Survey: UK Food and Drink Sector Remains Positive on 2012 Outlook

The latest Business Confidence Survey from the Food and Drink Federation (Quarter 3 2011) found that the sector is continuing to grow as companies make investments in R&D, facilities and skills, signalling that it is on course to achieve its recently announced growth prediction of 20% by 2020.

Dec 22 2011 --- Food and drink manufacturers introduced over 8500 new products during 2011, around 500 more than in 2010, showing that despite bleak economic forecasts, innovation remains strong.

The latest Business Confidence Survey from the Food and Drink Federation (Quarter 3 2011) found that the sector is continuing to grow as companies make investments in R&D, facilities and skills, signalling that it is on course to achieve its recently announced growth prediction of 20% by 2020.

Domestic sales remain good and export sales are strengthening as companies move into new markets where demand for Western goods has increased. 80% of survey respondents said that UK sales were up or static and 96% expected them to either rise or remain the same during October – December 2011 (Q4). Exports reflected similar optimism with 72% reporting an increase or static situation for Quarter 3 and only 24% predicting a fall during the next three months. Exports totalled £8.8 billion during the first three quarters of 2011, a 12% increase on the same period last year when they exceeded the £10 billion mark for the first time.

Key food commodity prices have slightly decreased but this has rarely been reflected in prices to manufacturers and almost 70% of respondents reported an increase in their average costs during Quarter 3 with further rises anticipated for Quarter 4. This has not been purely due to commodity price rises but also recent increases in materials and fuel costs.

Despite the on-going economic uncertainty, food manufacturers are continuing to grow their businesses with R&D spend up for 36% respondents (just 8% stated a decrease) and 48% expecting to invest for the Oct-Dec period. Up-skilling employees remains important with 84% expecting to invest more or the same in training during Quarters 3 and 4.

In terms of business optimism, there was an 11% fall from Quarter 2 (down to 12% expressing 'more optimism') with concerns likely to relate to the economy and on-going European issues.

FDF Director of Competitiveness Angela Coleshill said: “Food and drink manufacturing is a strong growth area and we have just launched our vision to grow the sector by 20% by 2020. Whilst members are cautious about the overall economic picture, their confidence in their growth strategies holds firm and they are pressing ahead with new product launches, R&D, capital investment and training. We are fortunate to be part of a resilient industry that appears to be withstanding the storms faced by other manufacturing sectors.”