NPD tops food and drink firms’ biggest opportunities

New product development is the biggest growth opportunity for food and drink businesses

New product development (NPD) is the biggest opportunity for food and drink manufacturers over the next 12 months, while fewer firms are positive about business prospects, according to a survey by advisory firm BDO.

Product innovation and export growth topped this year’s BDO Food and Drink Survey of industry opportunities. NPD was earmarked as the biggest growth opportunity by 92% of food and drink respondents, and 46% expected sales growth from new export markets.

Revenue growth, of up to 20% over the next year, was predicted by 81% of respondents, BDO reported. 66% were increasing their investment in automation.

Currency fluctuations was the biggest risk to food and drink businesses, according to 76% of respondents. Almost 30% of businesses experienced a drop in operating margins last year, and 57% said recruiting the right skilled workers was challenging.

Faith in the government

BDO report – at a glance
  • 73% are positive about the future
  • 92% say NPD presents biggest opportunity
  • 66% boosting automation investment
  • 81% think volatility of raw material prices is biggest threat
  • 57% experiencing difficulty recruiting skilled people
  • 14% think Brexit will have positive impact
  • 31% confident government will negotiate a favourable Brexit deal

Only 14% said they thought Brexit would have a positive impact in the medium to long-term future of their business, while just 31% had faith in the government to negotiate a favourable Brexit deal.

BDO head of food and drink Paul Davies said: “The industry continues to be faced by challenges predominantly related to price and margins, and Brexit brings with it new challenges. But, it is promising to see high levels of positivity in the industry, with firms pushing forward and adjusting their business plans to make the most of the opportunities available.

“Food and drink businesses are a driving force of growth, contributing jobs and revenue to the UK economy. Yet they are at risk of being overlooked as the UK prepares to leave the EU. The government needs to draw on the natural energy, ambition and entrepreneurial spirit of food and drink businesses and help them succeed post-Brexit.”

Securing the industry’s future

Davies added that the government needed to deliver a Brexit deal with access to non-UK EU national workers, to help secure the industry’s future. About one in four workers are EU nationals, and the sector will already need to recruit 140,000 more employees by 2024.

“We believe the government can do more to support the industry by ensuring they have open and simple access to world markets, to successfully continue trading and deliver growth through new export opportunities,” Davies said.

Meanwhile, the next government was urged to address the impending labour shortages faced by the food industry, after the immigration minister claimed the problem had been overstated.


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