattle, cocoa, coffee, and soy into European markets from December.
Mergers, Acquisitions, and Future Outlook
Merger and acquisition activity remains robust. Notable transactions include Scandi Standard’s €127 million acquisition of Glenhaven Foods in Co Wicklow and the €75 million acquisition of VITHIT by Nichols plc. Cobblestone Brands continued its expansion in the international spirits sector.
Looking ahead, businesses are expected to maintain a cautious approach to investment, prioritizing productivity, sustainability, and resilience. The report identifies key priorities, including cost control, technology investment, sustainability initiatives, export market diversification, and supply chain resilience.
Despite challenges, the overall outlook remains cautiously positive. A survey by Love Irish Food and Bank of Ireland found that 62% of food and beverage operators remain optimistic about business opportunities, demonstrating the sector’s resilience and adaptability in the face of uncertainty.
Inflation and Cost Challenges
Research shows that 91% of food businesses faced higher costs in 2025, and 85% expect further increases in 2026.
Extreme weather in Western Europe, including heat and low rainfall, has raised concerns about harvest yields and raw material availability. This could affect food and beverage production costs in the coming months. Despite these challenges, operators are adapting, focusing on efficiency and competitiveness.
