A glimmer of light at the end of the tunnel
By: Justin Wright Date: 13 December 2017
Category: Food and drink
As 2017 draws to a close, it seems hard to be optimistic about the situation that the food and drink sector finds itself in. The UK’s top 150 food businesses have reported a 0.8 per cent drop in revenue and, perhaps more worryingly, decreases in capital investment.
Every part of the food and drink industry, from agriculture to the restaurant trade, has faced huge cost pressures, with the introduction of, and steady rise in, the National Living Wage, Auto Enrolment, soaring business rates and pressure on input costs caused by the post-referendum slump in the value of sterling.
Meanwhile, many have seen the migrant workforce on which so much of the sector relies become increasingly jittery due to uncertainty over what will happen post-Brexit, while consumer confidence has taken a knock for much the same reasons.
At a recent business briefing in Norwich, we were told that, because of all this, businesses are increasingly starting to look inwards, trying to ensure that they trim the fat, enhance productivity, critically looking at how things are done and generally make more of themselves. Looking at those tiny aspects within a business can add up!
Whilst this introspection is driven by intense economic pressure, it may well be that it is also the beginning of a route out of the pessimism. The UK as a whole needs to find a way of boosting our doggedly lagging productivity levels; the food and drink sector is not immune from this.
Although times are undoubtedly challenging, I see some reasons for optimism as we move into 2018.
The inflationary pressures created by the fall in the pound will start to work their way out of the system and sterling’s continuing weakness will boost those businesses looking to export.
Whatever happens at the Brexit negotiations, a picture of how the post-Brexit world is going to look - one way or the other - will have to emerge in 2018. We may not like what we see but, at least the uncertainty that we see in so much of our economy will start to dissipate.
Also, whilst the mainstream big players in the food market are suffering, those smaller producers who have found a niche continue to do well. It is these artisan producers who are contributing to the continued strength of Brand UK in the export market.
I hope that 2018 will be the year in which we finally see a glimmer of light at the end of the tunnel as a level of much-needed certainty starts to return, allowing us to take advantage of the infrastructure as a trading nation that we still have in food and drink.
As we sit down to our Norfolk Black turkey on Christmas Day, we can reflect that quality will always have a market – and quality is something we do so well in Norfolk. Above all else, it will be this that will give me that greater sense of optimism in the New Year.