Food firms have growing appetite for investment, says report

Oct 25, 2013

 

The research, which includes views from key decision makers in the Milton Keynes food and beverage industry, also identifies that barriers to growth remain with over 40% of respondents predicting that raw material prices will rise by 1-5%. Subsequently this was identified as the biggest challenge for the sector in the year ahead.
 
Ashley Clarkson pictured, Grant Thornton’s head of food and beverage across Milton Keynes, said: “There has been a new wave of optimism across UK food and drink businesses, partly driven by export opportunities and partly due to improved consumer sentiment which is increasing investment in the sector.
 
“However, wider challenges remain for the sector, not just in terms of rising raw material prices but also in managing the volatility in the price and supply of many key commodities and ensuring the continuity of supply when product availability is short in the UK or globally.”
 
Despite UK’s imports exceeding exports, findings from the report indicate there will be an increase (from 2% to 5% over the next two years) in the number of UK businesses selling at least 25% of their products abroad.
 
Mr Clarkson said: “Seven out of ten respondents said growth was the more important factor over the next year rather than cost reduction, a sentiment that can partly be accounted for by increased export opportunities.
 
“This optimism, along with beneficial exchange rates, trusted ‘safe’ supply chains and demand for British brands and products are all likely to contribute to an increase in UK food and beverage exports.”
 
On supermarket shelves, the report finds that around half of respondents expect positive effects from the trend towards locally sourced goods – few expect a negative impact.
 
Businesses have invested heavily to maintain and improve product integrity and to apply more rigour to their supply chains, some as a direct result of the horsemeat scandal.
 
Mr Clarkson said: “Recently, there has been a trend towards locally sourced food and interestingly some supermarkets have adopted a ‘UK sourcing only’ policy on all meat products, changing food chain behaviour and encouraging investment in UK production.
 
“However, this is not as straightforward as it may seem as there will be imbalances caused by consumer preference for certain types of popular meat and price-conscious consumers are already causing some retailers to reintroduce imports.
 
"These imports will be better policed than in the past, which will benefit the quality operators in the market.”
 
The report also finds that 60% of UK food and beverage businesses are likely to require additional funding over the next 12 months.
 
Outside of Western Europe, China (37%), South East Asia (30%) and Africa (37%) are three key markets many UK food and beverage firms are targeting over the next two years.
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