UK food and drink executives have reported positive levels of optimism during the first six months of 2012, the latest business confidence survey from the UK’s Food and Drink Federation revealed.
Despite an uncertain economic outlook, UK food manufacturers’ business optimism has “remained high” in the first half of 2012, the FDF said.
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As a consequence, food businesses have continued to invest in research and development, product launches and human resources, the food industry body suggested.
According to Steve Barnes, FDF economic and commercial services director, capital expenditure remained on a par with last year’s levels, having recovered year-on-year since the onset of the economic downturn in 2009.
“In terms of CapEx investment, this was virtually unchanged at GBP1.1bn versus 2011 for the first six months of 2012,” Barnes told just-food today (25 September).
Barnes said that investment in R&D continued to be necessary in the context of the highly competitive UK market.
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By GlobalData“The UK market has become increasingly competitive in recent years and with stiff competition from international manufacturers, innovation is a vital route to secure growth,” he commented.
Meanwhile, companies are also investing in improved efficiency to drive down overheads, Barnes suggested.
“Anecdotally, we know through our work with members on our Five-fold Environmental Ambition, that a number of them are investing heavily in new sustainable measures and technology. A key motivation behind this is to reduce their environmental impact via such means as committing to reduce waste. However, in addition to making their businesses more sustainable, these companies are also reporting improved efficiency and overall reduced costs.”
UK food and drink businesses have also committed to doubling the number of apprentices working in the industry and Barnes said that investment meant that the sector is “progressing well” in this aim.
However, the FDF conceded that while overall sentiment remains positive, some smaller companies are struggling to invest in their businesses.
“This level of investment in both facilities and staff is not the case throughout the whole industry. We know that some of our smaller members have struggled to invest due to lack of cash flow and bank financing and are purely focused on maintaining good relations with customers,” Barnes commented.
Another cloud on the horizon for UK food manufacturers is the likelihood of rising commodity costs, the confidence survey found. Ingredient prices “remain high”, the FDF warned, and according to data provided by the federation, food commodity prices rose 2.6% between the first- and second-quarters of 2012.
