24 January 2022
The latest food and drink trade statistics show a mixed picture. Monthly food and drink exports continued to creep up in November 2021; but they are still 2 per cent down when compared to last year, which has been an ongoing trend since June 2021. The five-month decline is particularly telling as food and drink manufacturers had to face greater Covid restrictions towards the end of 2020, so the annual data is compared against levels that are already heavily impacted pandemic levels.
Exports seem to be holding up better than imports which were 7 per cent down annually, with the impact of Brexit and certain tariffs being felt as EU imports fell 13 per cent when compared to last year. This could show that food and drink exports are now less reliant on the EU as manufacturers have repositioned their focus to explore other international markets.
1 April looms large for food and drink industry
Looking ahead, price inflation is going to apply acute pressure to food and drink manufacturers and the crunch point will be 1 April when energy prices and staff costs will go up alongside the plastic packaging tax changes coming into force.
Although it could be argued that core policy decisions such as the plastic packaging tax will enact longer term positive behavioural change across the sector, now is not the time to bring in such measures. While many larger businesses have been planning for this for some time, many with less resources must be concerned at the prospect of this having an immediate detrimental impact to operations. The sector is not back to pre-pandemic levels and is still reeling from unprecedented trading conditions, so any Government support to delay the introduction of the plastic packaging tax; offer a support package to help offset soaring energy costs; or announce temporary tax reliefs would be greatly appreciated to allow the sector time to recover post-Covid.
The final month’s data of 2021 will be available next month and will no doubt begin to show the emergence of the Omicron variant and the associated impact on the leisure and hospitality sectors during the vital Christmas period. This data is unlikely to be positive – that said, there do remain some reasons to be positive for the sector. Key commodities continue to be exported to a wider variety of nations around the world with significant growth in exports being seen across many international markets outside of the EU. Key commodities such as whisky continue to be exported in greater volume too. If the sector can continue to develop relationships with international markets further afield, while also maintaining the key ties with the EU market – 2022 will be a much better year. With the latest Government announcement suggesting many current restrictions are to be lifted – let’s hope this is the beginning of an infinitely better year for food and drink manufacturers and the wider sector as a whole.