Revenue and productivity snapshot
Small to medium food manufacturers have seen their revenues fall by 6% in the first quarter of 2024, according to the latest Manufacturers’ Health Index.
The data is compiled by inventory management software providers Unleashed and is based on data from every purchase, sale and stock movement made by more than 1,790 UK manufacturers over the last six years.
Alongside a bad first quarter, the index also revealed that UK food manufacturing’s year-on-year performance fell by 9% when compared to the same period in 2023.
Although UK food producers witnessed a decline, beverage manufacturing saw a major lift, with the highest rise in revenue (at 63%) across manufacturing as a whole. Beverages also saw year-on-year revenue grow by 121% since the same period last year.
Joe Llewellyn, general manager of cloud ERP at Unleashed’s parent company, The Access Group, called the results “disappointing” but countered that manufacturers are at the mercy of a number of driving forces which are out of their hands.
The report also found that those who’d invested in eCommerce were reporting strong returns, while lead times across the entire manufacturing sector have been cut down by an average of 20 days.
“We know from speaking to SME manufacturers how important technology is in driving operational efficiencies and diversifying their sales channels, and these investments are starting to bear fruit,” added Llewellyn.
“Inflation has battered the manufacturing industry – but the short lead times we see today are a small reprieve and a sign that they’re in control of one of their biggest costs, their inventory. This will help them to remain resilient and take advantage of more favourable economic conditions in the future.”
Export and import snapshot
Elsewhere, a recent analysis from the Food and Drink Federation of Q1 has also shown a significant decline in export volumes between January to March 2024, driven by rising costs and global economic slowdown.
The numbers show export volumes have fallen by more than 20%, representing the lowest Q1 volumes in the last 15 years, save for a period in 2021 which saw the end of the transition period and the global pandemic.
The total export value of food and drink for Q1 stood at £5.7bn, falling 5.3% when compared with the same period in 2023.
Ireland remains the UK’s largest export market, despite a fall of 3.5% to £1bn.
Meanwhile food imports increased by more than 7% on the year, at the same time as values rose.
Increasing by 0.4% to £14.8bn, the report highlights the impact of the introduction of the Export Health Certificate for medium-risk EU goods in January under the Border Target Operating Model (BTOM).
The FDF says this has resulted in increased costs and bureaucracy for traders, reflected in the decline of beef and poultry imports.
Balwinder Dhoot, the federation’s director of industrial growth and sustainability, emphasised the important role of the UK’s food supply chain to the nation’s resilience and economy, against these worrying findings.
“Our analysis is concerning, with food export volumes seeing a significant decline by over a fifth on the year.
“The next government must help unlock the full competitive trade potential of the UK’s largest manufacturing sector by delivering a trade strategy that builds business confidence and provides greater support for exporters to arrest this decline.”
New trade opportunities
The report also flagged opportunities to enhance existing trade arrangements with Turkey, South Africa and Morocco, alongside highlighting new prospects in the Gulf Region – the UK’s second largest non-EU market for food and drink exports.
Turkey has seen a 0.8% increase and is now in the top 20 destinations for food and drink exports, reaching a record high of £60m. Imports have also witnessed as uptick of 15.2%, reaching £197.5m. Fruits and fish represent the highest value imports at £54.7m and £30.4m, respectively.
Meanwhile, exports to the Gulf Cooperation Council (GCC) increased by 4.3% - almost reaching £196m, with cheese (£12.0m) and soft drinks (£5.8m) showing strong growth.
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