The Food and Drink Report 2016

An analysis of the sentiment, challenges and changing landscape for UK food and drink companies.

While the food and drink industry faces some serious challenges,  it remains the largest manufacturing sector in the UK, with a turnover of £95.4 billion.

Published in association with BDO and based on its Food and Drink Survey, the report analyses the challenges for UK companies in the food and drink sector, including supermarket price wars, a tricky supermarket-supplier relationship and a skills gap.

According to the report, some 70% of those surveyed said they were experiencing difficulties in recruiting the skilled people they required and more broadly, the sector will need 109,000 new entrants at engineering and managerial level by 2022 to meet its needs.

On a positive note, the report also argues that some of the challenges have boosted the resilience of the sector. “The supermarkets’ battle to drive consumer prices lower has both challenged the supply chain and made it more resilient. The food and drink industry has become more efficient and smarter to survive a price war through new product innovation and investment in automation,” it says.

The report highlights other positive signs, such as new markets for British food in Thailand and the Middle East, which should encourage producers to invest more in new product development and overseas marketing.

Key findings

• 79% were positive about the future of the food and drink industry
• 26% said they would need to increase prices for customers to offset the cost of the National Living Wage
• 70% said they were experiencing difficulties in recruiting the skilled people they require
• 50% of companies are currently increasing investment in process automation
• 86% of firms expect revenue growth of up to 20% in the next year
• 45% of those surveyed employ strategies to mitigate changing energy prices: 65% invest in energy efficient technology and machinery