FDI Budget Submission 2027
Food and drink manufacturing is Ireland’s largest indigenous sector and accounts for almost half of direct expenditure by the entire manufacturing sector in the Irish economy (payroll, Irish materials and Irish services). With almost 60,000 direct employees and the same in indirect employment, it remained resilient in 2025, with exports valued at €19 billion. 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. The sector provides the exclusive outlet for much of farmer/SME produce, providing extensive added value and is thus crucially important to farm incomes.
In January, Food Drink Ireland published our Food and Drink Manufacturing Report 2026, “Appetite for Growth”, a sectoral extract of the overall Ibec “Manufacturing in Ireland” report. The report identifies a significant focus on rising operational costs. Wage growth is a primary concern, with 79% expecting costs to increase. Beyond direct wages, the sector is grappling with critical workforce-related hurdles. The next three major challenges identified by food and drink manufacturers are the attracting and retaining a quality workforce (64%), the availability of housing for employees (57%) and the cost of energy (57%).
Despite these pressures, the sector continues to show resilience in long-term growth strategies. Food and drink manufacturers are bucking the wider manufacturing trend by showing small but consistent annual increases in capital investment and R&D activity since 2023. Improving profitability remains the single greatest business priority for 2026 (57%), followed by a greater emphasis on introducing or increasing R&D activity (36%).
The report also tracks the sector’s digital and environmental transitions. While sustainability remains a universal priority (93%), there is a shift toward enhancing and extending existing initiatives (71%) rather than introducing new ones. Additionally, 57% of businesses plan to adopt AI initiatives – driven by the need for improved efficiency and productivity – although this remains lower than the wider manufacturing community.
It is thus critical that budget policy can support the sector in addressing its competitiveness challenges and harness opportunities for further growth.