According to the annual Food & Drink Report by BDO LLP, leaders in the UK food and drink sector are optimistic about the industry’s prospects in the coming year. However, they face mounting pressures such as higher energy costs and constraints on consumer spending, which will test businesses’ resilience. Despite these challenges, the survey reveals that 70% of respondents feel positive about the future of their own businesses in the next 12 months. This optimism is further supported by a significant increase in the sector’s overall positivity, rising from 69% in 2022 to 81%. Moreover, 40% of respondents anticipate an increase in their gross profit margins, while 24% plan acquisitive purchases, and 30% see new product development as a key driver for growth. Furthermore, the survey highlights that businesses in the sector are facing difficulties in recruiting the necessary talent, particularly within engineering, project management, and production-related roles. These skills shortages are believed to have worsened after Brexit and COVID-19. Additionally, digital transformation remains a crucial area of investment to enhance productivity and gain a competitive advantage. However, 60% of respondents express concern about falling behind on their digital transformation journeys due to enduring economic challenges. To counteract inflation, 28% of businesses report taking on higher levels of debt. Import-export rules, particularly with regards to trading with Northern Ireland and utilizing preferential origin under the UK’s Free Trade Agreements, are hindering trade for 65% of businesses due to their complexity. Despite these obstacles, leaders in the food and drink industry are praised for their resilience and adaptability in the face of Brexit, COVID-19, supply chain disruption, and the Ukraine conflict, which has caused a cost-of-living crisis. However, it is emphasized that sticking-plaster measures from businesses or government will not be sufficient to overcome the long-term threats facing these companies. As the UK’s largest manufacturing industry, contributing £128bn in turnover and £25bn in exports, the food and drink sector plays a vital role in the country’s economy, employing 456,000 people directly and supporting an additional 4.3 million people through its supply chain.
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