Future looks sweeter for West food and drink firms as survey shows big jump in levels of optimism

April 24, 2014
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The West of England’s food and drink businesses are increasingly upbeat about their prospects despite concerns over the price of raw materials and energy and the impact of this winter’s floods.

Most also believe that being based in this region is a major plus, according to a new survey.

The research by leading business and financial advisers Grant Thornton and Taste of the West, which represents around 1,000 food and drink businesses, shows the sector is overwhelmingly positive about the next 12 months in terms of growth in turnover, order books and jobs. 

Some 60% said they were feeling more optimistic than they were 12 months ago, with 75% expecting to increase turnover – both up on the figures in last year’s survey.

Likewise 96% described their order books as being either ‘healthy’ or ‘acceptable’ while 37% expect to take on new staff in the coming 12 months, up from 25% last time.

With 38% of food and drink firms in the region saying they had been adversely affected by the winter floods, the price of raw materials (60%) and energy prices (30%) continue to be seen as the biggest long-term concerns.

However, 85% say being based in the South West is a distinct advantage

A reduction in red tape, simplification of the tax system, improvements to transport infrastructure and a cut in VAT are all highlighted as being measures which the Government should take to help the sector.

One respondent said: “VAT is killing many small, especially seasonal, businesses. “To allow small businesses to survive we must either raise the ceiling to £120,000 or reduce the percentage rate to enable us to stay in business.”

Meanwhile, the importance of provenance and local sourcing in the food and drink sector is borne out by the fact that two-third of survey respondents view these as ‘absolutely vital’ and the remainder as ‘important’.

And while three-quarters of businesses surveyed see the UK as being their prime market, some 20% see international expansion as part of their strategy.

Taste of the West chief executive John Sheaves said: “These results bear out the overwhelming message that I have picked up from our membership, which is that the sector is resilient, buoyant and positive about its prospects.

“I am particularly pleased to see that 20% are looking at international markets for growth, which demonstrates a clear shift in recent years to broaden and differentiate the market for food and drink products made in the South West.

“There is not only a ‘buy local’ offer but a ‘Made in the South West’ offer too, which helps to broaden the appeal. Also, linked to this is the strong ‘provenance’ brand the region is now using to back up quality and integrity claims in national and international markets.”

Grant Thornton South West food and beverage partner James Morter, pictured, said: “In recent years many of the South West’s most successful food and drink producers have reacted to difficult times by streamlining their processes and investing in technology and new product development.

“Now as we enter a more benign environment, food and drink businesses will have a crucial role to play in the region’s economic recovery so it is good to see our latest survey painting such a positive picture of the sector.

“Nonetheless considerable challenges remain, not least the ongoing impact of the rising price of raw materials and energy, and the burden placed on food and drink businesses by issues such as regulation and VAT.”

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