Located just outside Claremorris in Co Mayo, the sheep graze on the clover and grass pastures before their milk is made into Velvet Cloud products. Run by husband-and-wife team, Michael and Aisling Flanagan, the range includes sheep’s yoghurt, milk and cheese. As well as selling online, the products are available in 120 retailers and are used by high-end restaurants. The company is a farm and food business and so are faced with increased input costs at both ends of the business.
Aisling says: “On the farm end of things, we only use two ingredients to make our yoghurt: sheep’s milk and live cultures. However, the cost of producing that sheep’s milk itself has skyrocketed. Our fertilizer costs used to be less than €400 per tonne, now it is costing over €1,000 per tonne. So this year that will mean an increase of between €8,000 to €10,000 on that input alone.”
“Then on the food production side of things, our energy bill has seen the biggest increase. Last year, we spent about €5,000 on bills, that has more than tripled and we predict that by the end of the year, we’ll have paid between €15,000 and €20,000 on energy bills. Packaging will be an extra €3,000 this year, assuming no more increases. Overall, that’s an increase of over €20,000 in input costs and that doesn’t take into consideration increased diesel prices, labour costs or haulage. That is just to stand still and keep doing what we were doing last year.
“But we are a business that wants to grow. Two key areas of growth in the food industry is gut health and microbiomes as well as sustainability. People are beginning to look for dairy alternatives and realising that the plant-based ones are coming from halfway across the world. So there is a demand for our product and recently, we just started supplying Tesco Ireland, which is hugely welcome. However, that was a big investment upfront to increase production and invest in packaging.
“That is probably the most we can do this year to grow. Because what all these increased costs mean for us is that we won’t be able to do another investment in growing the business in the near future, to capitalise on all the opportunities we could have. This is because we won’t have the money to invest back into the business to grow as much as we could have.
“For example, buying more or better genetics to produce more milk, ordering packaging in larger volumes to avail of more competitive rates or buying machinery for packing to make us more efficient and decrease our costs.
“So without being able to increase the amount of milk we produce on the farm, it’s a challenge to exploit the ever-increasing demand for sheep’s milk products which the market is requesting, and we have to turn down customers.”
Shines Seafood, Co Donegal
Shines Seafood.
When Shines Seafood launched on the market in 2015, they changed the game in terms of canned fish on Irish supermarket shelves. Premium seafood, all wild, never farmed and caught sustainably, the range includes wild albacore tuna, yellowfin tuna, Irish sardines and mackerel. In fact, given that the range is available in most SuperValu stores, Dunnes Stores and selected Tesco stores and independent retailers across Ireland, they could be classed a medium-sized business, instead of small. But that doesn’t mean they still don’t have their challenges. Owner and former fisherman John Shine says: “For many small- to medium-sized businesses, we find ourselves walking a tightrope between our rising cost base and requesting increased prices from retailers.”
To demonstrate the extent of increases, John says: “This time last year, mackerel on the pier in Killybegs was costing about €1,200 a tonne. Now its closer to €1,700 a tonne. The price of salmon has nearly doubled.
Shines Seafood.
“I never thought I would see the day that sunflower oil would be more expensive than olive oil but because sunflower oil is coming from Ukraine it is up by 70%. We sell both our sardines and mackerel in sunflower oil so that is a huge increase in cost. Because sunflower oil is now is short supply, there is a demand across the board for olive oil so that’s up by 25%. Packaging has also increased with aluminium tins up by 30%. And that’s before we even go into increased costs around transport and energy bills.
“Across the board, we have calculated that the cost of producing each product is up by 17%, which erodes our margin significantly.”
But John says, it’s not just as simple as banging on the supermarket doors demanding increased prices. “There is another side to this story and that’s the consumer’s supermarket trolley and if the retailers give everybody a price increase, that is obviously going to significantly increase people’s food bills and there will be a riot with customers.
“I’m also very conscious that we want to be in this game for the long term. Truthfully, as much as we are being badly affected by increased cost, I am the last person who wants our price to go up on shelf. We are a premium product, we’re not cheap at the best of times. A price increase, while it may balance the books in terms of our margins, I’m afraid it will drive consumers to a cheaper option. I would prefer to keep our current customers and get less margin in the short term rather than lose them in the long run.”
But something has to give. “We are in some discussions with retailers and I have serious concerns about what the price of tuna will be when they land in Irish waters later this summer. But for the meantime, I hope that we can carry some of the pain, in the hope that there will be some resolution by Christmas.”
The Village Butcher, Dublin
Michael, Sarah and Jessica Kelly, the Village Butcher.
Ten years ago, The Village Butcher opened its doors in the middle of Ranelagh village and almost instantly became a staple in the community. A family operation, it is run by head butcher, Michael Kelly, and his wife, Sarah, while their daughter, Jessica is in her second year of her butcher apprenticeship. Their focus is on quality local ingredients but they have also made a name for themselves sourcing more unusual meat produce such as boar, goat, venison, buffalo, game, rabbit and veal, sourcing from Ireland whenever they can.
Being in direct contact with their suppliers everyday means that they know first-hand the impact that increased costs are having on farmers. They are feeling it down the line and in some circumstances they have to pass the cost on to the consumer, but it isn’t always an option. Sarah explains: “Since the start of the year, the situation in Ukraine has really had an impact. The farmers who supply us felt the impact straight away with increases of up to 200% on feed and fertilizers. I deal with a lot of our farmers directly, rather than through the factories, and they were coming to me saying: ‘Look, inputs are going up massively and we have to increase our prices.’ Of course, we understood that. We know how hard our farmers and these small businesses work and they deserve to cover their costs, earn a living and not be under pressure.
“So, initially, it was increases of 10% to 15% and we said: ‘OK we will take the hit on that’. But then within a few weeks diesel had gone up, meaning more increases and now we are looking at the likes of beef up by 25% to 30% since the start of the year. Chicken feed has also gone up although we haven’t seen as much of a spike in pork.”
On top of that, packaging has also been impacted by COVID, as many of the aluminium trays are coming from China. “In the past, you would have packaging and carrier bags within a week. Now we’re waiting three or four weeks which impacts cashflow. Our electricity bills have gone from 17c a unit last year to 34c a unit this year.”
However, Sarah says there is only so much price increases you can pass on to the customer. “Our chicken farmer does a beautiful organic free-range chicken, it’s fabulous. We sell that for €15 but when he came to me saying he had to increase his costs, I couldn’t pass that on. We can’t sell a chicken for more than €15, we just can’t, there is a limit to what people will pay, even for an organic chicken. We just have to suck up the cost.
“We have had to pass on the price of beef though. For example, fillet steak has gone up from €48/kg last year to nearly €66/kg this year, meaning a fillet is now closer to €10 rather than €8. Other things we have had to do to try and recoup some of the increased costs without damaging our relationship with our customer is to reduce our special offers. So, for example, we make a lovely steak burger which is €2 and we had a three-for-€5 offer but we had to drop that. Our ready meals are €6 but we have had to drop our two-for-€11 promotion.
“Thankfully there haven’t been many complaints from customers, they are well aware of the situation but they are feeling it at the till. I have a regular customer who comes in every Friday for the same items: a ham hock, lamb chops, a striploin steak, a few rashers and sausages. He would usually get change from €20 but now I find myself asking him for an extra €1 or €2.
“This year we really wanted to add to the team but that’s just impossible now. All these increases have meant that the extra €2,000 to €3,000 a month has taken a wage and has cost someone a good job.”
Gran Grans Food, Co Galway
Nigel and Magaly Murray Gran Gran Foods.
Stepping into Gran Grans Food in Kilcogan in Co Galway, you’ll find a mecca of Irish foods; the best of Irish farmhouse cheese, charcuterie, butter and sauces. But it is the range of condiments – chutneys, jams, marmalades, dressings and oils which are all made on site in the artisan shop that really makes it unique.
Gran Grans Food is run by husband-and-wife team Nigel and Magaly Murray. Nigel is the chef behind their range while Magaly manages operations and one of her biggest challenges at the moment is sourcing glass to store their condiments.
Magaly says: “We are part of Origin Green where the focus is on sustainability, so instead of using plastic we have moved everything to glass. We buy the glass through a company in Dublin who source from Poland but earlier this year we learned that the glass they are using is made in factories in Ukraine. Since the Russian invasion, it is now a huge challenge to get glass and we have been told to order larger quantities because we might not be able to get it in a few months. And so many other companies are the same, we are all competing for the same glass.”
On top of that, the price of glass jars has increased significantly, especially impacting Gran Gran Foods as they source 10 different jars for their range.
“Last year, a jar cost about 25c. That same jar is now 38c. Placing an order last year usually cost about €2,000, now it’s €2,800 and haulage has also gone up by almost 40% on top of that.
“We have been forced to look at companies in Portugal where supply is more guaranteed but they are more expensive again. We found a company in Italy but they don’t supply the lids, which then brings its own set of problems.”
Sourcing cardboard boxes for deliveries is also an issue. “Covid restrictions may have eased in Ireland but the pandemic is still massively affecting supply chains, especially in China. Now everything takes at least four months. We had to order our boxes for Christmas in the spring so that they would arrive in time to start preparing for our busiest season of the year.”
This also brings its own set of problems. “These delays and the need to order bigger quantities really affects our cashflow. It’s money you can’t access and yet you are waiting months for the products. Then when they do arrive, whether it’s excess boxes or jars, you need to space to store them before they can be sold on.
“It has meant that our small business has to get into more debt, we have to get more credit from our suppliers and we have to gather as much money as possible to invest in stocking the jars, rather than investing in the future of our business.” J
Located just outside Claremorris in Co Mayo, the sheep graze on the clover and grass pastures before their milk is made into Velvet Cloud products. Run by husband-and-wife team, Michael and Aisling Flanagan, the range includes sheep’s yoghurt, milk and cheese. As well as selling online, the products are available in 120 retailers and are used by high-end restaurants. The company is a farm and food business and so are faced with increased input costs at both ends of the business.
Aisling says: “On the farm end of things, we only use two ingredients to make our yoghurt: sheep’s milk and live cultures. However, the cost of producing that sheep’s milk itself has skyrocketed. Our fertilizer costs used to be less than €400 per tonne, now it is costing over €1,000 per tonne. So this year that will mean an increase of between €8,000 to €10,000 on that input alone.”
“Then on the food production side of things, our energy bill has seen the biggest increase. Last year, we spent about €5,000 on bills, that has more than tripled and we predict that by the end of the year, we’ll have paid between €15,000 and €20,000 on energy bills. Packaging will be an extra €3,000 this year, assuming no more increases. Overall, that’s an increase of over €20,000 in input costs and that doesn’t take into consideration increased diesel prices, labour costs or haulage. That is just to stand still and keep doing what we were doing last year.
“But we are a business that wants to grow. Two key areas of growth in the food industry is gut health and microbiomes as well as sustainability. People are beginning to look for dairy alternatives and realising that the plant-based ones are coming from halfway across the world. So there is a demand for our product and recently, we just started supplying Tesco Ireland, which is hugely welcome. However, that was a big investment upfront to increase production and invest in packaging.
“That is probably the most we can do this year to grow. Because what all these increased costs mean for us is that we won’t be able to do another investment in growing the business in the near future, to capitalise on all the opportunities we could have. This is because we won’t have the money to invest back into the business to grow as much as we could have.
“For example, buying more or better genetics to produce more milk, ordering packaging in larger volumes to avail of more competitive rates or buying machinery for packing to make us more efficient and decrease our costs.
“So without being able to increase the amount of milk we produce on the farm, it’s a challenge to exploit the ever-increasing demand for sheep’s milk products which the market is requesting, and we have to turn down customers.”
Shines Seafood, Co Donegal
Shines Seafood.
When Shines Seafood launched on the market in 2015, they changed the game in terms of canned fish on Irish supermarket shelves. Premium seafood, all wild, never farmed and caught sustainably, the range includes wild albacore tuna, yellowfin tuna, Irish sardines and mackerel. In fact, given that the range is available in most SuperValu stores, Dunnes Stores and selected Tesco stores and independent retailers across Ireland, they could be classed a medium-sized business, instead of small. But that doesn’t mean they still don’t have their challenges. Owner and former fisherman John Shine says: “For many small- to medium-sized businesses, we find ourselves walking a tightrope between our rising cost base and requesting increased prices from retailers.”
To demonstrate the extent of increases, John says: “This time last year, mackerel on the pier in Killybegs was costing about €1,200 a tonne. Now its closer to €1,700 a tonne. The price of salmon has nearly doubled.
Shines Seafood.
“I never thought I would see the day that sunflower oil would be more expensive than olive oil but because sunflower oil is coming from Ukraine it is up by 70%. We sell both our sardines and mackerel in sunflower oil so that is a huge increase in cost. Because sunflower oil is now is short supply, there is a demand across the board for olive oil so that’s up by 25%. Packaging has also increased with aluminium tins up by 30%. And that’s before we even go into increased costs around transport and energy bills.
“Across the board, we have calculated that the cost of producing each product is up by 17%, which erodes our margin significantly.”
But John says, it’s not just as simple as banging on the supermarket doors demanding increased prices. “There is another side to this story and that’s the consumer’s supermarket trolley and if the retailers give everybody a price increase, that is obviously going to significantly increase people’s food bills and there will be a riot with customers.
“I’m also very conscious that we want to be in this game for the long term. Truthfully, as much as we are being badly affected by increased cost, I am the last person who wants our price to go up on shelf. We are a premium product, we’re not cheap at the best of times. A price increase, while it may balance the books in terms of our margins, I’m afraid it will drive consumers to a cheaper option. I would prefer to keep our current customers and get less margin in the short term rather than lose them in the long run.”
But something has to give. “We are in some discussions with retailers and I have serious concerns about what the price of tuna will be when they land in Irish waters later this summer. But for the meantime, I hope that we can carry some of the pain, in the hope that there will be some resolution by Christmas.”
The Village Butcher, Dublin
Michael, Sarah and Jessica Kelly, the Village Butcher.
Ten years ago, The Village Butcher opened its doors in the middle of Ranelagh village and almost instantly became a staple in the community. A family operation, it is run by head butcher, Michael Kelly, and his wife, Sarah, while their daughter, Jessica is in her second year of her butcher apprenticeship. Their focus is on quality local ingredients but they have also made a name for themselves sourcing more unusual meat produce such as boar, goat, venison, buffalo, game, rabbit and veal, sourcing from Ireland whenever they can.
Being in direct contact with their suppliers everyday means that they know first-hand the impact that increased costs are having on farmers. They are feeling it down the line and in some circumstances they have to pass the cost on to the consumer, but it isn’t always an option. Sarah explains: “Since the start of the year, the situation in Ukraine has really had an impact. The farmers who supply us felt the impact straight away with increases of up to 200% on feed and fertilizers. I deal with a lot of our farmers directly, rather than through the factories, and they were coming to me saying: ‘Look, inputs are going up massively and we have to increase our prices.’ Of course, we understood that. We know how hard our farmers and these small businesses work and they deserve to cover their costs, earn a living and not be under pressure.
“So, initially, it was increases of 10% to 15% and we said: ‘OK we will take the hit on that’. But then within a few weeks diesel had gone up, meaning more increases and now we are looking at the likes of beef up by 25% to 30% since the start of the year. Chicken feed has also gone up although we haven’t seen as much of a spike in pork.”
On top of that, packaging has also been impacted by COVID, as many of the aluminium trays are coming from China. “In the past, you would have packaging and carrier bags within a week. Now we’re waiting three or four weeks which impacts cashflow. Our electricity bills have gone from 17c a unit last year to 34c a unit this year.”
However, Sarah says there is only so much price increases you can pass on to the customer. “Our chicken farmer does a beautiful organic free-range chicken, it’s fabulous. We sell that for €15 but when he came to me saying he had to increase his costs, I couldn’t pass that on. We can’t sell a chicken for more than €15, we just can’t, there is a limit to what people will pay, even for an organic chicken. We just have to suck up the cost.
“We have had to pass on the price of beef though. For example, fillet steak has gone up from €48/kg last year to nearly €66/kg this year, meaning a fillet is now closer to €10 rather than €8. Other things we have had to do to try and recoup some of the increased costs without damaging our relationship with our customer is to reduce our special offers. So, for example, we make a lovely steak burger which is €2 and we had a three-for-€5 offer but we had to drop that. Our ready meals are €6 but we have had to drop our two-for-€11 promotion.
“Thankfully there haven’t been many complaints from customers, they are well aware of the situation but they are feeling it at the till. I have a regular customer who comes in every Friday for the same items: a ham hock, lamb chops, a striploin steak, a few rashers and sausages. He would usually get change from €20 but now I find myself asking him for an extra €1 or €2.
“This year we really wanted to add to the team but that’s just impossible now. All these increases have meant that the extra €2,000 to €3,000 a month has taken a wage and has cost someone a good job.”
Gran Grans Food, Co Galway
Nigel and Magaly Murray Gran Gran Foods.
Stepping into Gran Grans Food in Kilcogan in Co Galway, you’ll find a mecca of Irish foods; the best of Irish farmhouse cheese, charcuterie, butter and sauces. But it is the range of condiments – chutneys, jams, marmalades, dressings and oils which are all made on site in the artisan shop that really makes it unique.
Gran Grans Food is run by husband-and-wife team Nigel and Magaly Murray. Nigel is the chef behind their range while Magaly manages operations and one of her biggest challenges at the moment is sourcing glass to store their condiments.
Magaly says: “We are part of Origin Green where the focus is on sustainability, so instead of using plastic we have moved everything to glass. We buy the glass through a company in Dublin who source from Poland but earlier this year we learned that the glass they are using is made in factories in Ukraine. Since the Russian invasion, it is now a huge challenge to get glass and we have been told to order larger quantities because we might not be able to get it in a few months. And so many other companies are the same, we are all competing for the same glass.”
On top of that, the price of glass jars has increased significantly, especially impacting Gran Gran Foods as they source 10 different jars for their range.
“Last year, a jar cost about 25c. That same jar is now 38c. Placing an order last year usually cost about €2,000, now it’s €2,800 and haulage has also gone up by almost 40% on top of that.
“We have been forced to look at companies in Portugal where supply is more guaranteed but they are more expensive again. We found a company in Italy but they don’t supply the lids, which then brings its own set of problems.”
Sourcing cardboard boxes for deliveries is also an issue. “Covid restrictions may have eased in Ireland but the pandemic is still massively affecting supply chains, especially in China. Now everything takes at least four months. We had to order our boxes for Christmas in the spring so that they would arrive in time to start preparing for our busiest season of the year.”
This also brings its own set of problems. “These delays and the need to order bigger quantities really affects our cashflow. It’s money you can’t access and yet you are waiting months for the products. Then when they do arrive, whether it’s excess boxes or jars, you need to space to store them before they can be sold on.
“It has meant that our small business has to get into more debt, we have to get more credit from our suppliers and we have to gather as much money as possible to invest in stocking the jars, rather than investing in the future of our business.” J
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