Prosperous future ahead for food and drink sector - Andrew Walker

The ongoing Covid-19 pandemic has put an enormous strain on the economy and we are yet to see the true scale of its damage. The Scottish food and drink industry in particular has been hit hard by the pandemic and it has forced a large number of suppliers to adapt and pivot in order to survive.

This has meant an interesting acceleration and adoption of new strategies, technologies and methods which might otherwise have taken considerably longer to happen or indeed not have happened at all.

With Covid-19 causing nothing short of a catastrophe over the last ten months, the food and drink industry now also has the impact of Brexit with which to contend. In December 2020, James Withers, chief executive of Scotland Food and Drink, warned that a no-deal Brexit could cost Scotland’s food and drink industry £2 billion. Eleven food and drink bodies including the National Farmers’ Union Scotland, Quality Meat Scotland and the Scottish Seafood Association, highlighted immediate steps that needed to be taken by the UK Government to avoid enormous damage to the industry.

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These fears were understandably felt industry wide with very little guidance available. Thankfully, there has been a sigh of relief - for the time being - now that the Trade and Cooperation Agreement has been put in place. The deal means quota-free and tariff-free trade can continue to take place between the UK and EU subject to Rules of Origin (RoO) requirements. However, there are still plenty of changes for the sector to now grapple with and in a relatively short period of time.

For example, there will be new border checks and controls involving new forms of documentation and certification, which will need to be completed in advance. The fishing industry is already facing challenges with this requirement which is adding days to their delivery times to the EU and hundreds of pounds to their costs, which has resulted in many Scottish processors pulling the plug on exports to the EU to avoid this.

Although I am not naïve to the challenges that will have to be overcome at an already bleak time for the sector, I am hopeful that the agility and resilient nature that the industry has shown throughout the pandemic will help overcome such barriers .

Local producers have become intrinsic to communities as imports have been limited because of Covid-19. For many, this has meant a record demand from customers who now place a higher importance on supporting homegrown businesses and I suspect that this will continue to be a trend as we see the full extent of the impact Brexit brings. Convenience retail has also grown considerably during Covid-19, which again arises from a focus on supporting local businesses.

Unsurprisingly, there has also been a significant rise in the number of home delivery services from our favourite restaurants and bars which have diversified their offering to enable business continuity. Although this can’t replace the true customer experience, it highlights the agility of such food and drink suppliers, and I believe this will be imperative as we continue to live throughout the pandemic and beyond.

Covid-19 has also created opportunities for businesses to astutely pivot and develop new products to drive sales, the most notable example being distillers adapting their production lines to produce hand sanitisers. As we continue to learn more about the trade deal, I suspect we will continue to see suppliers offering a diversified offering, but the challenge will now be looking at how to ensure this is a long-term investment and not a short-term revenue stop gap.

That said, we cannot ignore the magnitude of pressures and concerns that will continue to bubble in the industry. Whilst I am sure the Government is not underestimating the scale of such apprehension, there now needs to be a clear roadmap set out to guide businesses through the months ahead in a bid to retain a resilient industry. Whilst we still have a lot to learn about implications to transport, labelling and employment rights, I am confident that Scotland’s food and drink sector has a prosperous future ahead with its industry partners collaborating to support thousands of businesses and enable a robust recovery.

Andrew Walker is a Corporate Partner at Addleshaw Goddard

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