Expert view: What needs to be done to build on the successes already enjoyed by Scotland’s food and drink industry, asks Clare Baillie
SOMETIMES the figures surrounding Scotland’s food and drink industry are simply staggering: its companies turn over a combined £14.3 billion, it employs some 34,000 people, it sells 1.16 billion bottles of Scotch whisky annually, and two-thirds of the world’s langoustine are sourced from Scottish waters.
Back in 2007, the industry set itself a target of growing its turnover from £10bn to £12.5bn by 2017. Part of that strategy was to increase exports from £3.7bn to £5.1bn.
Food and drink producers smashed through those goals – six years earlier than planned. Spurred on by its successes, the industry came up with even more ambitious aims of generating £16.5bn of combined revenues by 2017, with £7.1bn coming from exports. So how can the companies that make the nation’s favourite treats and tipples step up a gear and move Scotland up to the next level? How can the industry build on the successes it has already tasted?
“There are many things that make Scotland successful on a world stage – including quality, heritage and provenance – but ‘Scotland the brand’ goes a long way too,” says Natalie Bell, trade marketing manager for Europe, the Middle East and Asia at industry body Seafood Scotland.
“Scotland has been very successful in presenting a united front for its key food and drink sectors, and by helping global buyers and influencers first buy into the concept of choosing Scottish, export orders for individual businesses flow through. Key to performance is continuing support to deliver this message at a meaningful volume, and to make sure that the supply businesses themselves continue to flourish – these things make a truly meaningful difference to Scottish export performance.”
The importance of promoting “Scotland the brand” is also highlighted by David Watt, executive director at the Institute of Directors (IoD) in Scotland. “One action that we can all take to support all of our industries – and food and drink in particular – is to wave the Scotland flag more often than we do,” he says. “Part of that is about restaurants stocking Scottish food and drink, but it’s also about celebrating our own fayre.
“We had some American friends coming over and they asked us to identify Scottish restaurants that they could visit. So I asked friends for recommendations in Glasgow and Edinburgh – and many of them were Italian or Indian restaurants.
“That raises an interesting point for me – we’ve widened our food intake in a very positive way, but sometimes we need to remember about our own Scottish restaurants and Scottish fayre. Sometimes we forget about that.
“Also, we sometimes underestimate the ‘Scottish brand’ – it really does carry considering kudos around the world and food and drink has capitalised on that wonderfully. It’s something we should all follow.”
Some Scottish products are already well-established overseas, including geographically-protected items such as Scotch whisky, Scotch beef, and Scottish farmed salmon. Forming new over-arching brands to help promote individual products is another way of flying the flag for Scotland.
Scottish Development International (SDI) – the overseas arm of economic development agencies Scottish Enterprise and Highlands & Islands Enterprise – launched the “Scottish Dairy” brand at the Summer Fancy Foods Show in New York in June. The brand promotes cheeses that are made from 100 per cent Scottish milk and covers artisan, heritage and organic ranges.
SDI has teamed up with United States food importer Atalanta to introduce the brand. Connage Dunlop and Orkney smoked red cheddars were launched at the event in New York, alongside Mull of Kintyre cheddar, which Atalanta already distributes.
As well as waving the flag for Scottish produce, some experts think more needs to be done to change public attitudes about the hospitality industry in general.
While Scots often see working in hotels or restaurants as a role for students on leave from college or university – or even as a temporary post until they get a “real job” – other European countries such as France treat hospitality as a profession and a sector in which staff can build a career.
“Hospitality is simple; it’s all about being hospitable and looking after guests in a manner that we would love to receive – so why is a life in hospitality still frowned upon?” asks Andrew Scott, head of catering firm Victus Consultancy. “At a recent wedding, I heard the best man say: ‘I did not do well at school and ended up in catering’. “We should be proud – we should be celebrating our industry. It has flair, style, class, passion, innovation and energy. The one thing I would change is people’s negative opinion about the greatest industry of them all. Long live hospitality.”
In the shadow of the European Union (EU) referendum, growing Scotland’s food and drink exports will become more important than ever.
Fergus Chambers, chairman of Braehead Foods, thinks the decision to leave the EU is already having a big effect on the food and drink industry.
“The aftermath of such a decision has put lots of deals on hold as people were not prepared for the outcome,” he says.
“Braehead Foods is keen to expand internationally and the Brexit decision has had an impact on this. Currency fluctuations, cost increases and a general feeling of the unknown have affected our international business.”
Brexit is also at the forefront of James Withers’s mind. As chief executive of Scotland Food & Drink – the industry body created in 2007 – he’s charged with hitting those ambitious growth targets.
“There’s a lot of uncertainty kicking about at the moment due to Brexit,” he admits. “The uncertainty is there because there are so many questions out there that we don’t have answers to.
“But what it does emphasise is that more than ever we need a balanced set of markets – whatever Scotland’s relationship with the rest of the UK or indeed the rest of Europe.
“Part of the problem in the food industry – unlike the whisky industry, which has this beautiful spread of markets right around the world – is that we’ve been far too reliant on a small number of customers.
“We’ve not had a strong enough export platform, which is now starting to change. But even when companies have been looking to export, we’ve been so reliant on Europe.
“While whisky is exported to 200 markets around the world, 80 per cent of our food exports go to the EU, with a quarter of those to France alone. We need to sell a broader range of products into a broader range of markets.
“What whisky has shown us is that it is best able to withstand shocks to the system because when one market is doing poorly, another market will be doing better.”
Withers highlights the “triple-track” approach adopted by Scotland Food & Drink to grow sales in Scotland, in other parts of the UK and in overseas markets.
He points to the transformation in recent years, with consumers wanting to buy locally-made products and the link being made between tourism and food and drink.
“One in every five pounds visitors spend in Scotland is on food and drink and, to be honest, if you look back four or five years ago, we weren’t covering ourselves in glory when it came to giving visitors a good food and drink experience,” he admits. “It was an after-thought for many businesses but now it’s at the heart of what they’re doing, whether you’re going to Edinburgh Castle or the Falkirk Wheel or staying in a local B&B.”
The UK market remains fiercely competitive due to the “once in a generation change” as consumers move away from a weekly or fortnightly supermarket shop towards becoming convenience shoppers, with the average Scot making 270 trips a year to go and buy food and drink, Withers says.
He also points to changes in the structure of the marketplace, with the rise of discounters such as Aldi and Lidl and high-end players like Marks & Spencer and Waitrose, along with convenience store operators such as the Co-operative.
Price wars between the supermarkets put pressure on the supply chain, while producers also need to look at how they supply more convenience foods. Yet Withers says big retailers and contract caterers still want to be able to talk about the provenance of their foods, creating opportunities for Scottish suppliers.
At an international level, Scotland Food & Drink has appointed staff in ten cities throughout the world, eight of them outside Europe. The organisation has identified the “first 15” markets in which it believes Scotland has the biggest opportunities.
The initial seven markets in which it is concentrating its on-the-ground support are: North America; France; Germany; the Middle East, including Bahrain, Saudi Arabia and the United Arab Emirates; China and Hong Kong; Japan; and South-East Asia, including Singapore and Thailand. The next wave consists of Spain, Italy, the Benelux countries, Russia, the Nordics and South Korea, while a watching brief is also being kept on India and Africa.
While the export strategy continues to unfold, IoD Scotland’s David Watt points to a number of steps that the industry could take to help move it on to the next level, such as protecting the identity of its products, exploiting niches, and training its leaders to cope with expansion.
“Some of the things that food and drink producers need to do include securing their intellectual property (IP),” he says. “Products such as Stornoway black pudding have already done a good job of that.
“The niche and specialities markets are growing not just in Scotland but worldwide – that’s the future, that’s where companies have to go. That will lead to a real opportunity for small to medium-sized businesses, not just the bigger companies.”
Watt believes that making sure leaders have the right knowledge and skills is also a key component in growing the industry.
“For any business to grow and develop, improving the quality and knowledge and abilities and capacity of its leadership team is vitally important,” he explains. “Sometimes when businesses talk about ‘up-skilling’, they forget that includes up-skilling the boardroom and the leadership team. Bringing in an external view or voice or opinion can also be helpful.
“For quite a number of the businesses that we’ve worked with, a key turning point in sustaining their growth was when they developed their leadership and management teams into a more formalised boardroom, with one or two external people coming in.
“That’s allowed them to direct the company instead of just running it. That key change in terms of scale and thought process does make a massive difference to companies. They’ve been able to have serious boardroom conversations about strategy and development.”
• A total of 73 British foods and drinks have received protection under European Union schemes, such as protected designation of origin (PDO) and protected geographical indication (PGI), including a host of Scottish products:
Orkney Scottish islands cheddar
Scottish farmed salmon
Scottish wild salmon
Stornoway black pudding
●Traditional Ayrshire Dunlop cheese
Native Shetland wool has also held PDO status since 2011
Source: UK Government