UK food and drink sector serves up untapped potential

Greater support is needed for the nation’s food and drink manufacturers if they are to take advantage of growth opportunities and overcome the obstacles they currently face.

Food and drink fish fingers manufacturing factory line
The challenges UK food and drink manufacturers face in the coming years are described as “unparalleled”.

Food and drink is currently the largest industrial sector in the UK, accounting for some 17% of all UK manufacturing GVA – £28.2bn. It comprises just over 6,800 businesses and employees nearly 400,000 people.

It’s a growing sector, expanding by 27% between 1997 and 2015 – making it the fourth fastest UK manufacturing sector and significantly outstripping the average growth of 13%. Between 2010 and 2015, business turnover grew by 28% with profits growing by 10%, and employee numbers grew by 6%.

However, the challenges UK food and drink manufacturers face in the coming years are described as “unparalleled”.

A new Food and Drink Federation (FDF) commissioned report by Grant Thornton has highlighted the geographical spread of the sector, its importance to the wider UK economy and key growth opportunities.

The report also reveals the extent to which the EU may threaten the sector’s future productivity should the sector not receive further support from the government to help manage the transition.

The research focuses on three key areas: innovation, trade and skills; and all are framed against the backdrop of the UK leaving the European Union.

Key findings: Innovation

  • Almost all (89%) of respondents are involved in new product development with many manufacturers engaged in long-term calorie reduction programmes.
  • Just over half (54%) of manufacturers surveyed had accessed government R&D tax credits, which are not seen as a whole industry innovation solution.
  • Nearly half of respondents (46%) are involved in on-going collaboration with higher education or research initiatives.

Key findings: Trade

  • Between 2006 and 2015, global food exports had a combined annual growth rate of 7%. During the same period, UK food and drink exports grew by 4%.
  • EU nations Ireland, France, the Netherlands and Germany were noted as key trading partners and the EEA remains the market with the greatest perceived potential for the industry.
  • China, India and the UAE are seen as the top three markets that businesses surveyed would like to target.

Key findings: Skills

  • There is still great uncertainty regarding future access to EU workers, who are highly-valued and make up almost a third (32.5%) of the UK food and drink industry’s skilled and high-skilled workforce.
  • Despite misconceptions, there is an even mix of skills within the sector – less than 9% of roles are low-skilled.
  • 40,000 of the industry’s aging workforce are expected to retire in the next 10 years. 140,000 new workers are required by 2024 to fill the looming skills gap.

Cox and Plant Products, a manufacturer of conveying systems for major processing plants has plans to increase sales to £3m within 12 months and ambitious targets to more than double that figure by 2018.
The UK food and drink industry comprises just over 6,800 businesses and employees nearly 400,000 people.

FDF director general, Ian Wright CBE commented: “This detailed report by Grant Thornton charts the future shape of our industry for many years to come. It is a welcome assessment of the significant opportunities available to boost the productivity of the food and drink industry at a time of great economic uncertainty.

“The issues facing the food and drink industry are complex, but if we find the right solutions there is great reward – not just for our sector and the wider economy. We believe a new sector deal, working in partnership with government and the ‘farm-to-fork’ supply chain, will harness this potential.”

Key recommendations for government: 

  • Work with education providers across the UK to increase the availability of food and drink manufacturing sector specific apprenticeship training.
  • Enhance the image of the food and drink industry, and raise awareness of the range of career opportunities on offer.
  • Priorities food and drink as the UK’s largest manufacturing industry in relation to any new immigration policy.
  • Work with industry to reduce product sugar levels and take a holistic approach to calorie reformulation.
  • Further facilitate innovation through support for fundamental and applied research.
  • Encourage more food and drink manufacturers to export to help grow the UK’s 2.2% share of the global food and drink export market.
  • Work in partnership with industry to scale-up its provision of specialist export support for food and drink, and identify distributors in untapped markets.