Each year when I sit down to consider what the next 12 months hold for the food and drink sector in Northern Ireland, there is invariably some major challenge threatening to cast a large shadow over the industry.

We’ve had Brexit, the implementation of the Northern Ireland Protocol and, of course, the Covid-19 pandemic and associated economic lockdowns.

While the impact of each of those challenges endures, the big issue in 2023 will undoubtedly be the continued pressure caused by inflation.

That’s not to say it’s all a story of doom and gloom. Northern Ireland has and will continue to be a part of the world synonymous with good food and drink, with home-grown brands known for their quality across the world.

However, industry analysts and economists alike predict that this is going to be a difficult year for many to maintain profitability.

RISING INFLATION

On the one hand, you have food price inflation along with the concern about what that is doing to consumer confidence and demand.

Then there is also the pure cost inflation that businesses across every sector are having to contend with.

The figures on the rising cost of food make for grim reading. Staples such as bread, milk, eggs and butter, the sort of items that every household needs, appear to have been hit the hardest in terms of inflation.

And the question then becomes how much of that is now pushed into the cost of the shopping basket.

‘For retailers, part of the response is about getting a real grasp of what your proposition is’

At the time of writing, analysts at Kantar were predicting inflation would push the annual cost of the annual grocery bill from £4,797 to £5,270, up 9.8%, but many will see this higher.

The impact is not being felt universally, however.

In 2022, Grant Thornton partnered with Retail Economics to produce The Cut Back Economy report that looked at how the current economic climate is impacting discretionary consumer spending.

Our research, conducted just as inflation was really starting to bite for consumers, showed that 86 per cent of households surveyed planned to cut back in some way, leaving just 14 per cent that could be considered ‘financially immune’ to rising prices.

INDUSTRY CONSOLIDATION

For retailers, part of the response is about getting a real grasp of what your proposition is, are you appealing to the right audience and how does strategy need to change in line with consumer behaviours – whilst remaining cognisant of a dwindling discretionary spend.

It’s not all about inflation, however. Other issues include the ever-present skills gap. We are seeing more companies investing in technology to address this, whether that be in automation or streamlining logistics, and there is a growing sense that those that aren’t doing so will start to be left behind.

Sustainability and ESG (Environmental, Social and Governance) in general will increasingly come to the fore throughout 2023.

Increasingly, operators will only work with suppliers that share the same sustainability credentials or ethos, and investors, from private equity institutions to banks, expect to see it too.

All of this means that we expect to see a certain amount of industry consolidation throughout the year.

Engaging with expert advisers and implementing appropriate measures and strategies ahead of time will be a crucial step for businesses hoping to tackle the challenges of 2023 head on.

TO READ CHARLIE’S INDUSTRY COMMENT IN THE 2023 NEIGHBOURHOOD RETAILER YEARBOOK, CLICK HERE

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It is the latest expansion for the firm and follows further increased demand across its market leading Audit, Tax and Advisory departments.

Grant Thornton Northern Ireland Managing Partner Richard Gillan said: “It is great to welcome a fresh intake of talented graduates to Grant Thornton as they embark on their career paths.

“I have no doubt that our latest appointees will further enhance our reputation as a firm which “thinks outside the box” to provide exceptional service and advice to our clients.”

BELFAST EXPANSION

The graduates have joined Grant Thornton’s three-year training programme, designed to provide the skills and experience necessary to gain the required industry qualifications and play their part within a dynamic, global firm.

The firm has continued to expand its Belfast office significantly in recent months as part of its post-pandemic strategy for exponential growth.

Last year, it announced the recruitment of more than 50 new staff across all departments, while just last month, it unveiled the appointments of seven new Directors.

“As our business continues to expand within the Northern Ireland market and further afield, we remain committed to investing the time and resources required to ensure the personal and professional development of each employee,” added Richard.

“We believe that fostering an organisational culture which places people at its centre is a key contributor towards our future success, and Grant Thornton is dedicated to continuing to provide unrivalled professional advice and added value to the clients we serve.”

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Bringing a wide range of business experience to the post, Richard will play a key role in supporting current chair, Elaine Birchall, Chief Executive of the SHS Group and the CBI NI Director, Angela McGowan.

A graduate in accountancy from Queen’s University, Richard has extensive experience of operating internationally, having worked in London, Luxembourg, and Johannesburg for several high-profile firms.

He also has business ownership experience under his belt, having acquired a manufacturing firm in 2004. He led the company into several new geographic territories and secured significant revenue and profit growth prior to a successful sale.

SIGNIFICANT EXPERIENCE

Nine years ago, Richard joined Grant Thornton Northern Ireland. Appointed Managing Partner in 2015, he has since overseen a sevenfold rise in revenues.

Richard has significant experience of advising corporates on strategic and corporate finance matters including acquisitions, restructuring, disposals, finance raising, valuations and shareholder issues. He also regularly advises banks and private equity firms on their proposed investments and was Chair of Chartered Accountants Ulster Society in 2019/2020.

Richard said it was a “privilege” to be appointed CBI NI Vice-Chair.

“I am looking forward to working with Angela, Elaine and the wider CBI team to address the issues that matter to the Northern Ireland business community,” he said.

‘I am confident that, with the right ambition and conducive policy support, Northern Ireland’s economy can thrive’

Richard Gillan

“I am acutely aware of the challenges that local companies face in terms of cost pressures, access to skills and political uncertainty. But I am also confident that, with the right ambition and conducive policy support, Northern Ireland’s economy can thrive. My role is to ensure local companies and policymakers grasp all the prevailing opportunities that are open to them.

“With good collaboration, Northern Ireland can create a thriving and ambitious economy that will attract both investment and people.”

HIGHLY REGARDED

Angela McGowan, CBI Northern Ireland Director, said: “I am very excited to be working with Richard in 2023. I have no doubt that Richard’s vast leadership experience and his contribution to the success of Grant Thornton in Northern Ireland will leave him perfectly placed to help the local business community rise to the economic challenges that they currently face.

“With his broad range of sectoral knowledge, Richard will be a fantastic advocate for Northern Irish firms and the wider economy.”

Elaine Birchall, Chair, CBI Northern Ireland, said: “It will be great to have the support of Richard in the year ahead with his vast experience of leading teams, and his demonstrable success when it comes to business growth.

“Richard is a highly regarded member of the local business community and his insights and experience will undoubtedly serve the CBI very well in what is a very challenging time for local businesses.”

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The Craigavon shopping complex, home to some of the UK and Ireland’s most prominent retailers, has been sold to Killahoey Ltd, a joint venture between Northern Ireland-based companies Sheephaven and May Street Capital.

Having first opened its doors in 1976, Rushmere Shopping Centre has been a major employer in the area ever since. The property, which comprises more than 30 acres and 60 commercial units across the retail park and shopping centre, is the dominant retail scheme within the wider urban area of Craigavon.

MAINTAINING BUSINESS

Grant Thornton was appointed Administrators to Central Craigavon Limited which owns Rushmere on 7^th April 2022, at which time they confirmed the strategy was to maintain business as usual trading with no operational impact for tenants or shoppers, as well as seeking to enhance the centre ahead of taking the asset to the market.

Stephen Cave, Joint Administrator and Head of Restructuring at Grant Thornton in Northern Ireland said: “I am delighted to confirm the sale of the centre. All concerned have worked extremely hard over the last 10 months under our control to not just maintain business as usual but to enhance the retailer offerings at the scheme, evidenced with the recent openings of Primark and Poundland. This has led to increased footfall, more choice for shoppers and additional jobs in the local area.”

‘This is a landmark transaction and underlines the continued high demand for quality retail assets in Northern Ireland’

Ben Turtle, Head of Savills NI

The sale was handled by joint agents, Savills and CBRE NI and the new owners have pledged to invest in the centre, which is the largest shopping destination in the area.

Ben Turtle, Head of Savills Northern Ireland said: “The sale attracted a high level of interest from a number of domestic and international investors. This is a landmark transaction and underlines the continued high demand for quality retail assets in Northern Ireland.”

Andrew Coggins, Senior Director at CBRE NI added: “Rushmere Shopping Centre and Retail Park is the dominant retail offer within the wider Craigavon Urban Area. The sale of Rushmere reflects a resilient market and sets the tone for a strong year in the NI investment sector.”

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Michael Bell, Executive Director said the present difficulties should act as a ‘wake up call’ for Ministers, and called on the Executive to address the issue urgently.

“Across the UK, the food and drink sector is experiencing serious difficulty in accessing labour, with Brexit and Covid-19 creating a perfect storm across the supply chain leaving many farmers, food processors and supermarkets struggling to meet demand,” Michael said.

“Figures released this week by Grant Thornton on behalf of the industry reveal that UK food and drink companies have an average vacancy rate of 13%. To put that figure into perspective, that means there are potentially more than 500,000 vacancies in the industry across the United Kingdom.

“The problem is particularly acute in Northern Ireland, where some firms are operating at between 75-90% of normal staffing levels. Additionally, a shortage of HGV drivers is causing serious issues across the food supply chain, from the farm to supermarket shelves.

“Food and drink is one of Northern Ireland’s most important sectors. It is the largest manufacturing industry in Northern Ireland, supporting some 113,000 jobs. A strong food and drink industry will be key to driving Northern Ireland’s post-Brexit economic growth.

“These difficulties should act as a wake up call for government. The current situation is unsustainable, and if it deteriorates we are looking at higher food prices, choice for consumers significantly curtailed and ultimately Northern Ireland’s recovery from the pandemic stalled. We will continue to engage heavily with politicians locally and nationally to address this issue and deliver workable solutions.”

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