There was an opportunity for manufacturers to grow by investing in healthier products, automation, product development, and smart packaging, the report said. But, it warned that retaining access to non-UK EU workers was a key priority, given the skills gap the sector was already facing.
EEF senior economist George Nikolaidis said: “The food and drink industry has displayed remarkable resilience during the various ups and downs in market conditions over the past few years. It has maintained its position as the largest manufacturing sector in the UK.
“The ability of food and drink manufacturers to grow and broaden their export base has been a key part of this success. In order to harness the range of challenges on the horizon, the sector will need to continue to explore new export opportunities, embrace product and process innovation, as well as ensure it adapts to evolving consumer trends.”
‘Adapts to evolving consumer trends’
Exporting to emerging markets, including India and China, was a top priority for food and drink manufacturers, the report said. A growing middle-class in developing countries meant exports to China increased 259% between 2010 and 2016, EEF said.
Developing healthier food options was a key opportunity for manufacturers, the report said. After a 257% rise in veganism, and a 25% rise in vegetarianism, between 2010 and 2016, manufacturers were looking to cut sugar, salt and fats in their products.
The UK food and drink sector invested a low amount of money into innovation in relation to its size, compared with all other manufacturing sectors, the report concluded. Investing in new product development – particularly free-from foods – and automation was an opportunity for manufacturers, EEF said.
Smart packaging could “revolutionise” the food and drink sector by improving quality, safety, convenience, and by reducing waste, the report said. Smart sensors in packaging, that measure changes to pH, temperature, oxygen and carbon dioxide, were a more accurate way for manufacturers to detect food spoilage.
A key challenge facing the sector
But, retaining access to a non-UK EU workforce of about 120,000 was a key challenge facing the food and drink sector, the report said. The workers ranged from seasonal labourers in processing facilities, to highly skilled researchers and food scientists.
Santander Corporate & Commercial head of food and drink sector Nicola Thomas said: “There are some risks, but we believe that the consistent levels of demand means that the sector is well positioned to maintain solid growth.
“There are a number of strong opportunities on offer, notably growing demand from emerging regions, as well as the productivity gains that improved innovation can bring, which if harnessed, will provide the sector with further growth in the medium and long term.”
Meanwhile, don’t miss the Food & Drink Export Excellence 2017 conference, organised by the Food Manufacture Group, and sister William Reed titles British Baker and Meat Trades Journal, at which Thomas will be speaking on the subject of ‘Barriers to entry into new markets’. Taking place at the Ardencote Hotel, Warwick, on October 5, delegates will be armed with key data about which markets and product categories offer the best prospects. Register your interest in attending here.
Key opportunities for food and drink manufacturers – at a glance
- Export to emerging markets, including India and China
- Develop healthier food options
- Increase investment in automation and new products
- Use smart packaging