Supply chain overhaul is needed to de-risk food and drink sector

This month we’ve seen another dip in the value of UK food and drink exports globally when compared to the same period in 2020 – down 1.9 per cent on August last year. Depressed trade to the EU, down 10.7 per cent, brought the global average down. However, when you take the EU out of the picture then trade to the rest of the world is up 11.5 per cent – showing the food and drink sector’s ability to diversify into new markets. 

No or low alcohol beer saw the biggest increase in trade, up 233 per cent; but whisky continues to dominate and build momentum, seeing a 10.9 per cent uplift in volume, equating to £428m of products being shipped in August, as the forthcoming Christmas period drives growth for distillers. 

A challenging run up to Christmas begins

This run up to Christmas is always critical to the food and drink sector. However, with soaring energy prices, shortages in HGV drivers and increasing cost in shipping, food and drink operators are facing a multitude of challenges that are acutely impacting the bottom line after a turbulent trading period. In addition, the uncertainty around CO2 availability post-Christmas once the Government’s deal expires presents another looming issue.

Something has to change

This raises a very important question about the fragility of supply chains and our reliance on international markets. When you look at the import statistics, it’s interesting to see that the UK imports more than double (2.6 times) the fresh produce, such as dairy, meat, vegetables and seafood, than it exports.

So, if we used more home-grown produce, could we de-risk our supply chains and lower our environmental impact? Possibly, but the shelves in the supermarket would look different and ultimately the cost of food would increase. Staff costs would need to rise too to encourage much needed UK talent into the industry.

Practically speaking, fresh food producers are increasingly turning to technology, such as vertical farming, to circumnavigate our weather and to lengthen the season of certain products.

With warnings over availability of Christmas favourites, it will be interesting to see how the food and drink sector adapt and pivot throughout these next few months to maximise the opportunities and mitigate any risks.