Recruitment challenges persist as food and drink sector eyes opportunity for growth
The UK food and drink sector is poised for growth with businesses reporting an increasing sense of optimism according to a new report from accountancy and business advisory firm BDO.
In total, 95% of respondents said they feel positive about the prospects for their business, up from 70% in 2023. Additionally, almost two thirds (62%) have seen an increase in orders over the past 12 months, and over half (52%) anticipate further growth over the next year.
BDO’s annual Food and Drink Report, which surveyed 100 manufacturers in the sector, found that 75% of respondents said they lacked skilled people in key roles, up from 50% in 2023, hampering their ability to deliver their growth ambitions.
The roles that manufacturers are most keen to fill include sales and marketing, production, and project management positions. Roles related to digital transformation are also in demand with a fifth (25%) of businesses leaders seeing the need for more skilled workers in this area.
In response to longstanding recruitment issues, many businesses are turning to digital tools to automate processes and improve productivity. The appetite for digital transformation is strong with 88% of respondents saying it was strategically important to their executive teams. However, over 4 in 5 (84%) acknowledged there was a gap between their digital transformation ambitions and implementation within the organisation.
Despite the persistent recruitment challenges, BDO’s survey highlights a growing optimism felt within the Food and Drink sector. Over a third (34%) expect to drive their growth through an expansion into new export markets within the EU, while over a fifth (31%) plan to expand into new markets in the UK. A third (33%) of businesses say new product development remains a key growth area, with over a fifth (30%) planning to divest to focus on growth within core operations.
Nevertheless, the sector is not exempt from the current economic challenges. Faced with rising costs, almost a quarter (24%) of Food and Drink businesses plan to increase borrowing or seek additional finance. A further fifth (21%) say they will need to implement price increases to the cost of goods or services, and an additional 19% say they will need to take on higher levels of debt.
Cindy Hrkalovic, head of food and drink at BDO said: “Despite facing everything from a global pandemic to the loss of major markets and supply routes, businesses within this sector have shown remarkable resilience, while recruitment challenges persist, optimism is flourishing.
“The sector will have been further buoyed by the recent trade deal announced with the EU which should remove barriers to trade for many food and drink exporters and offer new opportunities for growth.
“However, there is also a pressing need for government to offer the food and drink sector targeted support with their recruitment and digital transformation needs in order to sustain growth and competitiveness in a rapidly evolving market.”
Food and drink is the biggest manufacturing industry in the UK with a turnover of £148bn and exports worth £24bn. The sector employs 486,500 people in the UK.