United Kingdom

Food for thought

Few sectors have been impacted to quite the same extent by Brexit as food and drink, given its heavy reliance on migrant workers and its clear focus on international exporting opportunities.

Set alongside the evolving economy, the infrastructure challenges of the region, the pre-existing skills gaps and a challenging shift in attitudes towards plastic packaging in the wake of the BBC’s Blue Planet II series, there are no shortages of risks when it comes to finding the perfect formula for continued growth.

Skills shortages

Helena Hills of Truestart Coffee said: “The barrier to growth is getting the right people in the right roles. We struggle to hire the right sales people in the region. We have a lot more luck with marketing regionally, but when it comes to finding good sales people, the pool is quite small.” Janis Sinton of TasteTech in Brislington, which specialise in food flavourings and functional ingredients, also finds it hard to find the right sales people. “For us it’s technical sales,” she said. “It can take us two years to get business from when we start talking to somebody, because they have to work with our technical teams to develop products. So it’s never easy. I’m looking for a head of sales at the moment.”

Tim Smiddy of Crediton Dairy in Devon, which was formed five years ago by a management buyout from the Arla/ Milk Link merger, said the industry has been seeing a skills shortage for many years, particularly around engineering workers for manufacturing plants. “Engineering has been an issue for many years and is not really getting better,” he said. “Some of the equipment required to produce our products as well as producing milk and other dairy drinks, the company is probably best known for its Flora brand] is very technical and engineering talent is thin on the ground. Even in those areas that have a manufacturing base – places like Bridgwater or Plymouth, the individual companies are competing with each other for people.”

Jon Simon explained how Bristol-based Pieminister attracted talent. He said: “It’s interesting when you hear people talking about salary expectations when trying to get people down from London. When we benchmark roles, we do it with a London rating, rather than a West Country rating that assumes you can pay a bit less. There’s no reason why a national or an international business shouldn’t be able to pay a bit more. As a result, we’re getting people coming down. Of course, there’s also a lifestyle draw – I would argue it’s a lot nicer living here than in London.”

Brexit woes

One of the biggest obstacles to growth is the uncertainty around Brexit, according to Laurence Hybs, of Clifton-based Stute Foods. He said: “We import all our products from Germany – fruit juice, jam, honey and chocolate spread. Brexit has been a complete and utter nightmare – not least with the exchange rate going from 130 euros to the pound, to 112 euros. We’ve been looking to see what we could get made in the UK, but those in the UK that can make it are already at full capacity.”

Chris Couzins-Short said the overall effect of Brexit had been completely neutral for his company, Gloucestershire-based Tudor Rose International, which acts as an outsourced export team for UK, US and European brand owners. “All the manufacturers’ import costs have gone up,” he said. “We’ve had between 10 and 15 per cent price increases without exception across all our brand-owners. So that’s completely offset any benefit from the euro advantage we might have seen for exporters. So Brexit has had no effect for us, other than some uncertainty.”

Somerset’s Wyke Farms sells its cheddar cheese to 160 countries and exports account for 20 per cent of the business. Daniel Rumley said Wyke had been hit by the inflation increases and rises in the costs of ingredients, particularly around milk prices. “We’re also seeing retailers pushing back on prices all the time, so we’ve had to take a margin squeeze temporarily,” he said. “Hopefully things will start to stabilise, but it really is all about the Brexit uncertainty. We’re focusing on the supermarket own-label market for now, because brand is so competitive.”

Peter Grocock of Aon added: “Brexit is one of those risks that businesses are having to consider as they plan for the future. We’re doing a lot of interesting work with what-if scenarios for which direction businesses should take depending on which way the Brexit deal goes.”

Aon Food and Drink Practice colleagues discuss risks facing the industry with South West Business Magazine

Packaging policies

There’s been pressure on food and drink companies to reassess packaging following the wave of social unease over plastic pollution in the oceans, which came about after the airing of the BBC’s Blue Planet II series. The Frome-based Natural Beverages Company specialises in making fair trade soft drinks, as well as exporting Ubuntu cola, which is the first fair trade cola in the UK, to ten international markets. Fraser Johnston said the impact of the programme hit immediately. “We’re still getting daily calls around plastic,” he says. “The solutions being put forward are not actually that sustainable. So there’s been a lot of having to educate the public on what we realistically can do. Even the so called biodegradable alternatives won’t biodegrade if they go into the wrong recycling stream, which on the whole they will.”

Miles Tea & Coffee, which has bases in Minehead and Porlock, is having to look into the plastic content in its tea bag fabric. Sam Burton said: “Our supplier is testing non-plastic alternatives, but we then have to adapt our machines and make sure it fully works – it’s not an overnight process.

We do a good range of loose tea, so we can say ‘if you’re really concerned about plastics, buy our loose tea instead’.” Wickwar Wessex Brewing Company, which owns 19 pubs around Bristol, Gloucestershire and the Cotswolds, as well as running a cask ale brewery in Wotton-under-Edge, has banned plastic straws. “We’ve also introduced Vegware straws, which are made out of plants – soyou can put them in the food bins and they’ll decompose,” said Abi Brown.

But Griff Holland, co-founder of Friska, which has seven coffee shops in Bristol, two in Manchester and an outlet at Luton Airport, said there was still a “lot of misinformation about waste streams”. He said: “GENeco, which does all our anaerobic digestion for our food waste, warned me that if the food waste bins come with biodegradable plastics, the bio-plastics will be removed and incinerated, because they anaerobically digest at a different rate. What we actually need is a complete review of the waste streams in the UK.”

written by David Clensy for South West Business Insider

Read more from Aon’s Food and Drink Practice

CO2 supplies go flat on food and drink industry