‘Start-ups in the food and drink sector are struggling’

By Michelle Perrett

- Last updated on GMT

Young Foodies is setting up a website to help small challenger brands
Young Foodies is setting up a website to help small challenger brands

Related tags: coronavirus

Food and drink start-ups and small enterprises are struggling due to the impact of the coronavirus, leading business groups have revealed.

Concerns have already been raised that smaller food and drink manufacturers are facing huge challenges in the supply chain. 

Federation of Small Businesses national chairman Mike Cherry said: “Start-ups in the food and drink sector are struggling as the coronavirus crisis continues. 

“Producers are also telling us that while food retail is up, the foodservice industry has entirely collapsed because all events have been cancelled, leading to a reduced demand for producers. 

“In some cases, items had already been ordered and produced before being cancelled, leading to wastage and significant write-offs.” 

He also expressed concern about the cancellation of trade and agricultural shows that he said were the  “perfect opportunity”​ for start-ups to showcase their new products, build relationships and find routes-to-market. 

“We’re in constant communication with the Government about the issues surrounding this and will continue to focus our efforts on securing support for the UK’s 5.8m small business and self-employed community at this extremely difficult time,” ​he said. 

 

‘Nerve-wracking’

This concern was backed by Young Foodies, a community for small and medium enterprises and challenger brands in the food and drink sector, which recently wrote to an open letter to Prime Minister Boris Johnson urging greater support for small food and drink businesses, which it said were predicting at least a 33% loss in revenue as a direct result of the virus.

 ​Theadora Alexander, co-founder of Young Foodies, told Food Manufacture​ that it was a nerve-wracking time”​ for the industry. 

Young Foodies surveyed 45 SMEs (on 16-17 March 2020) with annual revenues ranging from £250k per year to £12m and found that 73% of them saw the current challenges as a threat to the survival of their business.  

“The biggest hurdle right now is retailers, supply chains and manufacturers deprioritising small businesses in an effort to focus on the 80-20. This is dangerous territory,”​ she said. 

“We are urging retailers to not only prioritise small brands, but hero them. Pushing them to the bottom of the pecking order could cause irreparable damage to their already limited cashflow. Small brands that don’t have the cash reserves to ride huge change become vulnerable.” 

 ‘Inspiring’

Alexander said that despite livelihoods being at risk, the mental stamina of brand founders to triumph in the face of this adversity was “nothing short of inspiring”​. 

Challenger brands are pivoting to e-commerce as retailers deprioritise them in favour of big brand commodities, threatening to wipe out a third of their annual turnover. SMEs are dealing with major challenges to their businesses and livelihoods, and concerns are rapidly rising that they might be faced with a war-time grocery market within weeks,”​ she said. 

Young Foodies is set to launch a new online supermarket, allowing challenger brands without an existing e-commerce operation to access consumers.

The aim of the website Mighty Small​ is to encourage shoppers to support local producers and give a much-needed boost to independent businesses. 

Having built the platform, Young Foodies will manage supply and facilitate all operations on brands’ behalf, from centralising shipping costs, simplifying fulfilment, and managing multiple supply chains. All picking, packing and delivery will be handled and paid for by Young Foodies.

Launch partners include ethical roastery company Volcano Coffee Works and Italian bakery and artisan food firm Crosta & Mollica. 

Related topics: COVID-19, Start-ups, Business Leaders

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