Food and drink manufacturers report growth at home and abroad despite a worrying business environment.
Food and drink manufacturing is still reporting strong growth in both the UK and export markets. But despite plans for new investment during 2011, there are still concerns about the stability of the economy and around challenges of a future characterised by mismatched demand and resources.
The latest Food and Drink Federation business confidence survey (Quarter four Oct-Dec 2010) has shown a generally positive picture with sales up at the end of last year and expected to continue to increase during 2011. Levels of short term expenditure by companies increased marginally at the end of last year but there is more optimism for the remainder of this year with 39% expecting to increase levels of expenditure in 2011 compared to 2010.
Intentions for investment will have to be chosen carefully however, as companies look to balance their spending against the increasing price and uncertainty of availability of certain raw materials. The price increases currently being experienced in the food and drink supply chain have not come without warning with 82% of survey respondents expecting rises during early 2011 manufacturers warned at the end of last year that they could not continue to absorb increases that had been passed down the supply chain and which they had attempted to contain since last year.
The impact that resource availability and pricing is due to have on methods of food production and distribution were highlighted in a recent government report Global Food and Farming Futures. This report draws a complex picture of the challenges around creating sustainable global food systems and calls on governments and industry to take concerted action to protect resources. FDF has shown support for this through the promotion of lean production methods, to which the food and drink industry has come comparatively late in relation to other manufacturing sectors.
In addition to the somewhat doom-laden prospects around resource sustainability however, concern for wider economic in 2011, following last autumn’s economic spending review, caused 30% of survey participants to express a lower level of business optimism than they had felt I the previous quarter.
Defiant in the face of industry challenges, FDF’s Director of HR and Competitiveness Angela Coleshill said today: “Food and drink is a British success story. Despite challenging economic conditions food and drink businesses are continuing to invest for the future and employ staff, as a result of good sales at home and abroad. As the UK’s largest manufacturing sector the Government must put food and drink at the heart of its strategy for economic recovery through growth. ”