Food and drink sector eyes fresh opportunities
23 Feb 2016
Many UK food and drink manufacturers are set to splash out on product and technological innovation after successfully trimming fixed costs such as energy bills, says a new industry report.
The annual food and drink report published by accountancy firm BDO, found that while pricing pressures and the volatility of raw material costs and skills shortages remained major challenges, many respondents said they had become increasingly efficient in dealing with market pressure.
While 82% of companies said operating margins continued to be squeezed with pricing pressures remaining their top challenge, 70% said they were tackling this with measures that include arranging fixed price agreements with energy suppliers.
Many respondents also indicated an intention to embrace new process automation projects, with more than half of the food and drink firms questioned expecting to boost investment in this area.
Nearly two thirds of firms surveyed also said that new product development would be a major source of growth, with 60% and 43% saying access to new UK markets and export markets respectively would be increasingly important part of their growth strategies.
Paul Davies, head of food & drink manufacturing at BDO, said: “Pressures on pricing and margins remain hugely challenging, but the overall sentiment of the sector is a positive one. It’s been a tough few years for food and drink companies, but it seems they are finally stepping out of the shadows and focusing on future growth.”
Retaining skilled labour was named as the second biggest challenge facing the sector, and nearly three quarters (70%) of those surveyed said they were experiencing difficulties in recruiting the skilled people they required.
The research was conducted in conjunction with the Institution of Mechanical Engineers (IMechE), and Tim Fox, chair of its Food & Drink Engineering Committee said: “About 70% of the food and drink manufacturers surveyed said they were struggling to recruit people with the right skills.
"We need to encourage more people to pursue engineering careers and to champion the diverse and exciting career prospects for engineers and technicians working in food and drink manufacturing.”
Key findings:
- 79% food and drink manufacturers are positive about the future
- 86% of firms expect revenue growth of up to 20% in the next year
- Two thirds see product development will be major source of growth
- More than half will be increasing their investment in process automation.
