Sunday, June 7, 2020

Growth in UK’s food and drink sector despite uncertainty

Political and economic uncertainty have failed to dampen the fortunes of Britain’s food and drink sector as employment and sales both grow, a new report has revealed.

The report, published by Make UK and Santander, shows that the sector is worth 15.9% of total manufacturing GVA with sales in 2018 of £85.6 billion – a sharp increase of 7.6% in just two years from 2016.

As a result, the sector is now a major employer across the UK with some 440,000 employees, up 5.3% since 2016 and now at the highest level for fifteen years.

The report shows that a large element of this growth is coming overseas with sales abroad up by just under one quarter in the last two years alone.

The EU remains the biggest total market accounting for just under two thirds (61%) of exports worth £13.9 billion, with Ireland the largest single destination (21.4% worth £4.2 billion) closely followed by The Netherlands, France, the USA and Germany.

However, the Rest of the World is seeing significant growth with sales to Asia & Oceania up by 295% in the last twenty years and in the same period by 260% to the United States.

The report also analyses the UK’s position in the world supply of food and drink as well as a number of industry trends domestically. Globally the UK is the fourth largest food importer in the world and the second largest drink importer.

This highlights that notwithstanding the sector’s positive export growth, the UK is a net importer of food and drink by quite some margin with a total import value of £46 billion compared to exports worth £23 billion in 2018.

This means the UK imports twice as much food and drink as it exports and highlights the critical need to avoid border and customs checks on fresh food coming into the UK post Brexit.

In addition, the report highlights the rapid rise of online shopping for and delivery of food and drink to the home in the UK which far outstrips the trend anywhere else in Europe.

Whilst supermarkets still account for the vast majority of purchases (93%) online shopping now accounts for over 7% of the total and is rising rapidly, worth £141.9 million a week.

This trend in the UK is some way ahead of other major European countries with the nearest being France at 5.5% followed by the Czech Republic at around half the level of the UK. Online purchases are less than 2% of the total in Germany and less than 1% in Italy.

“The food and drink sector continues to benefit from British public’s desire to eat, drink and be merry,” said Make UK Chief Economist, Seamus Nevin.

“Despite the economic and political uncertainty the sector seems to be shielded from the difficulties experienced elsewhere and is driving hard for growth in the UK and overseas. It is now a key contributor not just to manufacturing but a significant employer in many regions of the UK.

“Despite growth in the rest of the world however, the EU remains the dominant market for exports of food and drink. As such, it is vital that frictionless trade continues in any post Brexit agreement if the remarkable growth pattern of the sector is to be maintained.”

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