The food and drink sector is having a glorious time - for the moment.

This week, in its annual report on export performance, Bord Bia presented the best set of figures that the industry has seen for a long time, according to Aidan Cotter, chief executive of the body charged with promoting Ireland as "the food island".

Despite a weak US dollar and a menu of competitive pressures, exports rose 10 per cent last year to exceed €8 billion for the first time. Beef exports were among the highlights, rising 20 per cent in the Continental market and 14 per cent overall, while Irish companies' beverage exports accelerated by 26 per cent, helped in large part by the success of C&C's Magners cider in the UK.

Cotter, who has been chief executive since 2004, says the "exceptionally strong" performance last year was not unexpected. But the good times are under threat from a mix of domestic cost pressures and international trade liberalisation.

With EU trade commissioner Peter Mandelson, US trade representative Susan Schwab and World Trade Organisation (WTO) chief Pascal Lamy all out on the political meeting circuit this week in a bid to resume five-year-old trade liberalisation talks, Bord Bia is conscious that the trading environment for Irish beef will eventually change.

The deal will give Brazilian beef farmers access to the European market, to which 93 per cent of the Republic's €1.5 billion beef exports are shipped. Bord Bia believes that the only way Irish beef will thrive is to differentiate itself as a premium offering. It is two years into a three-year promotional campaign to assert exactly that.

Cotter is not unduly worried.

"I think that there is room for everyone. The EU beef deficit is forecast to treble to a million tonnes by 2015," he says.

In the meantime, Bord Bia is exploring export markets outside Europe and will form part of the Government trade mission to the Middle East next week. The region is a market for dairy ingredients and was an important area for beef before the market closed in 2001, says Cotter.

"It is important to develop a relationship in those markets and eventually be in a position to capitalise on that when they reopen."

China is, naturally, also of huge economic importance and this year Bord Bia will establish a permanent presence in Shanghai. The drinks and dairy markets are the main focus, but Irish exporters to China are also beginning to reap the benefits of a pork protocol signed in 2005 and Bord Bia is on track to meet its target to double exports to China to €400 million by 2009.

Food is part of the fast-moving consumer goods (FMCG) industry and it's not called fast-moving for nothing, says Cotter.

Bord Bia's recent survey of Irish food companies revealed that 30 per cent of sales in 2006 were generated by new or reformulated products. Driven by demand for healthier foods, around 70 per cent of companies have indicated that they will develop new products in 2007.

Health concerns are an enormous driver of innovation in the market, according to Cotter.

Several companies based here are serving up probiotic-laced functional foods that claim to boost our immune systems.

But before anyone gets carried away by the apparent nutrition revolution, it is worth noting that the top two performing brands in terms of improvements in their sales in the UK last year were cider and pizza.

Both brands were Irish, with Green Isle's Goodfellas Solo pizza edging Magners into second place.

Convenience is still very much king in the prepared foods category, where pizza, luxury chocolate confectionary and frozen bakery products propelled a 10 per cent growth in exports last year to almost €1.7 billion.

There should be room for the sector to expand, but it remains very competitive, leaving Irish exporters with a struggle on their hands, says Cotter.

Price squeezes by retailers combined with rising energy and other costs are all making profit levels less palatable.

"Irish companies have been able to recover some costs in the UK market but the pressures are getting worse. Profitability is suffering, which has consequences for companies' ability to invest and expand," he says.

2007 promises to be a full year for Bord Bia. In May, it holds the Marketplace event in Croke Park, which will include what Cotter calls a speed-dating session: around 1,500 pre-scheduled, 20-minute meetings will take place between 70 Irish food companies and more than 200 international buyers.

The year will also see the establishment of the Bord Bia Centre of Excellence for small businesses with turnover of €3.5 million or less.

Bloom, an event designed to showcase Irish garden designers, will take place in the Phoenix Park on the June bank holiday weekend as part of Bord Bia's horticultural remit. The amenity horticulture industry is thriving, with sales reaching €970 million last year.

Cotter (54), who has previously worked for Bord Bia as director of operations and its European director, was brought up on a farm in Glanworth, Co Cork, which he says helped instil a feeling that the sector had a great future.

"This is still Ireland's largest indigenous industry," he says. "It is deeply integrated into the economy, from the fork right back to the farm."