About The Authors

November 2023 - Food

Eight in 10 food and drink leaders hold a positive outlook for the year ahead: A recent survey has found that 81% of leaders in the UK food and drink sector hold a positive outlook for the industry's prospects in the coming year. Despite this optimism, the sector faces mounting challenges, including the twin pressures of rising energy costs and constraints on consumer spending, which will continue to test businesses' resilience.

The annual Food & Drink Report, published by the accountancy and business advisory firm BDO LLP, surveyed manufacturers in the sector and reported a notably high degree of optimism this year. Although slightly lower than the 2022 figure of 78%, a significant 70% of respondents are positive about the future of their own businesses in the next 12 months. This optimism is further bolstered by a substantial increase in positivity for the sector as a whole, rising from 69% in 2022 to 81%.

A significant portion of respondents (40%) expect to see an increase in their gross profit margins over the coming year, and as the positive sentiment continues, an additional quarter (24%) is planning acquisitions. Nearly a third (30%) view new product development as a key driver for growth over the next 12 months, while 29% are focused on expanding into non-European Union (EU) markets.

However, despite this confident outlook, the survey by BDO highlights the myriad of challenges confronting businesses in the sector. Half of the respondents (50%) reported difficulties in recruiting the necessary talent, with engineering and project management or production-related roles being the most challenging to fill. Almost two-fifths (39%) of those facing recruitment challenges believe that skills shortages are now more pronounced compared to before Brexit and COVID-19.

Digital transformation remains a significant area of investment to enhance productivity and gain a competitive edge. While the majority of respondents acknowledge the importance of digital transformation, 60% express concerns about falling behind on their digital transformation journeys due to persistent economic challenges. Additionally, 28% state that they are taking on higher levels of debt to counteract inflation.

Cindy Hrkalovic, Head of Food and Drink at BDO said: “After enduring Brexit, COVID-19, supply chain disruption and a cost of living crisis brought on by a war in Ukraine, food and drink businesses should be applauded for the resilience and adaptability they have demonstrated.

“However, the long-term nature of many of the threats facing UK food and drink companies suggests that leaders will need to stay flexible and think strategically about the future of their businesses. Sticking-plaster measures from businesses or government will not suffice in an environment where a return to normality – whatever that is – remains elusive.”

Other Food Research Findings

Other Latest Market Research Insights