East Anglia: Food and drink companies ‘plan to invest’
- Credit: Archant
Food and drink companies in East Anglia are looking to increase investment in their businesses over the next year, a report says.
Many East Anglian food and beverage companies are looking to increase investment across areas such as facilities, equipment, IT and product development over the next 12 months as global optimism grows, according to the study, from business and financial advisory firm Grant Thornton.
But the research, which includes views from key decision makers in the East Anglian food and beverage industry, also found barriers to growth remain, with over 40% of respondents predicting that raw material prices will rise by 1-5%, which was identified as the biggest challenge for the sector in the year ahead.
Darren Bear, partner at Grant Thornton East Anglia, said: “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.
“The story in East Anglia is similar to the wider UK market with businesses continuing to face the challenge of increasing raw material prices. Alongside this we have seen a number of local businesses continue to invest in infrastructure to develop leaner and more efficient manufacturing operations and lay the foundations to support future growth.
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“However, wider challenges remain for the sector. In addition to rising raw material prices, managing volatility in the price and supply of many key commodities, and ensuring the continuity of supply when product availability is short in the UK or globally, are key.”
Despite UK’s imports exceeding exports, findings from the report indicate there will be an increase from 2% to 5% over the next two years in the number of UK businesses selling at least 25% of their products abroad.
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On supermarket shelves, the report finds that approximately half of respondents expect positive effects from the trend towards locally sourced goods – few expect a negative impact. Businesses have invested heavily to maintain and improve product integrity and to apply more rigour to their supply chains, some as a direct result of the horsemeat scandal.
Darren Bear said: “Whilst local businesses are keen to exploit overseas export opportunities to achieve growth they currently see significant opportunities closer to home. For example, with some supermarkets adopting a ‘UK sourcing only’ policy, a number of local businesses have leveraged off the demand for British brands to achieve increased penetration in their home market.”
He added: “With growth a priority for local businesses it is certainly an exciting time for the sector, and we expect to see continued investment in infrastructure, innovation and deal activity in the short to mid-term.”
The report also found that almost two thirds (60%) of UK food and beverage businesses are likely to require additional funding over the next 12 months. Outside of Western Europe, China (37%), South East Asia (30%) and Africa (37%) are three key markets many UK food and beverage firms are intending to enter over the next two years.