More than half of Irish food and drink SMEs expect to see a drop in sales this year as a result of Covid-19, according to new research conducted by Love Irish Food.

The organisation, which was set up in 2009 to safeguard the future of Irish food and drink brands, conducted the survey this July and August among 39 SME member brands.

It found that a third of smaller companies expect sales to fall steeply by more than 15% in 2020, while 54% believe their sales value will be down overall.

Speaking on Morning Ireland, Kieran Rumley, Executive Director of Love Irish Food, said many of the firms that are anticipating a drop in revenue are connected to the food service sector.

"In the early stage of the pandemic a lot of food companies faced significant problems with regards to their trading. Many of these businesses had food service accounts. For other businesses in the sector, 41% expect sales values to be up on 2019," he said.

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Almost half of the association's SME members said the decline in sales will result in their businesses employing less staff as the industry emerges from the pandemic.

However, Mr Rumley highlighted that 46% of businesses expect to retain the same number of staff, with 10% expecting to increase employee numbers post Covid-19.

Despite the challenges curtailing growth prospects for many food and drink SMEs, 62% of Love Irish Food members said they believe 2021 will be a better year for their businesses, as Mr Rumley explained.

"We are going through a transition phase where companies are processing their situations. We are seeing things pick up for the hospitality sector and the food services sector, so I expect that the industry will be in a much better position at the end of the year and that is reflected in the findings of our research," he said.

While many firms have put Brexit on the back-burner as they deal with the impact of the pandemic, Mr Rumley said now is the time to prepare.

"The biggest challenge is preparedness. Companies many not see themselves as significant exporters but they may be importing minor quantities of ingredients for food production and they need to make sure they are prepared for the changes that are to come and possible delays," he said.

Mr Rumley encouraged SMEs to make sure their finances are in order and to avail of the Government supports being provided.

"The Government announced details of the credit guarantee scheme this week and I would urge smaller companies to look to that scheme as a means of funding over the next number of months. Equally the Wage Subsidy Scheme has been hugely beneficial to the industry," he said.