In all of the analysis in the lead up to the Brexit vote in 2016, Ireland’s agri-food sector was repeatedly highlighted as the most exposed sector, particularly if the trading relationship between the UK and EU reverted to WTO rules.

The UK accounts for €4.5bn, or 37%, of Ireland’s total food and drink exports, which stood at €13bn last year. Some sectors are more exposed than others, with over half of all Irish beef, pork, cheese and mushroom exports destined for the UK market.

Because of its proximity, similar culture for food and drink, and shared language, the UK has long been the most attractive and straightforward export market for Irish food exporters to focus on.

Coolhull Farm

However, on 24 June 2016, the world awoke to the news that the UK had voted to leave the EU, realising the worst fears of business leaders in Ireland’s agri-food sector. In the aftermath of the Brexit vote, stock markets tumbled, the value of sterling collapsed and Barry Murphy, managing director of Wexford company Coolhull Farm, knew he had a problem on his hands.

Like most food companies up and down the island of Ireland, Coolhull found itself very exposed to the UK market, where the company sold a whole range of desserts such as ice cream, cheesecake, mousses, pastries and cakes made using milk from the Murphy family farm.

In 2016, all of Coolhull’s export business was destined solely for customers in the UK market. Murphy set to work diversifying export sales to safeguard the family business from the risks of Brexit.

Coolhull Farm sells a range of desserts such as cheesecake, mousses, pastries and cakes.

“When Brexit came along, the UK was our only export market,” says Murphy. “But we pushed ourselves to look at new markets and started attending trade shows like Anuga and Internorga in Germany. For the last two years we’ve been selling into Europe and now have sales into new markets like Germany, Sweden, Finland, the Netherlands, Belgium, Luxemburg, Denmark and Croatia.

“We never would have gone near these EU markets if it wasn’t for Brexit. Volumes are only starting but we’re establishing a footprint,” he adds.

Heading into 2019, Coolhull’s exposure to the UK market has reduced to 20% of total sales and this will only continue to shrink as the company sends greater volumes into continental markets.

The company has doubled down on new product development because consumer tastes in continental Europe are typically very different than the original products Coolhull developed for the Irish and UK market.

Oakpark Foods

It’s a similar story at Tipperary pork processor Oakpark Foods. David Brett (pictured), managing director of the company, says the UK was always a comfortable, high-value export market to do business in. Brexit has changed all that.

Oakpark Foods, Cahir, Co Tipperary. \ Donal O'Leary

“We dipped our toe into exporting to the UK for the first time in 2008 when we did some promotional listings with Lidl UK. It started out small-scale but a decade on and we now have a full listing with all of Lidl’s stores in the UK. We also have nationwide contracts with Morrison’s and Iceland,” says Brett.

For Oakpark, which generated sales of €35m last year, exports now represent 40% of the total business, with most export sales going to the UK. As a result of the Brexit vote, the company now finds itself where it was with the UK market 10 years ago and is dipping its toe into new export markets in Europe in a bid to diversify.

“Through our connections with Lidl, we’re developing new sales markets in Europe,” says Brett. “We’re at the stage with Lidl in Europe where we were with Lidl UK 10 years ago. Every second week we have an order going out to Europe to test what works in different markets. It may take a couple of years, but if we can get a full listing in one or two markets out of this it would be fantastic.”

Challenges

However, breaking into new markets is not straightforward. According to Brett, the biggest challenge the business now faces is trying to adapt Oakpark’s product range to the tastes of European consumers.

“The rasher is a staple of the British and Irish diet. But they’re not frying up rashers in Paris,” he says. “We’re going to spend about €1m over the next three years on R&D and new product development to adapt our products to the EU consumer.”

Oakpark has its own R&D team in-house that work with Enterprise Ireland on designing new products, as well as new packaging to extend shelf life. Pork products such as streaky bacon and lardons are the types of product that Oakpark is starting to manufacture on a larger scale to win over more European customers.

The company has recently acquired and retrofitted a second processing facility in Clonmel, which is now up and running producing product for the EU market.

Irish Dog Foods

Another example of market diversification is Irish Dog Foods, the Kildare-based pet foods company owned by the Queally family. According to Irish Dog Foods managing director Liam Queally, Brexit forced a complete rethink of the company’s export strategy.

Liam Queally, managing director of Irish Dog Foods.

“After the Brexit vote, we turned the business on its head and started focusing on other markets,” says Queally. “We started looking at Europe initially and then turned to the US market. In 2016, the UK market accounted for 80% of overall sales in this business. Today it accounts for less than 15% of sales.”

While the UK market now accounts for a smaller share of exports, Queally says sales to UK customers have actually grown over the last two years. The big difference has been the increase in product being shipped to key markets such as Germany and the US.

To achieve this rapid diversification, Irish Dog Foods has invested heavily in developing new products for the attractive US market by focusing on the ‘humanisation’ of pet food.

Queally says the most successful products over recent years has been the company’s superfood range of pet foods that are made with kale, spinach, carrots or sweet potato. The company is playing into the clean, green image of Ireland with its customers in the US.

Silver lining

Since 24 June 2016, the Irish food industry has known that Brexit would be bad for business with the potential for many food companies that are extremely exposed to the UK to be seriously damaged.

However, if there has been a silver lining to Brexit for the Irish food industry, it is that it has forced many Irish food companies into new markets in Europe or further afield. Most Irish food companies begin exporting to the UK market because it is our nearest neighbour, we have a shared language and our food culture is very similar.

As a result, food companies never had to bother looking too far outside the UK for export business when such an attractive and high-value market was on their doorstep.

However, Brexit has pushed many Irish food companies just like Coolhull, Oakpark and Irish Dog Foods out of their comfort zone to seek out new opportunities beyond the UK in a bid to diversify their sales. To win business in new markets in Europe, the US or Asia, companies will often have to tweak or alter their product range for different consumer tastes, overcome a language barrier or even bring new expertise into the business.

And while this can be a challenge, it will ultimately stand to the Irish food industry in the long run and harden the resilience of food companies. As Coolhull, Oakpark and Irish Dog Foods will attest, there is more than enough opportunity out there to de-risk from the UK. Firms just need to seek it out.