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Brexit, COVID and inflation biggest risk factors for manufacturers
In its 2023 Food Safety Audit Report, Ideagen found that COVID-19 was the highest-ranking risk factor for 61% of food and drink firms, overthrowing credit as the top risk reported back in 2018. This was followed by commodity inflation (60%) and Brexit (52%).
While commodity inflation featured on the previous report (up seven percentage points to 60%), Brexit and COVID-19 were understandably new additions worrying food and drink firms.
There was no significant difference between how businesses of different sizes viewed the risk of Brexit, with the perceived risk increasing with the size of the firm.
On the other hand, COVID-19 was a major concern for 68% of businesses with revenues more than £250m. For comparison, 58% of food and drink companies with revenues less that £250m said it was a major risk.
Product safety
Interestingly, product safety took the ninth position in the top 10 risk back in 2018. However, this risk didn’t even break into the top 10 in the latest report – the 2023 data ranked it much lower that risk to financial status, customers and competitors.
While its placement in the top table was pushed out by the likes of Brexit and COVID-19, the proportion of companies that called out product safety as a risk factor moved forward by 10 percentage points (27% from 17%).
The largest increase was reported among businesses with revenue between £100m–£250m, where it was acknowledged as a concern by almost one-in-three organisations (32%).
Supply chain challenges drop in the rankings from seventh to eight but saw a subtle shift in terms of the proportion of organisations who mentioned it as being a risk factor. Ideagen posited this was perhaps exacerbated by the numerous lockdowns, border closures, import and export challenges and raw materials shortages.
Supply chain risk
Mid-sized businesses with revenue between £100–250m were most concerned by this risk factor (40%, up from 24% in 2018), while businesses with revenue above £250m reported the opposite (down from 36% to 24%).
“With new and growing challenges, it’s easy to take our eyes of those other risks that might impact our ability to operate,” the report concluded. “While it’s positive that more organisations are acknowledging supply chain fragility and product safety, the fact that the latter dropped out of the top 10 needs to be considered in tandem with the fact that reputational risk disappeared completely. This is at odds with Ideagen’s consumer research which indicates bad news in the food industry has a long shelf life.
“Resilience has been keenly tested since 2018 but the sector is naturally agile, with a long history of being forced to adapt to world events. It continues to innovate and embrace technology to support and grow operations and to enable efficiencies.
“However, the fact financial risks continue to dominate the top 10 needs some scrutiny as economic stability is intrinsically linked to the integrity and quality of the product and the trust customers have in the safety of the product.”
