FDBusiness.com

Concerns are mounting within the largest manufacturing sector in the UK – food and drink – and confidence is becoming more fragile, a survey of Food and Drink Federation (FDF) members reveals. The survey coincides with quarterly figures from UK retailers showing food sales at their highest levels since 2013, suggesting a disparity between business and consumer confidence levels.

Following the UK’s vote to leave the European Union (EU), a majority of food and drink companies responding to FDF’s survey report increased ingredient prices, a drop in product margins, and concerns for the future raised by their EU workforce. More than two thirds (69.5%) of respondents are less confident about the UK business environment, with only around one in ten (11.2%) more confident.

FDF is calling for an industrial strategy partnership with Government to support the development of food and drink manufacturing, a sector in which the UK has a competitive advantage.

Food and drink manufacturing supports 3.9 million jobs across the £108 billion UK food chain and employs 400,000 people directly. Of these, almost a third (29%) are non-UK EU nationals. A large majority (71%) of companies surveyed employing EU staff report their EU employees have expressed concerns about the Referendum outcome, with around one in 12 (8.7%) reporting that EU employees intend to leave the UK. FDF is calling for urgent assurances for the industry’s workforce from the EU that they will have leave to remain in the UK.

Ian Wright CBE, director general of FDF.

Food and drink producers face tough trading conditions, with three quarters of companies seeing ingredient prices increase largely as a result of the weak pound, with product margins falling for most survey respondents. This trend is expected by most companies to continue over the next 12 months. Urgent action from Government is needed to ensure essential imports of ingredients and raw materials from the EU and EU Free Trade Agreement (FTA) countries do not face tariffs or costly non-tariff barriers.

FDF’s survey results reflect the sentiment of one third of its full membership including micro, small, medium and large food and drink manufacturers.

Ian Wright CBE, Director General of the Food and Drink Federation, comments: “We share Government’s view that we need to make the best of Brexit. Food and drink industry confidence is low. Slower revenue growth, coupled with prolonged business uncertainty, is affecting the industry’s ability to invest.”