NEW figures for UK inflation have been released which show the food and beverage (F&B) sector is still struggling as a result of low food prices.
UK inflation rose to 0.5 per cent in March, from 0.3 per cent in February, and is at the highest level since December 2014. However, food and non-alcoholic was the only CPI category to show a significant reduction in prices (close to -0.3 per cent) illustrating the difficult conditions the sector is continuing to operate in.
NEW figures for UK inflation have been released which show the food and beverage (F&B) sector is still struggling as a result of low food prices.
UK inflation rose to 0.5 per cent in March, from 0.3 per cent in February, and is at the highest level since December 2014. However, food and non-alcoholic was the only CPI category to show a significant reduction in prices (close to -0.3 per cent) illustrating the difficult conditions the sector is continuing to operate in.
The sector has been facing challenges for several years with retailer pressures placing increased competition on food producers. The introduction of the £7.20 an hour living wage will now exacerbate the difficulties for the sector as employee pay has historically been close to the minimum wage, significantly increasing expenditure.
In Northamptonshire, the F&B sector employs over 45,000 people and is estimated to be worth over £1.5bn to the local economy according to the Northamptonshire Enterprise Partnership (NEP). So what can businesses here in the region do to buck this trend?
Ashley Clarkson, F&B specialist at Grant Thornton’s Northampton office, said: “With the F&B sector struggling to gain momentum, businesses in Northamptonshire should start looking at alternative markets by expanding overseas as a possible option. This will involve tailoring product offerings and messages, and understanding local markets as well as the relevant country regulations, but could lead to significant new revenue streams.
“There are certainly challenges in exporting, not helped in the short term with uncertainty with the upcoming EU referendum, so businesses need to ensure that the risk of entering into new markets is manageable.
“Any successful expansion may also then rely on investment in new machinery and staff, a difficult task with the current skills shortage in Northamptonshire, so investment in existing staff will be key for businesses moving forward. Businesses should also look to simplify their supply chains and streamline their operations which could include cutting out suppliers and reducing product offerings.”
Last year’s Northamptonshire Limited report, which looks at the performance of the top 100 companies in the county, showed that profits in the F&B sector are currently strong so companies have the financial opportunity to explore new avenues. The findings from this year’s report will be released in May.
Contact Grant Thornton in Northampton on 01604 826650 or visit the website www.grant-thornton.co.uk
