Firms forecasts 14,000 jobs
Food and drink buoyant on back of global reputation
Innovation and export activity are high on the agenda, although they caution that regulation and the potential exit from Europe are concerns.
According to the fourth annual Bank of Scotland report, Fresh Opportunity & Growth, producers forecast an average turnover growth of 19% with two-thirds (62%) planning to introduce new products and the same number looking to build their overseas business.
Significantly, four in five (78%) say they have benefited from Scotland’s reputation for food around the world.
Two thirds (66%) says they will create jobs in the next five years, which, if replicated across the entire industry in Scotland, could equate to more than 14,000 jobs by 2020.
Job creation is cited by 46% as a way of generating growth. The jobs forecast set out by producers highlights the significant contribution that food and drink manufacturers are making to employment in Scotland.
This year’s report revealed that half (51%) of Scottish firms plan to collaborate or form partnerships with other organisations in their supply chain to develop new products, streamline manufacturing processes and boost productivity.
Exporting remains a key driver in the sector, with Scotland’s food and drink businesses strongly positioned for further growth in export markets. Robust international performance in recent years has given confidence in Scottish provenance and provides momentum for future progress.
Four in five firms (79%) that intend to target new markets will undertake new product development and/or packaging redesign to help achieve the expansion abroad.
Western Europe remains the international area of choice for engaging new customers, favoured by 61% of respondents. North America is the second most popular overseas destination overall (52%), while the Middle East is cited by 50% and the Far East and Asia by 30%.
Provenance in particular emerged as a real positive for the Scottish food and drink industry in this year’s report. 63% of producers highlighted provenance as an important factor for export markets, while just under three quarters (71%) also say they are currently capitalising on the Scottish heritage of their products.
The report highlights a number of significant challenges for the food and drink industry in Scotland, including increasing regulation and compliance (39%), a possible exit from the EU (34%) and rising labour costs (42%). The overall confidence and investment growth highlighted in the survey reflects the sector’s resilience against both sector specific issues and external pressures.
Graham Blair, area director, Scotland and head of food and drink, said: “Scottish food and drink manufacturers of all sizes are making ambitious plans for significant growth, cementing the sector as one of Scotland’s key economic contributors.
“Collaboration is high on the agenda for firms looking to invest in R&D over the next five years, a positive sign that the industry can continue to build on its already strong reputation for more traditional Scottish food and drink produce, while exploring exciting new products and ventures.
“Scotland’s food and drink sector has a significant impact on Scotland’s Gross Value Added and this year’s report gives every indication that this input will become even stronger.
James Withers, chief executive at industry body Scotland Food & Drink, said: “One element of Scotland’s reputation for world-class produce is our heritage and tradition, but that can still marry well with smart product innovation, tapping into fast-changing consumer and market trends.
“One of the most important catalysts for Scotland’s remarkable food and drink growth in recent years has been the development of a new culture of collaboration. Different sectors, from seafood to red meat to whisky, now work together to build our national reputation.
“So too individual businesses work together and we have a public sector responding to industry leadership. Competition is healthy but collaboration opens up new markets and relationships. It has been crucial to taking our industry from static growth just a few years ago to its current position as Scotland’s best performing sector.
“Scotland is increasingly seen internationally as a model to follow in terms of driving the reputation and growth of its food and drink sector.”