Accountancy and business advisory firm BDO LLP has released its annual Food & Drink Report, which surveys manufacturers in the sector, reporting a high degree of optimism among manufacturers.
According to the report, 81% of leaders in the UK food and drink sector felt positive about the prospects of the industry over the coming year, while 70% felt positive about the future of their own business in the next 12 months. This was buoyed by the big jump in optimism for the sector overall, which increased from 69% in 2022 to 81%.
Over a third of manufacturers expected an increase in their gross profit margins over the coming year, and a further 24% were planning acquisitive purchases.
Difficulties remain
Half of the respondents reported difficulties in recruiting the people they need, and 39% of those experiencing recruitment challenges believed skills shortages are worse now than before Brexit and Covid-19.
The Ukraine conflict continued to affect 65% of businesses surveyed. According to the BDO report, overly complicated import-export rules were cited as reasons for hampering trade, as 63% found it hard to trade with Northern Ireland via the Trader Support Service, and a further 69% struggled to use preferential origin under the UK’s Free Trade Agreements.
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.”
Food and drink is the biggest manufacturing industry in the UK with a turnover of £128 billion and exports worth £25 billion. The sector employs 456,000 people in the UK, with its supply chain employing a further 4.3 million people.
