Food manufacturers’ reasons to be cheerful: FDF

Food and drink manufacturers are optimistic about sales for the remainder of the year, according to the Food and Drink Federation’s (FDF’s) latest Food and Drink Business Confidence survey.

Stronger sales both at home and abroad plus the prospect of a Christmas boost underpinned the optimism.

“Domestic sales strengthened in the second quarter [April to June] with 48% of survey respondents reporting growth compared with the previous quarter,” the FDF said in a statement. “The expectations are that domestic sales will strengthen further throughout the remainder of the year.”

The latest survey – which covers businesses with a combined turnover of £8.9bn and more than 34,600 workers – is the first time optimism has been reported in two consecutive quarters.

Some manufacturers’ lower average raw materials costs – at least in the short-term – were said to have contributed to the optimism.

Continued to invest

Despite tough trading conditions, businesses have continued to invest in research and development, product launches and human resources.

More than half the respondents had introduced new product lines in the second quarter. “Investment in capital expenditure remains subdued but positive, the uncertain economic environment and the lack of bank finance continues to limit advancement in major capital projects,” said the researchers.

Steve Barnes, the FDF’s economic and commercial services director, said: “It is really encouraging to see optimism among our survey respondents so far this year. Holding your nerve in this economic environment is by no means easy and is a great credit to our members in difficult times.

Christmas

“Looking ahead, we expect to see both our domestic and overseas sales increase as we head towards Christmas.”

Barnes remained confident of achieving the industry goal of 20% growth by 2020.

To read the FDF report, click here.

Meanwhile, last week PepsiCo boss Dr Bruce Linter warned that it was vital that firms continued to innovate when times were tough.

Linter, the firm’s long-term research manager, said: “It is very short-sighted to close research and development departments. We have to keep innovating, otherwise you’ll make money in the short-term, but in the long-term someone else will come along and make your product cheaper and you won’t have a business anymore.”

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Reasons to be cheerful

1)      Stronger sales, both at home and abroad, in the second quarter

2)      Lower input costs for some manufacturers

3)      Prospect of a Christmas sales boost

Source: FDF