The chartered accountancy firm surveyed UK senior food and beverage executives in May, June and July this year.
The findings, published in its ‘Hunger for growth: food and beverage looks to the future’ report, indicate many aim to boost investment in facilities, equipment, IT and product development in the next year.
“There’s been a new wave of optimism across UK food and drink businesses, partly driven by export opportunities and partly due to improved consumer sentiment, which is increasing investment in the sector,” said Trevor Griffith, head of food and beverage at Grant Thornton.
‘Increased export opportunities’
“Seven out of 10 respondents said growth was the more important factor over the next year, rather than cost reduction, a sentiment that can partly be accounted for by increased export opportunities,” said Trevor Griffith, head of food and beverage at Grant Thornton.
“This optimism, along with beneficial exchange rates, trusted ‘safe’ supply chains and demand for British brands and products are all likely to contribute to an increase in UK food and beverage exports.”
Based on existing data, Grant Thornton predicted a rise of 2–5% over the next two years in the number of UK businesses selling at least 25% of their products abroad.
Top three export markets
Outside of western Europe, the top three export markets bosses canvassed said they planned to enter in the next two years were China (37%), Africa (37%) and south east Asia (30%).
Aside from export growth and investment in infrastructure, half of all respondents expected positive effects from consumer demand for locally sourced products. Businesses reported investing heavily to maintain and improve product integrity and apply more rigour to their supply chains.
Griffith said the trend had moved some supermarkets to adopt a UK-only meat sourcing policy “forcing many suppliers to use only UK meat, changing food chain behaviour and encouraging investment in UK production”.
Additional funding
Given the planned investment in growth, 60% of food and drink businesses said they were likely to require additional funding in the next 12 months.
However, those surveyed said they anticipated barriers to development, the biggest of which would be rising raw material costs.
More than 40% of respondents predicted raw material prices would rise by 1–5% in the coming year. Managing volatility of price and supply were further challenges mentioned.