UK food and drink manufacturing sector is becoming increasingly optimistic and is poised for growth, shows a recent report.
Surveying 100 UK food and drink manufacturers, 95 per cent of business leaders feel positive about the prospects of their business, up from 70 per cent in the last survey.
Additionally, almost two-thirds (62 per cent) have seen an increase in orders over the past 12 months, and over half (52 per cent) anticipate further growth over the next year.
BDO’s annual Food and Drink Report also found that 75% of respondents lack skilled people in key roles, up from 50 per cent in 2023, hampering their ability to deliver their growth ambitions.
The roles that manufacturers are most keen to fill include sales and marketing, production, and project management positions. Roles related to digital transformation are also in demand, with a fifth (25 per cent) of business leaders seeing the need for more skilled workers in this area.
In response to long-standing recruitment issues, many businesses are turning to digital tools to automate processes and improve productivity. The appetite for digital transformation appears to be strong, with 88 per cent of respondents saying it was strategically important to their executive teams.
However, over 4 in 5 (84 per cent) acknowledged there was a gap between their digital transformation ambitions and implementation within the organisation.
Despite the recruitment challenges, BDO’s survey highlights a growing optimism felt within the food and drink sector. Over a third (34 per cent) expect to drive their growth through an expansion into new export markets within the EU, while over a fifth (31 per cent) plan to expand into new markets in the UK.
A third (33 per cent) of businesses stated that new product development remains a key growth area, with over a fifth (30 per cent) planning to divest to focus on growth within core operations.
Nevertheless, the study notes that the sector is not exempt from the current economic challenges. Faced with rising costs, almost a quarter (24 per cent) of food and drink businesses plan to increase borrowing or seek additional finance.
A further fifth (21 per cent) said they will need to implement price increases to the cost of goods or services, and an additional 19 per cent revealed that they will need to take on higher levels of debt.
“Despite facing everything from a global pandemic to the loss of major markets and supply routes, businesses within this sector have shown remarkable resilience, while recruitment challenges persist, optimism is flourishing,” said Cindy Hrkalovic, Head of Food and Drink at BDO.
“The sector will have been further buoyed by the recent trade deal announced with the EU, which should remove barriers to trade for many food and drink exporters and offer new opportunities for growth.
“However, there is also a pressing need for government to offer the food and drink sector targeted support with their recruitment and digital transformation needs in order to sustain growth and competitiveness in a rapidly evolving market.”
