The Scottish food and drink industry is globally recognised and continuing to strengthen. It will be key to reaching the shared vision that The Scotland Food & Drink Partnership outlined in its Ambition 2030 strategy.
To achieve this, there will need to be collaboration from field to table, and a wide variety of businesses from different sectors will each play an important role in future-proofing an ever-growing and vitally important industry for this country.
So, where are the areas in which food and drink companies may look for support, to help them in unlock their own potential and ultimately support this burgeoning sector?
If the company is at a relatively early stage in its lifecycle, then ensuring that there is a firm business plan in place to map out a strategy, the brand and route to market is essential. This involves preparing a financial model to determine the quantum of investment and trading levels required to make the brand viable.
Securing the most appropriate early-stage investment will form a critical part of this plan, as there can be a wealth of different options available, including high-net worth individuals, banks, mezzanine finance providers and private equity investors.
Getting this right from the outset will pay dividends in the future. This same plan can also lead to thoughts around ultimate exit planning... what are the long-term goals, and can a structure be put in place early to make the enterprise as tax efficient as possible?
Whatever the stage of the business, it will need to be innovative and open to new developments in technology. The UK has a generous Corporate Tax regime which can benefit food and drink companies seeking inventive means of developing their products.
If a company is investing its money and its people’s time into innovation, then the business must ensure it actively secures the tax breaks that can go alongside that to reinvest back into growth. In some cases, this can involve getting money paid directly to the business from HMRC... and what is not to like about that?
For the business to be successful, it is essential to have a motivated and driven management team. Implementing the most appropriate type of employee remuneration and share incentive plan can be a fundamental part of achieving this. Making the management team feel akin to entrepreneurs in their own right, sharing in the business success, can make a significant difference to performance.
High-quality Scottish food and drink is recognised around the world, and capitalising on international opportunities can reap considerable benefits. With the globalisation of a brand – as with any business – there are numerous factors to consider. Can the product currently be imported into and sold in that marketplace? What is the route to market and what local support may be required? Are there any import duties? What other tax considerations are there in the specific location for the business in trading there?
And all that is even before any questions are asked about the impact of Brexit!
International expansion should not be taken lightly and should be carefully planned and fully understood, so that profits are not unexpectedly eroded by tax surprises. Finally, the choice of advisor to a food and drink brand is key. Ensuring that the advisor is knowledgeable in the sector, and also sufficiently specialised so as to be able to offer crucial support with matters such as those noted above will play a fundamental part in the brand’s success.
Derek Mair is a Partner and Head of Food and Drink at Anderson, Anderson & Brown