Food and drink industry needs breathing space after turbulent year - David Thomson

As 2021 comes to a close I am reflecting on a year in food and drink and what lies ahead. It has been a turbulent year for our industry. The continued impacts of Covid-19 and Brexit have meant that all food and drink businesses have had to adapt in one way or another.

David Thomson, CEO, Food and Drink Federation (FDF) Scotland

This has included having to find new routes to get their food and drink to consumers and thinking carefully about the production and sales of individual products. Our hidden heroes working in these businesses across the country have shown true resilience and innovation in dealing with these pressures. This has made me even more proud to work in our fantastic food and drink industry.

I recently had a chat with our members representing a wide variety of food and drink businesses in Scotland to find out how the last year has been and what is worrying them for the year ahead.

There is a mixed picture. Some businesses have seen an increase in demand for their products from both the retail and hospitality sectors which of course is good news. Others have seen a huge loss in sales as they have not been able to supply their products to the EU due to changes in rules – this includes those in Scotland’s critical seed potato sector. Even for those food and drink businesses that have seen an increase in sales this is not matched with an increase in profitability – putting the long-term viability of many in jeopardy.

Supply chain issues threaten the future success of our industry. Many businesses cannot keep up with the demand with ingredients, packaging and products taking longer to arrive – or in some cases not showing up at all! For many a shortage of talented people is exasperating this issue. Trading with the EU has meant increased paperwork and costs – some businesses have outsourced production to the EU, but others have deemed it not worth the headache and ceased trading with that market.

The top issue set to impact the food and drink industry over the next year is price inflation. Increased costs for everything from energy, packaging, and ingredients are going to enviably lead to the prices of food and drink on our supermarket shelves increasing. This will be devastating to hard pressed shoppers. But if this doesn’t happen, many businesses won’t be able to survive.

This matches results from a recent industry survey launched by Johnston Carmichael and the Food and Drink Federation. The survey asked some of the UK’s leading food and drink producers about the key challenges impacting their businesses.

Adam Hardie, business development partner and head of food and drink at Johnston Carmichael, recently commented on the survey, he said: “Supply chain disruption, increased raw material prices, shortages of HGV drivers, and the reduction in labour are just some of the challenges which businesses are having to overcome.”

On a positive note he said: “Despite the challenges, it’s very encouraging the business leaders surveyed believe the UK is an attractive economic environment. For those seeking investment to enable growth, food and drink continues to be an attractive sector for private equity, high net worth individuals and overseas buyers.”

To ensure the future sustainable growth of our vital food and drink industry we need sympathetic and understanding governments with a desire to work with the industry. We ask governments across the UK to give the industry some time to breath and to not put in place further policy and regulation that will have a negative impact on our food and drink businesses at such a challenging time.

David Thomson, Chief Executive Officer, Food and Drink Federation Scotland