The West’s food and drink sector is upbeat with most businesses set to grow turnover and orders this year, according to a new report.
The research has also found most food and drink firms think being based in the region is a major advantage.
Business advisory firm Grant Thornton and Taste of the West, which represents around 1,000 food and drink businesses across the region, carried out the research, which also shows that 85% firms feel either more optimistic, or broadly the same, as they were 12 months ago, with two-thirds expecting to increase turnover over the next year.
Likewise 30% describe their order books as ‘healthy’, and a further 53% as ‘acceptable’. A quarter expect to take on more staff.
The price of raw materials (60%) and energy prices (30%) are the biggest concerns among food and drink firms although the overwhelming majority – 77% – see their location as an advantage rather than a disadvantage.
Taste of the West chief executive John Sheaves said: “It is encouraging that our members expect to grow over the next 12 months, primarily by means of increasing sales and strong order books.
“Approaching half – 42% – say that in order to achieve that sales growth, they feel the need to invest in a stronger sales and marketing function, and a quarter see international sales as being important to their strategy. This is borne out by the fact that, while most of our members see the UK as being the most important for their business, a quarter see Europe as being their key market and for a small but significant number, it is the fast-growing markets of the Far East.
“All of this bodes well for our new ‘commercial’ sales and marketing business, which is designed to take members’ products to international and domestic markets on their behalf.
“It is perhaps not surprising, but gratifying nonetheless, to see the recognition that our members view the South West as being a great place to locate a food and drink business. Some 95% of respondents said that provenance and local sourcing of products are either ‘important’ or ‘absolutely vital’ to their customers. This demonstrates the very strong link between the quality landscapes and quality food we have here in the South West.”
Grant Thornton’s food and beverage partner in the West, James Morter, added that although around a quarter of firms in the survey have received external funding over the past 12 months, half of them still say they find it difficult to access finance.
“Our survey mirrors the findings of our national research, which continues to portray a dynamic and optimistic sector that is increasingly attractive to foreign investors.
“Nonetheless when it comes to their overriding concerns, the South West’s food and drink businesses are clearly not significantly different to those in other industries and despite the strength of the sector, it is not immune from the fundamental issues that all businesses are facing.
“Reducing red tape was highlighted as a priority in terms of Government help to the sector by the highest number – 31% – of food and drink businesses, but trying to ensure a better flow of finance from the banks, improving the South West’s transport infrastructure, and simplifying the tax system, were also cited by significant numbers.
“It was also surprising that very few survey respondents feel that either the new ‘above-the-line’ R&D tax credits, or the Patent Box regime, would benefit them. There is clearly more work to be done in terms of raising awareness of these schemes and others like them.”
