The Food and Drink Federation and Santander have launched a new report highlighting the growth opportunities and challenges for the food and drink sector for 2020.
The Food and Drink Industry Report 2020 highlights other important issues for the industry including increasing automation. The recent 'Made Smarter Review' highlighted a potential £55.8bn value to the sector over the coming decade through digital technology adoption but pointed out that food and drink lags behind other manufacturing industries.
Sustainable packaging and diet and health are also highlighted in the report as areas where industry is committed to making a difference, working alongside or ahead of Government to drive change.
The report looks in particular at exports:
• H1 2019 exports of food and drink increased by 5.1% (y-o-y) to £11.3bn. This has largely been driven by growth in the value of exports to non-EU countries (+9.8%), with growth over four times that of exports to the EU.
• The UK’s food and drink trade balance has declined, indicating that relative dependence on imports has increased by 0.8% since H1 2018.
• While year-on-year growth in the value of food and drink exports exceeded 11% in Q1, the second quarter of the year saw a decline on the same period in 2018 (-0.6%). Evidence from members suggests that the figures we reported in Q1 were significantly inflated by the impacts of stockpiling.
• In line with this, a large proportion of members have reported that they predict exports in the wider UK economy to decline over the remainder of 2019.
• Exports to the UK’s top trading partner, Ireland, have fallen in value on H1 2018, for the first time since H1 2015. The two key drivers of this decline were weaker exports of cereals & flours and meat-based products. On the other hand, growth to the UK’s remaining top five markets (France, USA, Netherlands, and Germany) has been positive.
• Other key markets that have seen negative growth include Spain, Hong Kong and the UAE, where the value of a variety of exported products has fallen, including: sauces, ice-cream, meat products, and confectionary.
• The developing markets of China, India, Japan, UAE and USA, all of which have seen considerable year-on-year growth.
• All of the UK’s highest value exported products have grown in H1 2019, with whisky, salmon, wine, gin, and pork increasing by over 10% on the same period last year. Salmon, beef and gin have also all seen volume growth above 10%.
FDF Chief Executive, Ian Wright, said, 'UK food and drink exports have been a singular success in recent years, achieving strong year- on-year growth. But we start from a relatively low base, in that only around one-in-five of our food and drink businesses are exporters.
'In some competitor markets, that proportion is much higher. Encouraging more businesses to overcome their concerns about exporting is a high priority for FDF and for our affiliate members Santander. We are seeking to persuade the Government to invest alongside us in more specialist support to help companies take advantage of more export opportunities.
'This report focuses in detail on growth through export potential but also touches on the many other opportunities and barriers on key issues impacting our members.'
Santander UK, Head of Food and Drink Sector, Andrew Williams, said, 'As the UK's largest manufacturing sector, contributing £31.1bn to the economy annually and employing 450,000 people, the food & drink industry is a vital element of UK business and output, both domestically and internationally.
'Despite an uncertain UK economic environment and the continual need to invest in technology and innovation, huge opportunities remain to sell more great British food and drink, in particular oversees.
'It's key that we identify how best to harness this growth potential and improve productivity, and we're delighted to be supporting the industry and this FDF report and in particular, by showcasing those opportunities overseas.'