State of the industry

As shoppers, this is all you’re probably seeing of the huge pressure that Britain’s food and drink manufacturers are under. Until shoppers, including politicians, can’t buy what they want, it’s easy to overlook the strains on our supply chain. But these should neither be underestimated nor ignored.

The UK’s vital food and drink manufacturing industry is hard-working and pragmatic. Over the last few years, we’ve adapted in the face of a myriad of challenges – from keeping our teams safe as they worked through COVID-19 to ensure shops were stocked, to adapting how we operate to keep food and drink affordable as ingredient and energy costs rocket.

But the Food & Drink Federation’s latest report makes for sobering reading. It speaks to those strains and paints a picture of resilience that’s wearing thin in the toughest trading conditions company bosses can remember.

Our State of the Industry report tells us that confidence within the industry is at rock-bottom. Soaring energy, ingredient and other costs are proving impossible to handle and acute labour shortages mean many companies are trying to make the same amount of goods with fewer people to do it.

Energy suddenly accounts for nearly a quarter of company costs – causing some to question if they’ll manage to stay in business at all. With more insolvencies in our sector in the first eight months of this year than in the whole of 2019, the risks couldn’t be clearer.

What’s particularly treacherous for a sector like ours, with sites based everywhere across the country, is how the current pressures are stifling investment. Investment is how companies grow and create new and better opportunities for our employees and the communities we’re based in. But nearly 50% of manufacturers have cut or paused investment projects. Where they’re investing, it’s largely in energy efficiency.

The Government is helping us with vital support on our energy bills until the end of March. What worries us is we don’t use less energy in summer than winter – in April, we will still need to bake, chill and freeze food. If energy prices haven’t started to come down by then, the pressures on many businesses will become overwhelming.

We hope the Chancellor will be weighing these challenges as he prepares for the Autumn Statement next week. The UK’s vibrant food and drink sector is at the heart of all of our lives and is critical to the fabric of our society. We’re so good at ensuring the goods everyone wants to consume is always available that we’re easy to take for granted. That would be a mistake.

So Mr Hunt, will you support us to keep investing in our businesses and our workforce through these difficult times, so we can emerge as a strong and successful sector of the UK economy? Will you act to dampen inflation and to help businesses by reviewing burdensome regulation, while helping us to manage energy volatility?

It’s not good enough simply to enjoy the things we make and assume they’ll always be there. As shoppers are now discovering, sometimes that isn’t the case.

Karen Betts is the chief executive of the Food and Drink Federation

This article was originally published in The Grocer