By John Giles
John Giles is a Divisional Director of Promar International and the current President of the Food, Drink & Agriculture Group of the Chartered Institute of Marketing
At a meeting of the Food, Drink & Agriculture (FDA) Group of the Chartered Institute of Marketing (CIM) last week, Ian Wright admitted that at the moment “Brexit is all I think about”, as he represents what he called a “massive industry” employing some 4 million people across the supply chain.
A “no deal” on Brexit to come out come to the ongoing negotiations would be a disaster for the UK food and drink sector and the creation of the Single Market in the first place should be seen as a brilliant success and incredible achievement.
The food sector is now bigger in terms of economic contribution to the UK than the aerospace and automotive sectors combined but has sometimes struggled to come up with coordinated responses to the challenges it faces, not least to the extreme nature of competition that characterises the industry. The food sector though is a critical sector to the whole political system of the country and is unique in that consumers across the UK engage with it every day and 2 or 3 times a day too. The industry is also critically linked both up and down stream, with as an example, 70% of the UK packaging sector involved supplying the food and drink processing industry
The issue of affordable and sustainable food supply is seen as one of national security, with consumers now not only demanding enough to eat, but also being able to buy and consume what they expect to eat too.
As well as the whole issue of Brexit, food and drink companies still need to differentiate between the shopper and the consumer. The consumer “receives” the product but it is the shopper who actually dictates what is bought. Food and drink suppliers still to spend more time and resources understanding the fundamental motivations of the shopper in the future. And to make matters more complicated for food and drink companies, out of home eating patterns and consumption are very different to what consumers buy in a retail environment.
And away from Brexit, the issues of packaging, food waste and nutrition were all burning issues that the food and drink sector would need to come to terms with in the future. The sector is also likely to be subject to further marketing and promotional restrictions on issues surrounding salt and sugar, as subjects such as obesity and diet become increasingly part of a wider debate on the nation’s health. Developing a coordinated response to these issues was often quite difficult, as every scenario will have a winner and a potential looser too.
Added to this was the need to find answers to the issue of labour availability. This is all compounded by over 30% of those employed in food processing coming from Europe, an ageing work force in the UK, nearly full employment in the UK and the need to source labour from long distances to key areas of food processing activity. The increasing technical and commercial demands of the sector mean that many of those employed are no longer un skilled and poorly qualified. The issue will only become more acute after 2021 when the proposed legalisation on labour migration would be reviewed again. Automation in the industry is often easier to talk about than sometimes implement.
Attempts to educate consumers about how food is produced in the UK have been tried with the likes of the NFU and the Food & Drink Federation both involved in this, but more is still needed to be done to build on what appears to be a massive interest in the subject, judging by the number of food sector blogs, TV programmes and general media coverage given over to it. This needs to start at school, with lessons on home economics, health, diet and nutrition all important and should ideally start at a primary school level.
The challenges for food and drink companies are numerous and wide ranging – and against a backdrop of industry margins comfortably in single digits which was likely to remain the case in the foreseeable future. To counter this – they need to prepare well for Brexit, try and understand as much as they can about changing consumer and shopper behaviours both in and out of home, look for solutions to the labour issue and possible options for automation in the future in the mid to long term.
This was a wide ranging talk from Ian. He touched on lots of subjects in the course of it. It was a well attended event and those who were there, cannot have gone away much better informed about what the real challenges and opportunities are for the UK food and drink sector going forward in the next 6 months and following years.