‘Most food and drink makers feel positive for coming year’

Almost eight out of 10 leaders in the UK food and drink sector feel positive about the prospects for their business over the coming year.

According to a survey from accountancy and business advisory firm BDO LLP, there is a high degree of optimism among food and drink manufacturers, despite the challenges of rising input prices, geopolitical instability and the lingering impacts of Brexit and Covid-19.

More than half (53 per cent) expect to see an increase in orders over the coming year. And despite difficult economic conditions, one-third of companies are planning capital expenditure in production this year, seen as a key driver for growth.

Geographical expansion also features in the growth plans of many businesses. Almost a third (31 per cent) anticipate growth in non-European markets such as the Middle East and North and South America, while 29 per cent expect growth to come from the UK and 28 per cent from new markets in the EU.

However, the ongoing impact of Covid continues to be the biggest worry, cited by 28 percent of BDO’s survey sample with increased competition, the effects of cheap imports, cyber security and wage inflation too were seen as threats for between 16 per cent and 18 per cent of those surveyed.

There was also unease around rising levels of inflation. In response to rising prices, around a third (32 per cent) said they were seeking additional finance, 23 per cent were reducing profit expectations, and almost one in five (19 per cent) said they would be prepared to take on higher levels of debt.

Staffing, which was already a problem pre-Brexit, also continues to be a challenge as 61 per cent reported that they were having difficulty recruiting the people they need, with IT and software roles the hardest to fill.

“Over the last few years, food and drink manufacturers have proved themselves to be very resilient in responding to Brexit and Covid-19 lockdowns. Many have acted swiftly by choosing to in-shore or near-shore supplies and strengthen operations,” said Cindy Hrkalovic, Head of Food and Drink at BDO.