Andrew Connors, head of mid-sized business at Lloyds Bank Commercial Banking, discusses the bank’s latest research into the prospects for food and drink manufacturers in England and Wales.
Every year at Lloyds plc we survey the UK’s key manufacturing sectors, including food and drink, to get a detailed snapshot of the current climate.
It’s heartening to report that the contrast between the 2014 food and drink report and this year’s research – Investing for Growth – is really positive.
Plans for investment, job creation, and exporting are all up on last year’s already strong figures, underpinning the industry’s ongoing resilience to both sector specific issues and the broad-based challenges facing the UK’s wider economy.
The employment forecast is particularly strong, with firms planning to create more than 73,000 new jobs over the next five years.
And optimism in the sector is universal, with 100% of firms expecting to grow over the next five years, up from 98% in last year’s survey.
To achieve that, the majority of firms are focused on entering new markets in the UK and developing new products.
Investing and collaborating
A particular highlight is the significant investment food and drink manufacturers are planning to channel into research and development over the next five years, boosting productivity in the sector.
Firms tell us they plan to invest, on average, a quarter of their current turnover into R&D over the next five years.
As we know, productivity presents an ongoing challenge for the UK, so against this backdrop the continued commitment to innovate from food and drink manufacturers is a clear indication of the crucial role this sector plays in the broader economy.
The provenance of products is also playing an increasingly important role for food and drink manufacturers, who are finding a ‘Made in Britain’ label is highly regarded by consumers around the globe.
A healthy pride
The research did also expose some potential concerns within the industry, including raw material price volatility, a potential skills shortage and a possible exit from the EU.
But dynamic food and drink manufacturers are responding creatively to the growing emphasis on public health awareness that has been building for some time, with consumers, retailers and government placing increasing focus on the content of food and drink products.
Almost three quarters of the firms we surveyed viewed this spur for new product development as a positive opportunity for their business.
This vibrant entrepreneurial energy positions the sector as a fantastic example for the wider manufacturing industry in the UK.