By Ashley Clarkson
F&B Specialist
Grant Thornton Northampton
APPETITE for investment in the food and beverage sector remains strong with the trend expected to continue throughout 2018. While there are challenges ahead, from Brexit to changing consumers habits, Northamptonshire businesses have every reason to be confident about their future growth prospects.
The F&B sector is an important part of the overall business picture here in Northamptonshire, employing just over 60,000 people. While demand for non-essential consumer items such as cars and electronic goods can fluctuate, food is an essential, which is why the market remains buoyant.
2017 saw significant M&A activity across the sector, culminating in 206 deals UK-wide with a total value of £6.2bn – a substantial increase on the previous year. This surge was partly driven by the Brexit vote, with overseas buyers, particularly European investors, looking to establish or solidify a foothold in the UK with the view that owning a British brand may help to avoid any unfavourable legislation once Britain leaves the Union.
In addition, food and drink exports continued through 2017, exceeding £22bn, up 9.7 per cent on 2016, demonstrating the opportunities the sector has for further growth.
The fall in the value of sterling also heightened interest and activity ahead of a predicted recovery in 2018, making it an opportune time for acquisitions.
However, new and existing challenges continue to hinder the growth of many businesses in the sector. A third of workers in the industry are either EU nationals or born overseas, a group which has been declining in numbers since the Brexit vote in 2016. This is largely due to lack of clarity over future working and living arrangements once Britain is outside the EU which, for the time being at least, makes the UK a less attractive place to work.
Food manufacturers are already starting to feel the impact of this, particularly those who rely on temporary, seasonal workers such as farmers. Businesses that continue to face difficulty recruiting need to address the issue or they could be seen as a less attractive target for potential buyers.
Firms in this fast-moving sector are also having to contend with changing consumers habits with a prominent shift towards healthy eating and ethically resourced products. Increased competition also means businesses have to meet these demands without compromising on taste or price.
Despite these challenges, time and time again the F&B sector has demonstrated its resilience, resourcefulness, ability to innovate and adapt quickly to change. Employing the best people will be key to success so businesses need to demonstrate they have a clear and optimistic vision to attract new talent. Firms also need to create the right culture for people to thrive, and highlight the benefits and opportunities a career in the F&B sector brings.
The F&B sector in Northamptonshire remains ripe for investment and our upcoming health check of the local economy provided through our annual Northamptonshire Limited report will provide a more detailed insight into how the sector is faring.
Find out more at www.grant-thornton.co.uk