For the first time since the UK’s Food and Drink Federation's (FDF) Business Confidence survey was launched in 2010, food and drink business leaders have reported positive levels of optimism for consecutive quarters.
Despite continuing uncertainty in the UK economy, food and drink manufacturers' business optimism has remained high in 2012. Businesses have continued to invest in research and development, product launches and human resources. This confidence is positive for a sector that has set itself the challenge to grow by 20% by 2020.
Domestic sales strengthened in Q2 with 48% of survey respondents reporting growth compared to the previous quarter. Expectations are that domestic sales will strengthen further throughout the remainder of the year.
In overseas markets, there remains strong interest in UK food and drink exports, with a third of respondents reporting growth. Again, confidence is high in the run up to Christmas and opportunities for UK exporters abound.
Ingredient prices remain high for food and drink businesses with national data showing food commodity prices up 2.6% between Q1 and Q2.
Food and drink manufacturers continue to invest heavily in staff, particularly in upskilling but also through a small rise in numbers employed.
The food and drink industry continues to invest, particularly in research and development resulting in over 50% of respondents introducing new product lines in Q2. Capital Expenditure (CAPEX) remains subdued but still positive, as the uncertain economic environment holds back capital projects.
“It is really encouraging to see optimism amongst our survey respondents so far this year,” said FDF's economic and commercial services director, Steve Barnes. “Holding your nerve in this economic environment is by no means easy and is a great credit to our members in difficult times.”
“Looking ahead, we expect to see both our domestic and overseas sales increase as we head towards Christmas. Our commitment to grow our industry by 20% by 2020 is ambitious and we remain confident that we will achieve this goal.”
The Food and Drink Federation is the voice of the UK’s food and drink manufacturing industry – the country’s largest manufacturing sector.