The UK food and drink sector has an enviable reputation for generating a range of world class product categories and brands. The cachet of buying British shouldn’t be underestimated and UK export figures reflect this growth. Last year, over 2500 UK companies exported food and drink products in a market where total sales are worth a staggering £19bn across 150 countries.
Manufacturers of whisky and salmon are key examples of products purchased overseas for their provenance and demand continues to grow. The UK is almost defying convention as we now sell tea to China, wine and cheese to France and even chillies to Pakistan – the growing Asian market place is increasingly critical to the UK export market.
So with all this good news, which key trends should food and drink manufacturers watch out for this year?
Collaboration, collaboration, collaboration
Protecting and maintaining food security is vital to ensure a sustainable and growing market. Exporting opens a world of competition, and to continue this upward curve, manufacturers must work with farmers and producers of raw materials and the hospitality and tourism sectors to complete the virtuous circle. Scotland is ahead of the rest of the UK on this front, realising that food and drink is currently accounting for one in every five pounds spent by visitors to Scotland. Scottish farmers, manufacturers and the hospitality industry are working closer together than ever before, and we expect the rest of the UK to follow this trend.
Mergers and acquisitions
The sector will be driven by consolidation, succession planning and strategic purchases as UK brands are of great interest to investors. The quality of produce, an uplift in demand and new opportunities in markets across the globe has increased lending from banks, private equity and international investors. This places food and drink businesses in a great position to access finance to grow into new markets, including internationally, and maximise the opportunity to export products to rapidly growing markets across the world.
All the talk around a Brexit vote has created uncertainty in the market. Whichever way the polls go, there will be both opportunities and threats facing food and drink businesses. However, with development of key European markets at the heart of many UK food and drink companies diversification plans, anything which may impact trade with Europe has to be a concern.
Remember the home market
Export can be an attractive option but it may not be the be all and end all. Newcomers such as Aldi and Lidl have shifted the dynamics in the UK retail market. The weekly shop has become a thing of the past and those manufacturers who can innovate to fit the trend of convenience shopping and develop their e-commerce systems will succeed.
Amazon has recently announced a deal with Morrisons whereby they will deliver fresh, chilled and frozen food in one hour deliver slots across an increasing number of UK cities. Delivery mechanisms will be key along with other technological advances such as the move by US WalMart to use drones for home delivery to drive efficiencies.
The UK Government has stated that 2016 is the year of great British food. This marks the beginning of the development of a great British food unit which will support export growth, training of new apprentices and an increasing emphasis on protected food brands which celebrate the rich heritage, iconic traditions and provenance of British food. All these factors bode well for the food and drink sector which is an integral part of the British economy and has a range of growth opportunities to take advantage of in the coming years.