Why this is important to Wisconsin businesses: Among the contributing factors are instability due to Brexit and the pandemic.
The United Kingdom’s food and drink manufacturers contribute £31.1 billion to the economy annually. The sector is the country’s largest, directly employing 450,000, with total sales of over £74 billion. The food supply chain employs four million people and generates an additional £121 billion in added value for the economy. With no regional concentration, the 9,500 sites and factories are spread throughout the UK, and 97% are classified as small businesses. The top five firms—Associated British Foods, Boparan Holdings, Arla Foods, Greencore and Muller UK—account for more than £30 billion in turnover, and the top 20 companies own and operate more than 300 sites across the country. The industry has grown by 27% over the past 10 years, significantly outstripping average manufacturing growth.
Innovation and research and development are critical in the UK food industry. Nine out of every ten businesses are involved in new product development and innovation for health. Innovation also extends beyond the development of new products to include automation and robotics, supply chain and logistics efficiencies, convenience and waste minimization. Consumer demand is growing for safe, ethical, healthy and high-quality choices, including “free-from,” vegan, vegetarian and cruelty-free options.
The UK is not self-sufficient in food, and imports are increasing annually. While the country exports £24 billion worth of manufactured food and drink annually, it imports about twice that amount, particularly in fresh fruit and vegetables. Currently, 47% of what is consumed is imported, and almost half of all raw materials are sourced abroad.
The UK food supply chain is changing rapidly and dramatically as a result of the pandemic. It is impossible to predict the timeframe for the food system to return to stable footing, especially when adding Brexit into the mix. With the possibility of a “no deal” outcome if the EU and UK don’t sign a trade deal by the end of 2020, food and drink will be the sector most exposed to higher prices and supply chain disruption, with more red tape, border delays and checks.
With the heavy reliance on food and drink imports, coupled with Brexit trade deal uncertainties, there is a potential opportunity for U.S. producers, especially those manufacturing healthy eating options. Additionally, the increased emphasis on productivity and innovation creates an opportunity for suppliers of automation systems, supply chain and logistics solutions, raw materials and ingredients.