Business optimism hits three-year high in food and drink sector

Business optimism among UK food and drink manufacturers has reached the highest levels seen since 2010, according to a new report from the Food and Drink Federation (FDF).

The FDF’s Business Snapshot survey shows that, in Q3 2013 sales strengthened in both domestic and international markets. The findings also reveal a sector confident of continued sales growth in Q4.

Sales grew by one percent in July and August 2013 compared with 2012, aided by good weather and stronger consumer confidence, up nine points in Q3. The majority of food and drink manufacturers expect continued growth during the run-up to Christmas. Value-added exports were up eight percent in July and August as Eurozone markets recovered.

Rises in the price of energy, and commodities like dairy and cocoa, resulted in increased Q3 costs. However, there were some price drops – wheat, for example, but the hope for many is that Q4 costs will fall back as ingredient prices drop.

Capital expenditure has shown continued recovery, with businesses looking to boost productivity and expand capacity to fulfil increased orders. However, expenditure is slightly down on research and development and training as the focus shifts to seasonal product lines for Christmas and the new year.

Steve Barnes, FDF’s Economic and Commercial Services Director, says this is the most optimistic we have seen UK food and drink manufacturers since we started this survey three years ago: “This good news could not have come at a better time, with Christmas products already starting to appear in shops.

“As well as seeing growing confidence among shoppers here in the home market, the message is loud and clear that there are significant gains to be made in exports, where we have seen eight percent growth in value-added products. We hope that UK food and drink manufacturers will take heart from these findings and confidently compete on a global stage.”